Business, Legal & Accounting Glossary
The broker loan rate, also known as the call money rate, is the interest rate that banks charge a broker for the funds that the broker uses to make margin loans to clients. The broker charges his clients the broker loan rate plus a service charge. The broker loan rate only applies to clients who buy stock on margin and the broker loan rate may vary considerably from one broker to another. Depending on various factors, a broker may charge different clients a different broker loan rate. Some brokers make a large portion of their income from the premium they charge above their broker loan rate, but many brokers intentionally keep their broker loan rate low to encourage additional margin trading by their clients.
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This glossary post was last updated: 4th February, 2020 | 1 Views.