Investopedia says:

The amount paid by a stock lender to a borrower who has put up cash collateral to borrow a stock. The stock loan rebate comes from the reinvestment of the cash collateral by the stock lender, and offsets part of the stock loan fee.

Still quite getting lost though. For example, the fees for a chosen stock might be:

  • Current fee rate: 16%
  • Current rebate rate: -15%

Does the above mean that the short seller would only pay 1% of the stock value to the lender?

Can there be positive and negative rebate rates?

In what time intervals do short sellers pay the fees? If they short a stock and buy to cover a week later, what fees will they pay?

2 Answers 2


I think that you might be conflating retail shorting with institutional shorting.

Retail is subject to a Reg T amount of 150% of the value of the position at the time the short is created but since the full value of the credit shorted position is included, it's effectively 50% margin. When short, we pay a borrow fee. Some brokers share that fee with the lender. At my broker, if the current fee rate is 16% and the current rebate rate is -15%, the borrower would pay 16% and the lender would receive 15% with the broker taking 1%.

The shorter pays a daily borrow rate which fluctuates and accrues daily. It would show up as a daily debit on Tuesday through Friday with a three day debit occurring on Monday (Friday plus the weekend). So if you short a stock and buy to cover a week later, you would pay seven days of borrow fee, each day at the respective daily rate.

Institutional borrowers (hedge funds, fund sponsors, etc.) borrow from a counter party and post a cash collateral which protects the lender from default. The amount required is usually about 102% to 105% of the value of the security that was borrowed security. The position is marked-to-market and the amount of the loan can fluctuate, requiring more collateral or a refund.

The Investopedia article that you referred to has to do with the complexities of this institutional borrowing not retail shorting which I described above.


Here short seller would pay 31% to the lender = 16% - (-15%). If rebate rate was positive 15%, then you would pay only 1%.

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