--- title: Short Selling and Locates - Clear Street Trading API Documentation and Guides description: Place short sales, understand hard-to-borrow locates, and estimate borrow costs. --- ## 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](#advanced-shorting-concepts) section. --- ## Placing a Short Order Submit a sell order through the [submit orders endpoint](/api/resources/v1/subresources/orders/methods/submit_orders/index.md). 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](/guides/trading/#trading-hours/index.md). 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](#three-shortable-classes). 2. [Read the borrow rate](#overnight-borrowing-charge) 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](/guides/trading/#order-statuses/index.md), and `/locates` if you want to [see the grant](#locates). ## 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. --- ## 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](/api/resources/v1/subresources/locates/methods/get_locate_rates/index.md) | `GET` | `/v1/locates/rates` | Get current borrow rates for up to 1,000 instruments. | | [Get Locate Rate](/api/resources/v1/subresources/locates/methods/get_locate_rate_by_id/index.md) | `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. --- ## 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](/guides/instrument-data/#instrument-response/index.md) 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](/api/resources/v1/subresources/locates/methods/get_locates/index.md) | `GET` | `/v1/accounts/{account_id}/locates` | List locate requests and grants for an account. | | [Get Locate](/api/resources/v1/subresources/locates/methods/get_locate_by_id/index.md) | `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. |