Brokers' loans

Brokers' loans

Money borrowed by brokers from banks for uses such as financing specialists's inventories of stock, financing the underwriting of new issues of corporate and municipal securities, and financing customer margin accounts.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved