what is a hard to borrow list 
a hard to borrow list is an inventory record used by brokerages to indicate what stocks are difficult to borrow for short sale transactions a brokerage firm s hard to borrow list provides an up to date catalog of stocks that cannot easily be borrowed for use as a short sale the hard to borrow list can be compared with a brokerage s easy to borrow list understanding the hard to borrow listshort selling of stocks is built on the notion that an individual trader or investor wanting to profit from a decrease in a stock s price is able to borrow shares of that stock from the broker brokerages have a variety of ways to provide access to shares that can be sold short however regardless of their methods there is a finite number of shares available for shorting once the number of shares available has come close to running out the broker will publish a notation of some kind on their platform this alerts account holders that if they attempt to sell that security short their trade order may be refused short supply isn t the only reason why a security may be on the hard to borrow list it may also be included because of high volatility or something else to enter a short sale a brokerage client must first borrow the shares from their broker to provide the shares the broker can use its own inventory or borrow from the margin account of another client or another brokerage firm the borrower i e the short seller must pay interest and fees on the borrowed shares those on the hard to borrow list can have higher stock loan fees as a result of being in shorter supply investors who enter short sale transactions attempt to capture profits in a declining market for example an investor may think that shares in apple are likely to drop in price the investor can short sell the stock and if the price falls as they anticipate repurchase it back for a profit if the stock rises however the investor loses money hard to borrow list requirementsbrokerage firms update their hard to borrow lists daily a broker must be able to provide or locate the shares to loan to their client before executing the client s short sale transaction regulation sho which was implemented on jan 3 2005 has a locate condition that requires brokers to have a reasonable belief that the equity to be shorted can be borrowed and delivered to the short seller 1 the regulation is intended to prevent naked short selling a practice where the investor places a short sale without holding the shares hard to borrow list vs easy to borrow listthe hard to borrow list is the opposite of the easy to borrow list which is an inventory record of securities that are available for short sale transactions in general an investor can assume that securities not included on the hard to borrow list will be available for short selling while a brokerage firm s hard to borrow list is typically an internal list that is not made available to clients the firm s clients usually have access to the easy to borrow list brokerage clients may have to pay hard to borrow fees on certain short sales typically the cost of borrowing stocks on the difficult to borrow list is higher than for stocks that are on the easy to borrow list large brokerage firms usually have a securities lending desk that helps source stocks that are difficult to borrow a brokerage s securities lending desk also lends securities to other firms 