Short Selling and Locates

Shorting Overview

Shorting is selling a stock you do not own, anticipating the price will fall. Below are the steps.

1. Borrow shares: someone lends you 100 XYZ
2. Sell them: you receive cash at today’s price ($50)
3. Price falls: XYZ is now $40
4. Buy them back: you pay $40 (this is “covering”)
5. Return the shares: profit = ($50 − $40) × 100 = $1,000, minus costs

If the price rises instead, you buy back higher and lose money. Unlike a long position, a short’s loss is unbounded: a stock can only fall to $0 but can rise without limit.

Clear Street classifies every equity as easy-to-borrow (ETB), hard-to-borrow (HTB), or not shortable. For HTB stocks, Clear Street requests the locate for you automatically when you submit the order. More details on locates can be found in the Advanced Shorting Concepts section.

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Placing a Short Order

Submit a sell order through the submit orders endpoint. There is no short flag and no separate “request a locate” call.

[
  {
    "order_type": "LIMIT",
    "limit_price": "350",
    "side": "SELL",
    "time_in_force": "DAY",
    "quantity": "100",
    "symbol": "TSLA",
    "instrument_type": "COMMON_STOCK"
  }
]

A SELL is treated as a short sale when you hold no long position in the stock or already hold a short position. Order responses report short sales with side: SELL; there is no separate short-sale side.

One Order Cannot Flip a Position

A single sell order may close a long or open a short, never both. If you hold 100 shares, a SELL of 150 is rejected. To reverse, send two orders: close the long, then short.

Starting from a long position of 100 shares:

Order	Outcome
SELL 150	Rejected: a single order cannot flip the position from long to short.
SELL 100	Accepted: closes the long (position is now 0).
SELL 50 (submitted after the previous SELL 100)	Accepted: opens a short (position is now −50).

HTB Order Rules

Hard-to-borrow short sales have restrictions that do not apply to other orders:

• Time in force must expire by end of day: DAY, IMMEDIATE_OR_CANCEL, FILL_OR_KILL, and AT_CLOSE are supported. GOOD_TILL_CANCEL and GOOD_TILL_DATE are rejected, because a locate is only valid for the day it is granted.
• Sessions: locate requests are only accepted during pre-market, regular, and after-hours sessions (4:00 AM – 8:00 PM ET). An HTB short sale cannot be placed during the overnight session. ETB short sales are not session-restricted.
• Order types: trailing stop, trailing stop limit, and extended-hours stop limit orders are not supported for HTB short sales.

Typical Workflow

1. Read shortable_attribute (and is_threshold_security) on the instrument.
2. Read the borrow rate and estimate cost, remembering it is only an estimate.
3. Submit a SELL. Locates, if needed, are handled for you.
4. Track the order status, and /locates if you want to see the grant.

Risks of Shorting

• Unbounded loss if the price rises.
• Margin calls if the position moves against you.
• Borrow rates can rise while you are short; the billed rate may exceed the estimate.
• Buy-ins, especially in threshold securities.
• Borrow cost continues to accrue on a halted security you are short, even though you cannot buy to cover.

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Shorting Economics

A short has costs beyond the price move. Note charges are estimates until billed or settled.

Overnight Borrowing Charge

You pay to borrow the shares. Key points:

• Borrow is charged only on settled shares. The cost starts once the short sale settles, not at order time, and accrues every calendar day based on settlement, including weekends and settlement holidays.
• Easy-to-borrow stocks typically accrue little or no borrow cost; hard-to-borrow rates run higher and can move quickly.
• The rate is annualized and accrues daily on the market value of the borrowed shares, using a 360-day year. Weekends count: a Friday-night position accrues 3 days of borrow cost (Fri, Sat, Sun).

daily_borrow_cost = short_market_value × annual_borrow_rate / 360

Short 1,000 XYZ @ $20 = $20,000, rate 0.037012 (3.7012%)
daily_borrow_cost = 20,000 × 0.037012 / 360 ≈ $2.06 per day

Checking the Borrow Rate

Name	Method	Path	Description
List Locate Rates	GET	/v1/locates/rates	Get current borrow rates for up to 1,000 instruments.
Get Locate Rate	GET	/v1/locates/rates/{instrument_id}	Get the current borrow rate for a single instrument.

Both accept instrument UUIDs or ticker symbols.

{ "instrument_id": "…", "rate": "0.037012", "as_of": "2026-10-16T14:30:00Z" }

Field	Description
rate	Annualized borrow rate as a decimal. 0.037012 = 3.7012%.
as_of	When the rate was last retrieved.

The list endpoint returns 200 if every instrument has a rate and 207 if some do not; those entries carry an error instead of a rate. The single endpoint returns 404 when the instrument is unknown or has no rate.

The rate is an indicative estimate, not a quote. The billed rate is determined at billing and can be higher or lower than the rate shown when you opened the position. Use it to estimate cost.

