What is an Easy-To-Borrow List?

An easy-to-borrow list is a list that a brokerage updates on a daily basis and is comprised of extremely liquid securities that are readily available, thus assuring delivery, to investors seeking to engage in short selling transactions.

Key Takeaways

  • An easy-to-borrow list is a list that a brokerage updates on a daily basis and is comprised of extremely liquid securities that are readily available, thus assuring delivery, to investors seeking to engage in short selling transactions.
  • Securities that are on the easy-to-borrow list, in addition to being easier to short, usually have lower transaction costs.
  • The easy-to-borrow list offers no information as to whether a security is over- or underpriced, but rather, it's a measure of anticipated liquidity or availability for potential short sellers.

Understanding an Easy-To-Borrow List

Also known as a blanket, or standing, assurances by members or associated persons, this easy-to-borrow list is updated every 24 hours. It gives firms the ability to transact short sales more readily, as they aren't required to research the availability of a stock every time it is requested for a short sale transaction. Instead, they can assume that stocks on the list are readily available. Availability is usually due to their accessible nature and/or high number of outstanding shares, which is often called a stock's float.

In contrast to the easy-to-borrow list, many brokers also maintain a hard-to-borrow list. These securities are naturally more challenging to borrow for short sale motivations. Often, a security may be on the hard-to-borrow list because it is in short supply or because of the stock's volatile price. Compared to securities on an easy-to-borrow list, hard-to-borrow securities almost always come with more fees for access to the securities.

The easy-to-borrow list offers no information as to whether a security is over- or underpriced, as opposed to other recommendation lists that brokers keep, but rather, it's a measure of anticipated liquidity, or availability, for potential short sellers. Securities that are on the easy-to-borrow list, in addition to being easier to short, usually have lower transaction costs.

Brokerage houses with a deeper lineup or menu of services will often have a more extensive list of securities that are easy to borrow. Naturally, institutional investors, such as hedge funds, often seek near-immediate access to short sale opportunities, given the small window that is available for them to initiate their transaction.