TD Ameritrade - shorting shares question?

Question

I use TD Ameritrade and I currently have a short position of a particular stock. I tried to short more yesterday and was told by TDAM that there were no shares available to short.

I'm wondering if this is a problem just with TD Ameritrade and their access to shares/liquidty or if this is somethign that I would have encountered across the industry in general yesterday.

I ask because if this is just a problem for TDAM and I could have better access to this type of transaction through a different broker then I will definitley explore changing brokers. I have been happy with TDAM up to this point though so if this was just a problem yesterday in the market in general then I would stick with TDAM.
I just don't know the mechanics of how TD handles shorting, is it just that TD didnt have access to borrow the shares to short and maybe another broker would have? The stock I was trying to short is EWZ and there is a TON of liquidity/volume in the market yesterday. Thx for any help.

HI its jungle... I don't know anything you don't- I've just been playing this thing for a while now and buying on the dips and selling short on the highs. I just think the think is pretty over-bought right now and wouldn't be surprised to se a 4-6% dip sometime soon. I've also sold puts like a maniac on this thing for the past few months and made some nice premiums. Although I came DANGEROUSLY close to getting assigned on a Sept 55 put that I wrote.
Thanks to you both for your feedback.

Answer 1

That is hard to answer, there is an real time, broker index of available shares market wide. However, it is dangerous to a broker to borrow shares from outside its own customer base. It is nearly riskless to do such trades in house, it places the broker at risk to borrow broker to broker to fill a customer's request UNLESS they are a very large customer such as a hedge fund and there is plenty of collateral. For a very large short request, it could be worth TD Ameritrade taking the risks because institutions pay higher commissions than individuals because of custodial requirements.

I would say, given Toronto Dominion's size and access to both sets of capital markets, that if you could not find shares at TD, you would have difficulty finding them anywhere. The reason is that the banking side can act as a legal custodian for mutual funds and hedge funds, whereas the brokerage side has a huge direct customer base.

Finally, as an exchange traded fund, the fund sponsor would have an interest in keeping some control over the price. If shorting would cause the price to vary strongly from the underlying, the sponsor would have a self interest to work against the short sellers placing any broker trying to break the fund at tremendous risk if they permitted their customer or a group of independent customers to push the fund strongly away from the underlying. A broker would be foolish to push up against another major broker for the small interest income to be gained.

Answer 2

LOL.. I took out a small short in that etf and it's killing me..lol..
it's my weakest link..
TD Ameritrade is a very big company and generally I would say that if they don't have it, it's likely that nobody else has much either, but in this particular case I find that hard to believe.
Hey, do you know something I don't? .. because as far as I see it, they're doing you a favor :)
Maybe so many other people are shorting it, that there isn't enough to share. Again, I find this tough to believe though.

Answer 3

you've answered you own question! yes, the shares you shorted were borrowed from one or some of the house's client's! If there are no more shares to borrow, then you can't short any more stock. If some other firm has a larger position, then you could proceed with your trade! You can't sell, what isn't there!

Answer 4

1

Answer 5

Looking for an answer on this too

Answer 6

Well, it depends..