Contributor: Andrew Shinn

Facebook’s problems on its first day of trading had many brokers concerned about their ability to borrow shares on Wednesday to settle short sales. Therefore, on Tuesday, as some institutional investors received shares early in the allocation process, brokers borrowed 26 million Facebook shares at a costly 40% annual interest rate. However, on Wednesday, a flood of lendable shares sent borrowing costs for Facebook shares down 80%. Another 28 million FB shares were borrowed at these lower rates on Wednesday. On Thursday, brokers borrowed another 10 million shares but returned 9 million, for a net additional 1 million shares borrowed.... read more