a Broker's call, also known as the Call loan rate, is the

interest rate An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed (called the principal sum). The total interest on an amount lent or borrowed depends on the principal sum, the interest rate, th ...

relative to which margin

loan In finance, a loan is the lending of money by one or more individuals, organizations, or other entities to other individuals, organizations, etc. The recipient (i.e., the borrower) incurs a debt and is usually liable to pay interest on that d ...

s are quoted. Individuals may borrow on

margin Margin may refer to: Physical or graphical edges *Margin (typography), the white space that surrounds the content of a page *Continental margin, the zone of the ocean floor that separates the thin oceanic crust from thick continental crust *Leaf ...

a part of the funds they use to buy their securities from their

broker A broker is a person or firm who arranges transactions between a buyer and a seller for a commission when the deal is executed. A broker who also acts as a seller or as a buyer becomes a principal party to the deal. Neither role should be confu ...

. The broker, in turn, may borrow funds from a bank (''with an agreement to repay the bank immediately on call''). The broker has a base rate which is usually the Broker's call rate. The broker's rate is published daily in publications such

The Wall Street Journal ''The Wall Street Journal'' is an American business-focused, international daily newspaper based in New York City, with international editions also available in Chinese and Japanese. The ''Journal'', along with its Asian editions, is published ...

and

Investor's Business Daily ''Investor's Business Daily'' (''IBD'') is an American newspaper and website covering the stock market, international business, finance and economics. Founded in 1984 by William O'Neil as a print news publication, it is owned by News Corp and is ...

. Depending on the amount borrowed the effective rate will have a percentage added or subtracted with the lowest rates for the most money borrowed. The dollar categories and amounts that are added or subtracted varies with the broker. The rate paid on such loans is usually based on a benchmark such as

LIBOR The London Inter-Bank Offered Rate is an interest-rate average calculated from estimates submitted by the leading banks in London. Each bank estimates what it would be charged were it to borrow from other banks. The resulting average rate is u ...

plus the brokers own margin which typically ranges from about 0.75 – 3.5%. Since the Late-2000s financial crisis and consequent

bank runs A bank run or run on the bank occurs when many clients withdraw their money from a bank, because they believe the bank may cease to function in the near future. In other words, it is when, in a fractional-reserve banking system (where banks no ...

that caused dislocation in overnight borrowing rates (i.e. the effective achievable deposit rates for spare cash) the

Futures Commission Merchant A commodity broker is a firm or an individual who executes orders to buy or sell commodity contracts on behalf of the clients and charges them a commission. A firm or individual who trades for his own account is called a trader. Commodity contra ...

's have moved away from LIBOR reference and have taken to pricing relative to each exchange's specific margin deposit rate (i.e. on

IntercontinentalExchange Intercontinental Exchange, Inc. (ICE) is an American company formed in 2000 that operates global financial exchanges and clearing houses and provides mortgage technology, data and listing services. Listed on the Fortune 500, S&P 500, and Russell ...

(ICE) this is the deposit rate 'IDR').

External links

* http://www.investopedia.com/terms/b/brokerscall.asp Interest rates {{bank-stub