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Advanced Shorting Concepts

Three Shortable Classes

Every tradable equity reports a shortable_attribute on the instrument (GET /v1/instruments, /v1/instruments/{id}, /v1/instruments/search, and watchlists):

Value	Meaning	Locate needed?
EASY_TO_BORROW	Shares are readily available to loan.	No
HARD_TO_BORROW	Not easy to borrow, but locate inventory is available and float meets the minimum.	Yes
NOT_SHORTABLE	Cannot be shorted: no locate inventory, or float below the minimum.	n/a

The field is omitted for instruments that are not tradable equities (e.g. options). See Instrument Response for the full instrument shape.

Threshold Securities

Hard-to-borrow stocks split further on is_threshold_security, also on the instrument. A stock lands on the SEC Regulation SHO threshold list after five consecutive settlement days with large fails to deliver (≥ 10,000 shares and ≥ 0.5% of shares outstanding).

For a short seller a threshold security means:

• Tighter supply and higher rates. Check the borrow rate first.
• Higher buy-in risk. Fails must be closed out on strict timelines, so a short can be bought in to meet delivery.
• Locates are not reused on cover (see below).

Screen programmatically:

GET /v1/instruments?is_threshold_security=true&instrument_type=COMMON_STOCK

Locates

Clear Street handles this for you. On a hard-to-borrow short, the order is held, a locate is requested on your behalf, and the order is released when it is granted. You never call a locate endpoint to place a short.

Locate behavior to know:

• Pooled per account, stock and day. Granted shares go into a pool that any of your orders can draw on.
• Valid for one trading day. In force for its effective_date (New York date) and expires at 8:00 PM ET. Nothing carries over.
• Same-day covers replenish, except in threshold securities. If you open and cover a short the same day in a stock that is not a threshold security, the covered quantity becomes available again that day. For threshold securities covering does not free quantity, even for a short opened the same day, so shorting again needs new availability.
• Granted even if the order dies. A locate granted after its order is canceled or rejected still counts toward your day’s pool.
• Replacing an order never triggers a new locate. It can draw on remaining located shares and is rejected if it needs more. A replace is not allowed while the locate is pending.
• There is no minimum locate size and no round-lot requirement. The locate request is for exactly the number of shares your order still needs.

Seeing Your Locates

Name	Method	Path	Description
List Locates	GET	/v1/accounts/{account_id}/locates	List locate requests and grants for an account.
Get Locate	GET	/v1/accounts/{account_id}/locates/{id}	Get a single locate by locate request ID or locate ID.

List filters: effective_date (YYYY-MM-DD, defaults to today in New York), status (comma-separated), instrument_ids (UUIDs or symbols).

Locate Response

Each locate joins the locate request with the locate granted for it, if any:

Field	Type	Description
locate_request_id	UUID string	Identifier of the request.
client_request_id	string	Identifier assigned when requested.
account_id	integer	Owning account.
instrument_id	UUID string	Instrument located.
requested_quantity	integer	Shares requested.
effective_date	date	Trading day in force.
status	string	REQUESTED, ACCEPTED, REJECTED, EXPIRED.
related_order_id	UUID string	Order that triggered the request, if any.
locate_id	UUID string	Present once granted.
quantity	integer	Shares granted (may be less than requested).
reserved_quantity	integer	Granted shares held by open short orders.
used_quantity	integer	Granted shares consumed by executions.

The quantity available for new short sales is quantity - used_quantity - reserved_quantity, and drops to zero once the locate expires.

How an Order Moves Through a Locate

While the request is outstanding, the order shows status: PENDING_NEW and queue_state: AWAITING_RELEASE (the “pending locate” state).

Locate Outcome	Locate Status	Order Result
Granted in full	ACCEPTED	Shares reserved, order released (NEW).
Rejected	REJECTED	Order rejected: Locate Check Failed: locate request rejected.
Granted partially	ACCEPTED (smaller quantity)	Order rejected: Locate Check Failed: insufficient locates: need X, have Y. The granted shares stay in your pool for the day, so send a new, smaller order that uses them.
Day ends	EXPIRED	Unused quantity is gone.

Short Sale Rejections

A short can be rejected before it is routed. Rejections at submission return synchronously; rejections after a locate response arrive as a REJECTED order with the reason in details. Locate-related messages are prefixed Locate Check Failed:.

Reason	When it occurs
Short selling not permitted	The account type does not permit shorting (e.g. a cash account).
short sales of this stock must expire by end of day	A hard-to-borrow short used GOOD_TILL_CANCEL or GOOD_TILL_DATE.
locate requests are only supported during premarket, regular, and after-hours sessions	A hard-to-borrow short was sent overnight or outside trading hours.
strategy orders are not supported for hard-to-borrow short sales	A hard-to-borrow short used a trailing stop, trailing stop limit, or extended-hours stop limit.
locate request rejected	The locate venue rejected the request.
insufficient locates: need X, have Y	The locate venue granted fewer shares than the order needs.