Hard to Borrow: Locates, Reg SHO and 434 Days of Threshold Lists

Michael Whitman · Trading since 2017, full-time since 2020 · Published 2026-09-25

Every short sale starts with a borrowed share, and not every share is equally easy to borrow. When a broker’s lending desk runs short of a stock, the stock becomes hard to borrow: the order needs a specific locate, the daily fee climbs, and the position can be called away. This page separates the broker’s label from the public rules behind it, prices a hypothetical hard-to-borrow short, and counts 434 trading days of Nasdaq’s Reg SHO threshold list to show what the official list actually contains.

How it works

The locate comes before the sale. Under Rule 203(b)(1) of Regulation SHO, a broker may not accept a short sale order, or short for its own account, unless it has borrowed the stock, has a bona fide arrangement to borrow it, or has reasonable grounds to believe it can be borrowed in time for delivery, and it must document which. That check is the locate. Bona fide market making and a few other cases are exempt.

Easy to borrow is the default, hard to borrow the exception. Brokers commonly keep a list of stocks they can lend in size and treat those as located automatically. Anything off that list needs a locate request to the desk for a specific number of shares, which can be granted, partly granted or refused.

Borrow fees and broker lists

The fee reflects scarcity. Borrowed shares are rented, and the rent is quoted as an annual rate charged daily on the position’s value. On a widely held large cap it is small. On a stock with few lendable shares and many short sellers it can run to a large fraction of the position each year, and it can change from one day to the next.

The label belongs to the broker. No regulator publishes a hard-to-borrow list. One broker may lend a stock freely while another marks it hard to borrow, because each is working from its own inventory and its own lending partners.

Threshold securities and the Reg SHO list

The public list tracks failed deliveries. A threshold security, as defined in Rule 203(c)(6), is an equity security of a reporting company whose total fails to deliver at a registered clearing agency reach 10,000 shares or more, and at least 0.5% of the shares outstanding, for five consecutive settlement days. It comes off once fails stay below that level for five consecutive settlement days. Each listing exchange publishes a daily file of its own threshold securities.

Being on the list tightens the rules. Under Rule 203(b)(3), a clearing firm with a fail in a threshold security that has lasted 13 consecutive settlement days must close it out by buying shares. Until it does, neither it nor the brokers it clears for may accept a short sale in that stock without first borrowing the shares or arranging to borrow them, a stricter step than a locate.

Every fail has a deadline anyway. Rule 204 requires a clearing firm to close out a fail from a short sale by the start of regular trading on the settlement day after settlement date. Fails from long sales or bona fide market making get until the third consecutive settlement day after it.

The two ideas overlap but are not the same. A threshold listing says deliveries have been failing in size. A hard-to-borrow flag says one broker cannot easily lend. A stock can be either without the other.

A worked example

Take a hypothetical short of 500 shares at $20.00, a $10,000 position, in a stock the broker marks hard to borrow at a 35% annual fee. Assume the broker charges the fee daily on the position’s value over a 360-day year; some brokers divide by 365, so check the method in your own account.

The daily cost is $10,000 x 0.35 / 360 = $9.72. On a 365-day basis it would be $9.59. Held for 30 calendar days at an unchanged price, the fee comes to 30 x $9.72, or $291.67 using the unrounded daily figure, which is 2.92% of the position. The stock has to fall 2.92% in that month just to cover the rent, before any commission.

If the rate jumps, the arithmetic changes fast. At a 150% annual fee the same position costs $10,000 x 1.50 / 360 = $41.67 a day. And if the price rises to $25.00 while the rate stays at 35%, the fee is charged on $12,500, which is $12.15 a day: the position costs more to hold exactly when it is losing.

The public list shows a real case of a long run. The longest spell in the Nasdaq data belongs to IONZ, a Defiance leveraged fund, which was on the threshold list every trading day from 10 July 2025 to 25 September 2026, 306 list days, and was still on it at the end of the sample.

The original data

The sample is every Nasdaq threshold file from 2 January 2025 to 25 September 2026. That is 434 trading days of the Reg SHO list Nasdaq publishes for securities listed on its markets, downloaded from Nasdaq Trader. The NYSE group publishes separate lists for its markets; its site refused a day-by-day download (too many requests), so every figure here covers Nasdaq-listed securities only.

The list is short and it moves. The median day carried 56 names. The fewest was 27, on 1 May 2025; the most was 88, on 7 and 8 July 2026. The file for 2 January 2025 had 63 and the one for 25 September 2026 had 74. Month by month, the median count ran from 31 in May 2025 to 80 in August 2026. The daily counts are published.

Hundreds of names passed through. 923 different symbols appeared at least once, across 1,558 separate spells on the list, and 355 symbols came back after dropping off.

Most spells were brief, and a third were not. Of the 1,421 spells that both began and ended inside the sample, the median lasted 10 list days. 14 lasted 1 to 4 days, 896 lasted 5 to 12, 436 lasted 13 to 34, and 75 lasted 35 or more. So 511, or 36.0%, reached 13 list days, roughly where Rule 203(b)(3)’s close-out applies to a clearing firm whose fail ran the whole time. Every spell is in the spell file.

The September 2026 list was mostly funds. Of the 74 names on 25 September 2026, 41 carried fund-style names (ETF, ETN, daily, 2X or leverage), and 37 of those were the leveraged kind, many of them single-stock funds from Defiance, GraniteShares, Direxion and Themes. The other 33 included small operating companies, several foreign issuers trading as ADSs, and a few more fund trusts whose shortened names did not carry those words.

What the count cannot show. The files record which securities crossed the fail threshold, not why, how many shares failed, or what any broker charged to borrow them. A classification by name is a rough cut, and a name-based count can miss a fund whose name does not say so.

When it fails

The list arrives late. A stock needs five consecutive settlement days of large fails before it appears, so by the time a name is on the list, the delivery problem is at least a week old.

It is not a map of crowded shorts. The September 2026 list was dominated by leveraged funds, not by the heavily shorted stocks traders talk about. A crowded short in a large company can be expensive to borrow without failing deliveries at all, and so never appear on the list.

A locate is not a guarantee. A locate is reasonable grounds to expect a borrow, and a completed borrow can still be recalled. When the lender wants the shares back and none can be found, the broker can close the position with a buy-in, at whatever price the market is asking.

Fees move against the position. The worked example above shows the fee rising in dollars as the price rises. Scarce stocks also tend to see their rates reset upward when shorts crowd in, which is the setting for a short squeeze.

Related

The short selling page covers the mechanics every hard-to-borrow short rests on. The buy-in page explains the forced close that a failed borrow can end in. And the short squeeze page shows what happens when scarce stock and rising prices meet a crowd of short sellers who all need to buy.

This page is educational, not financial advice. Test every idea on your own charts before risking money.