Securities Financing - Interactive Brokers

Securities FinancingatInteractive BrokersBruce Turner, Interactive Brokersbturner@interactivebrokers.comDecember 2013webinars@interactivebrokers.comMember SIPC www.sipc.orgwww.ibkr.com/webinars1

Table of Contents IntroductionTrade Date – Executing the Short Sale– Availability Short Stock Availability Tool Rate Conventions Stock Locate Availability in TWS– How locates works at IB Large extended interconnected network Entering orders drives locate consumption– Pre-Borrow – How it works – Customer ExperienceSettlement Date and Beyond – Fulfilling Your Trading Strategy– Sourcing Supply– Deriving Rates– DurationLoaning Shares– Stock Yield Enhancement Program– AQSGetting Your Questions AnsweredWhat’s New– Locate Notifications– Publishing Analytics to IB Trader’s Insight– Revamped Web PageWhat’s Coming Soon– IRA Stock Yield Enhancement Eligibility2

Trade DateExecuting the Short Sale Availability– Short Stock Availability Tool– Rate Conventions– Stock Locate Availability in TWS How Locates Work at IB– Large extended interconnected network– Entering orders drives locate consumption Pre-Borrow –– How it works– Customer Experience3

Trade Date – Short Stock Availability Tool4

Trade Date - Stock Availability in TWS5

Trade Date - How Locates Work at IB Locates are made available for all customers Securing a locate is done at order entry.– Different than other brokers IB is connected to over 60 counterparties in the USAincluding Agent Lenders and Brokers to sourcesupply6

Trade Date – Pre-Borrows Pre-Borrows –– Allows customer to secure Hard to Borrow shares in advanceof settlement date to mitigate close out risk– Pre-Borrows at IB are also put last in line for potential buy ins– Pre-Borrows on Hard to Borrows can involve manual desklocate and borrow and are subject to delivery fromcounterparty.7

Settlement Date and Beyond Sourcing Supply Deriving Rates Duration8

Settlement Date and Beyond –Supply and Deriving Rates Sourcing Borrow Supply– Source externally what we need beyond what is coveredinternally– Connected to 60 Brokers and Agent Lenders– Reducing Rule 204 Closeouts and Buy In’s System Generated Rate Recommendations– Based on several data sources9

Settlement Date and Beyond –Duration Using the rate and supply data we seek to keepexisting borrows on at the optimal rate. Our goal is to keep loans for as long as the customerstrategy requires.10

Loaning Shares - Stock Yield Enhancement Program(SYEP) Why enroll for SYEP?– Generate Revenue from existing portfolio positions– Pension Funds and Beneficial Owners are currently lending Who Can Enroll–––––iBrokers – Non-Disclosed and DisclosedRIA’sIndividualsHedge Funds50k USD Minimum Account Balance What You Should Expect– Hard to Borrow loans are most valuable How Rates are Determined– Rates are the Weighted Average of all the outstanding loans on IB’s booksThe customer and IB are getting the same gross rate.11

Loaning Shares - AQS IB sponsors enabled customers to transact settled borrows and loansdirectly on AQS, the only electronic stock loan market place.The Options Clearing Corporation acts as the Central Credit Counterparty12

Getting Your Questions AnsweredInteracting with IB Access the Securities Finance desk through theCustomer Service Desk13

What’s New Borrow Notification in IBFYI Publishing Securities Finance Analytics Weekly onTrader Insight Revamped Securities Financing Web Page14

