Recall Risk
Recall risk is the chance that the lender of shares you have shorted asks for them back. If your broker cannot find replacement shares, your short position may be closed, sometimes at a bad moment.
Short sellers borrow shares, and the lender can ask for them back. If the broker cannot find another lender, the short may be closed by force at the market price. Lending and buy-in rules differ by country.
- Category
- Market Structure
- Reading time
- 3 min
- Also called
- Share recall, Stock loan recall
- Updated
Recall risk in plain words
To deliver shares to the buyer, a short seller borrows them, usually from a broker or an institution.1
After the short settles, the lender can ask for the shares back at any time.2
If they're recalled and no replacement can be borrowed, the broker may have to close your short by buying shares in the market.3
How a recall plays out
Borrow
Know where the borrowed shares come from: the broker's own stock, other clients' margin accounts or another lender.4
Short
You sell the borrowed shares.
Lender recalls
A recall happens when the lender asks for the shares back.3
Broker seeks new shares
The broker first tries to borrow the shares from someone else.2
Buy-in if needed
If that fails, a forced buy-in can happen without warning, at whatever the market price is.3
Regulatory close-outs
Separately, US rules require clearing brokers to close out positions that failed to deliver.4
Worked examples
Example 1 — Forced buy-in
−1,800Hypothetical: short 300 at 40.00, bought in at 46.00.
| Loss | (46 − 40) × 300 = 1,800 |
The forced buy-in happened without warning at the market price, locking in the loss.3
Example 2 — Replaced
No changeA hypothetical recall where the broker finds a new lender.
| Position | Kept |
The broker found another lender, so the short stayed open.2
Example 3 — Crowded short
Squeeze riskA hypothetical heavily shorted stock with few lenders rises fast.
| Recall chance | High |
With no shares left to borrow, brokers had to buy in the market, adding to the buying pressure.3
Recall vs margin call
| Aspect | Recall | Margin call |
|---|---|---|
| Trigger | Lender wants shares | Equity too low |
| Fix | New lender | Add funds |
| Can force close | Yes | Yes |
| Warning | May be none | Usually some |
Where recall risk matters
Shorting
Any Short Selling position.
Squeezes
Fuel for a Short Squeeze.
Crowding
High Short Interest stocks.
Risk control
Alongside Margin Call risk.
Advantages and disadvantages
Advantages
- Knowing it helps size shorts.
- Brokers often replace shares.
- Encourages tighter risk control.
Disadvantages
- Buy-ins may come without notice.
- Fills at market prices.
- Worse in crowded shorts.
- Rules differ by country and broker.
Going deeper
Read as far as you need. Each level builds on the one before it.
Common mistakes
Assuming you control timing
Lenders can recall.
Oversizing crowded shorts
Recall risk is higher.
No stop plan
Plan exits.
Ignoring broker notices
Read them quickly.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- Short sellers borrow shares.
- Lenders can recall them.
- Brokers try to find replacements.
- Otherwise a buy-in may happen without notice.
- Rules differ by country and broker.
Frequently asked questions
Will I get warning before a buy-in?
Are hard-to-borrow stocks riskier?
Are rules the same everywhere?
Further learning
- Short Selling
Short selling basics.
- Short Squeeze
Recalls and squeezes.
- Short Interest
Crowding.
- Margin Call
Another forced close.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- U.S. SEC. Division of Trading and Markets: Responses to Frequently Asked Questions Concerning Regulation SHO (opens in a new tab) Checked .
- Interactive Brokers. Loan Recall (IBKR Glossary) (opens in a new tab) Checked .
- Public.com. What are forced buy-ins and recalls? (opens in a new tab) Checked .
- U.S. Securities and Exchange Commission. Key Points About Regulation SHO (opens in a new tab) Checked .
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.