A loan provided to a brokerage firm and used to finance margin accounts is called as call loan. The resulting interest rate is referred to as the call loan rate. Call loans use securities as collateral for the loan.
Call loan rate can change on a daily basis, and the loan can also be canceled with 24hours notice.
Broker's Call Loan
Short-term demand loan to a broker secured by pledged securities. Brokers use the loans to finance underwriting or to secure advances to customers who maintain margin accounts. The broker loan rate usually is a percentage point or so above such short-term rates as the federal funds rate or the Treasury bill note.
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