What’s NewBorrow Notification in IBFYI15

What’s New - Analytics16

What’s New - Analytics15 Most Shorted Securties (as of 12/17/13)SymbolDescriptionIAGIAMGOLD CORPORATIONONVO ORGANOVO HOLDINGS INCMGMMGM RESORTS INTERNATIONALFBFACEBOOK INC-AKKRKKR & CO LPSLTMSOLTA MEDICAL INCTWTR TWITTER INCFSTFOREST OIL CORPRMTIROCKWELL MEDICAL INCNNRX NUTRANOMICS INCLLENL&L ENERGY INCHIMXHIMAX TECHNOLOGIES INC-ADRDHIDR HORTON INCSCTYSOLARCITY CORPPHOT GROWLIFE INCTop 5 Shorted Securities Per Sector (as of 12/17/13)DescriptionSectorIAMGOLD CORPORATIONBasic MaterialsMECHEL-SPONSORED ADRBasic MaterialsGOLDCORP INCBasic MaterialsSESA STERLITE LTD-ADRBasic MaterialsBARRICK GOLD CORPBasic MaterialsTop 5 Shorted Securities Per Sector (as of 12/17/13)SymbolDescriptionSectorFBFACEBOOK INC-ACommunicationsTWTRTWITTER INCCommunicationsLEAPLEAP WIRELESS INTL INCCommunicationsQIHUQIHOO 360 TECHNOLOGY CO-ADRCommunicationsZUZULILY INC - CL ACommunicationsTop 5 Shorted Securities Per Sector (as of 12/17/13)SymbolDescriptionSectorMGMMGM RESORTS INTERNATIONALConsumer, CyclicalNNRXNUTRANOMICS INCConsumer, CyclicalDHIDR HORTON INCConsumer, CyclicalPHOTGROWLIFE INCConsumer, CyclicalIRBTIROBOT CORPConsumer, CyclicalTop 5 Shorted Securities Per Sector (as of 12/17/13)SymbolDescriptionSectorONVOORGANOVO HOLDINGS INCConsumer, Non-cyclicalSLTMSOLTA MEDICAL INCConsumer, Non-cyclicalRMTIROCKWELL MEDICAL INCConsumer, Non-cyclicalCYTRCYTRX CORPConsumer, Non-cyclicalSFXESFX ENTERTAINMENT INCConsumer, Non-cyclicalSymbolIAGMTLGGSSLTABX17

What’s New - Analytics15 Most Difficult To Source Locates (week of 12/09/1312/13/13)SymbolDescriptionCYTR CYTRX CORPMDDD MAKISM 3D CORPTGRO TIGER OIL AND ENERGY INCBGMD BG MEDICINE INCTWTR TWITTER INCNNRX NUTRANOMICS INCVEND FRESH HEALTHY VENDING INTERNTSLA TESLA MOTORS INCGFOX GRAY FOX PETROLEUM CORPBISNBISON PETROLEUM CORPPLUG PLUG POWER INCNURO NEUROMETRIX INCSRPT SAREPTA THERAPEUTICS INCAXIHAXION INTERNATIONAL HOLDINGSMAVPIONEER MUNI HI INC ADV TRSTTop 5 Most Difficult To Source Locates Per Sector (week of 12/09/13-12/13/13)SymbolDescriptionSectorDNAPDNA PRECIOUS METALS INCBasic MaterialsNCQNOVACOPPER INCBasic MaterialsURREURANIUM RESOURCES INCBasic MaterialsURZURANERZ ENERGY CORPBasic MaterialsUSUUSEC INCBasic MaterialsTop 5 Most Difficult To Source Locates Per Sector (week of ER INCCommunicationsATHMAUTOHOME INCCommunicationsVISNVISIONCHINA MEDIA INC-ADRCommunicationsGOGOGOGO INCCommunicationsENGAENGAGE MOBILITY INCCommunicationsTop 5 Most Difficult To Source Locates Per Sector (week of NOMICS INCConsumer, CyclicalVENDFRESH HEALTHY VENDING INTERNConsumer, CyclicalTSLATESLA MOTORS INCConsumer, CyclicalGRLTGRILLIT INCConsumer, CyclicalHLTHILTON WORLDWIDE HOLDINGS INConsumer, CyclicalTop 5 Most Difficult To Source Locates Per Sector (week of 12/09/13-12/13/13)SymbolDescriptionSectorCYTRCYTRX CORPConsumer, Non-cyclicalMDDDMAKISM 3D CORPConsumer, Non-cyclicalBGMDBG MEDICINE INCConsumer, Non-cyclicalNURONEUROMETRIX INCConsumer, Non-cyclicalSRPTSAREPTA THERAPEUTICS INCConsumer, Non-cyclical18

