broker's loan


Also found in: Dictionary, Encyclopedia.

Broker's Loan

A loan to a broker or brokerage by a bank. Brokers take out broker's loans usually to fund margin accounts for their clients, but also to fund underwriting purchases. Occasionally, brokerages borrow these loans to buy securities for themselves as well. Broker's loans are payable on 24 hours notice, and carry interest rates that are about one point higher than short-term rates. See also: Broker call loan.

broker's loan

Funds borrowed by a broker, mainly from banks, for various purposes including a call loan for purchases of securities on margin, an underwriter's purchase of a new security issue for resale, or a specialist's inventory of securities. Also called general loan and collateral agreement.
References in periodicals archive ?
Every mortgage broker has encountered a wholesaler who (a) doesn't see the merits of one of a broker's loans now and then and (b) wouldn't grant that extra day or two on a lock during a market sell-off.