What is an Easy-to-Borrow List?
An easy-to-borrow list is a brokerage firm's list of securities that are available for shorting.
How Does an Easy-to-Borrow List Work?
Short selling involves a three-step trading strategy that seeks to on an anticipated decline in the price of a security. First, arrangements are made to borrow of the security, typically from a . Next, the investor sell the shares immediately in the open with the intention of buying them back at some point. Finally, to complete the cycle, at a later date he/she repurchase the shares (hopefully at a lower price) and will return them to the . In the end, the investor will pocket the difference if the share price falls, but of course incur a loss if it rises.
For example, if Mr. Johnson firmly believes ABC Corp. is due to fall, he might his broker to short 100 shares of the company. If ABC Corp. is on the easy-to-borrow list, Mr. Johnson can transact the more easily because his broker doesn't have to go out and find some stock for him to sell.
Why Does an Easy-to-Borrow List Matter?
brokerage fees to do so.that are on the easy-to-borrow list are easier to short and might even incur lower