What’s New - Analytics15 Most Difficult To Source ETFs Locates (week of12/09/13-12/13/13)SymbolDescriptionUVXYPROSHARES ULTRA VIX ST FUTURDUSTDIREXION GOLD MINERS BEAR 3XTLTISHARES 20 YEAR TREASURY BODSLVVELOCITYSHARES 3X INVERSE SIEDZDIREXION DLY EMG MKT BEAR 3XXIVVELOCITYSHARES INV VIX SH-TMVONGVANGUARD RUSSELL 1000 GROWTHQABAFIRST TRUST NASDAQ ABA CBIFPSCUPOWERSHARES S&P SC UTILITIESPSCIPOWERSHARES S&P SC INDUSTRIAKCESPDR S&P CAPITAL MARKETS ETFTDIVFT NASDAQ TECH DVD INDEX FDSEFPROSHARES SHORT FINANCIALSTVIXVELOCITYSHARES 2X VIX SH-TRMUCOPROSHRE ULT DJ-UBS CRUDE OIL15 Most Shorted ETFs (as of 12/17/13)SymbolDescriptionVXX IPATH S&P 500 VIX S/T FU ETNQQQ POWERSHARES QQQ NASDAQ 100GDX MARKET VECTORS GOLD MINERSSPY SPDR S&P 500 ETF TRUSTUVXY PROSHARES ULTRA VIX ST FUTUREEM ISHARES MSCI EMERGING MARKETVWO VANGUARD FTSE EMERGING MARKEXIVVELOCITYSHARES INV VIX SH-TMSKF PROSHARES ULTSHRT FINANCIALSGDXJ MARKET VECTORS JR GOLD MINERXLIINDUSTRIAL SELECT SECT SPDRXLFFINANCIAL SELECT SECTOR SPDRSHPROSHARES SHORT S&P500JNKSPDR BARCLAYS HIGH YIELD BDXLEENERGY SELECT SECTOR SPDR19

What’s New – Revamped Web p?f shortableStocks&p overview20

What’s Coming Soon IRA Enrollment in SYEP21

Trade Date to Settlement Date and Beyond IB’s tools and Customer Service are focused onenabling your trading strategies22

DisclosuresOptions involve risk and are not suitable for all investors. For information on the uses and risks of options, you can obtain a copy ofthe Options Clearing Corporation risk disclosure document titled Characteristics and Risks of Standardized Options by visitingInteractivebrokers.com.Futures are not suitable for all investors. The amount you may lose may be greater than your initial investment. Before tradingfutures, please read the CFTC Risk Disclosure. For a copy visit interactivebrokers.com.Security futures involve a high degree of risk and are not suitable for all investors. The amount you may lose may be greater thanyour initial investment. Before trading security futures, please read the Security Futures Risk Disclosure Statement. For a copy visitInteractivebrokers.com.There is a substantial risk of loss in foreign exchange trading. The settlement date of foreign exchange trades can vary due to timezone differences and bank holidays. When trading across foreign exchange markets, this may necessitate borrowing funds to settleforeign exchange trades. The interest rate on borrowed funds must be considered when computing the cost of trades across multiplemarkets.The Order types available through Interactive Brokers LLC’s Trader Workstation are designed to help you limit your loss and/or lock ina profit. Market conditions and other factors may affect execution. In general, orders guarantee a fill or guarantee a price, but notboth. In extreme market conditions, an order may either be executed at a different price than anticipated or may not be filled in themarketplace.There is a substantial risk of loss in trading futures and options. Past performance is not indicative of future results.Any stock, options or futures symbols displayed are for illustrative purposes only and are not intended to portray recommendations.Interactive Brokers LLC is a member of NYSE FINRA SIPCInteractive Brokers LLC is registered with HKSFC and is a participant of the Sydney Futures Exchange (SFE)23

onvo organovo holdings inc mgm mgm resorts international fb facebook inc-a kkr kkr & co lp sltm solta medical inc twtr twitter inc fst forest oil corp rmti rockwell medical inc nnrx nutranomics inc llen l&l energy inc himx himax technologies inc-adr dhi dr horton inc scty solarcity corp phot growlife