If I borrow shares to short, and the initial borrowing rate at the time that I open the position is 10%, will that be fixed until I close the position? i.e. if the borrowing rate increased to 20% while I am still shorting, would my interest payments increase as well, or do only new borrowers pay the increased rate?
The borrow rate is a floating rate that can change day to day. In addition, the fee will fluctuate based on the value of the security. It's a full day rate. There is no fee charged for a day trade. The fee formula is:
- (Borrow rate) x (market value of the security)/365 days in the year
That means that you pay for holding on the weekend and holidays as well.