Our clients have the ability to gain direct exposure to US Treasuries on both the short and long side of the market.
Orders can be entered via TWS.
Cost to Borrow
The borrow fee to short US Treasuries is based on our borrow cost and is subject to daily change. If the Treasury is borrowed by us at the General Collateral rate, the client does not incur a borrow fee.
Customers earn Short Credit Interest on their short US Treasury positions based on our standard tiered rates.
Margin1 requirements on Short US Treasury positions are the same as Long US Treasury positions. The requirement is between 1% and 9%, depending on time to maturity. The proceeds of the short sale are not available for withdrawal. The amount available for withdrawal is generally Equity with Loan Value – Initial Margin.
Additional information on fixed income margin requirements can be found here.
Selling short US Treasuries incurs the same commission cost as buying US Treasuries. Our commission schedule can be found here.
Minimum short position size is $250,000 face value per CUSIP due to limitations of the US Treasury borrow market. Once the minimum position size is met, the minimum order increment is $250,000 for both short sales and buy to covers (as long as the resulting short position remains higher than the $250,000 face value minimum).
Short Sale Order Examples
|Existing US Treasury Short Position Face Value in Account (per CUSIP)||Face Value of Short Sale Order||Face Value of Resulting Position||Order Accepted?||Reason|
|Flat||$250,000||$250,000||Yes||Face Value of resulting position is => $250,000|
|Flat||$100,000||$100,000||No||Face Value of resulting position is < $250,000|
|$250,000||$50,000||$300,000||No||Order increment < $250,000|
|$250,000||$250,000||$500,000||Yes||Order increment =>$250,000|
Buy-to-cover orders that will result in a short US Treasury position of less than $250,000 face value will not be accepted.
Buy to Cover Order Examples
|Existing US Treasury Short Position Face Value in Account (per CUSIP)||Face Value of Buy to Cover Order||Face Value of Resulting Position||Order Accepted?||Reason|
|$500,000||$250,000||$250,000||Yes||Face Value of resulting position is => $250,000|
|$500,000||$300,000||$200,000||No||Face Value of resulting position is < $250,000|
|$500,000||$500,000||Flat||Yes||Order increment => $250,000|
Payment in Lieu
When a short US Treasury position is held over the record date of an interest payment, the borrower’s account will be debited a payment-in-lieu of interest equal to the interest payment owed to the lender.
Eligible US Treasuries for Shorting
Only accounts carried under Interactive Brokers LLC and Interactive Brokers UK are eligible to short sell US Treasuries.
US Treasury Notes and Bonds with an outstanding value greater than $14 Billion can be sold short.
US Treasury Bills, TIPs, STRIPs, TF (Floating Rate Notes) and WITFs (When-Issued Floating Rate Notes) are not available for shorting.
Non-US sovereign debt is also not available for shorting.
1Trading on margin is only for sophisticated investors with high risk tolerance. You may lose more than your initial investment.
For more information regarding margin loan rates, see ibkr.com/interest