A
hard-to-borrow list has to do with securities that are available for a short sale. The list is used by brokerages to indicate securities that are not available for borrowing in
short sale transactions. It is the direct opposite of an
easy-to-borrow list, which is a list that indicates securities that are available for short sale transactions. Securities that are not on the hard-to-borrow list are usually assumed to be available to short sell.
A short sale is conducted by borrowing securities from a broker in order to sell them, and then buying those securities, hopefully at a lower price, and returning them to the broker. Short selling is a tactic used by investors to take advantage of the anticipated decline in a stock price. If a stock currently sells for $50 and an investor expects it to fall to $40, he or she borrows shares from a broker and sells it at $50. When the price falls to $40, the investor buys the shares and returns it to the broker but keeps the $10 gain.
Learn more in our
Short Selling Tutorial.
This question was answered by
Chizoba Morah.
