Regulation SHO requires broker-dealers to have a reasonable basis to believe a security can be borrowed and delivered by settlement before executing a short sale. The locate process matches sell-short orders to available borrow inventory in real time. Names with abundant supply are "easy-to-borrow" (ETB) and execute at standard borrow rates; constrained names are "hard-to-borrow" (HTB) and carry elevated daily borrow fees, sometimes 50%+ annualised on small-float, high-short-interest names.
Brokers source borrow from internal long inventory, omnibus accounts at their prime broker, and external lending agents. The size and quality of this network determines locate availability and pricing. Interactive Brokers, Cobra, CenterPoint and TradeStation are best-known for deep small-cap locate inventory; many app-first retail brokers offer little or no HTB.
A locate is intraday by default — most retail brokers do not pre-borrow for the next session. Day traders who run a short past close may need to roll the locate or pay an overnight borrow fee. Tier-1 short-selling brokers offer locate management tools (request, hold, release) that aren't exposed on simpler retail platforms.
