In case what you will learn in this post is new to you, your are not alone. A number of readers mentioned they never heard of something called indicative rate. It refers to the carry cost that brokerage firms charge short stock sellers for shorting a stock. The indicative rate can be very high, varies from stock to stock, and can change at any day and moment. There are a significant number of stocks that have an indicate rate of close to 100%. We listed those stocks in our previous posts on this topic.

We publish indicative rates for stocks each day, so you may want to visit often. The stocks list contains stocks that have an indicative rate on the low range in absolute terms (between 4% and 4.7%), they are still high when compared to current interest rates (they are still 20 times the interest rates).

Stock brokers loan shares from brokerage account of a Customer A to the brokerage account of Customer B which is shorting the shares of the stock. The short seller may pay a high rate for shorting the shares, even after reducing any dividend income that may go the customer A (even there is dividend in the first place), the carry cost for customer B for shorting the shares can provide the stock brokers with a good amount of money without taking a price risk like customers do.

One question: do you think customer A gets anything in return for loaning his shares? Ask your broker, and you will be surprised by the answer. Being a stock broker can be a good business!

Please share this post and site link in other forums and sites, so that others learn more and visit this site which allows us to provide more information to valuable visitors like yourself.

We thank you for your visit and your for help.

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