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, ...

relative to which margin

loan In finance, a loan is the tender of money by one party to another with an agreement to pay it back. The recipient, or borrower, incurs a debt and is usually required to pay interest for the use of the money. The document evidencing the deb ...

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 entity that arranges transactions between a buyer and a seller. This may be done 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 ...

. 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'' (''WSJ''), also referred to simply as the ''Journal,'' is an American newspaper based in New York City. The newspaper provides extensive coverage of news, especially business and finance. It operates on a subscriptio ...

and Investor's Business Daily. 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 (Libor ) was an interest rate average calculated from estimates submitted by the leading Bank, banks in London. Each bank estimated what it would be charged were it to borrow from other banks. It was the prim ...

plus the broker's own margin which typically ranges from about 0.75 – 3.5%. Since the

2008 financial crisis The 2008 financial crisis, also known as the global financial crisis (GFC), was a major worldwide financial crisis centered in the United States. The causes of the 2008 crisis included excessive speculation on housing values by both homeowners ...

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 fail in the near future. In other words, it is when, in a fractional-reserve banking system (where banks normally only ...

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 ...

has moved away from LIBOR reference and have taken to pricing relative to each exchange's specific margin deposit rate (i.e. on IntercontinentalExchange (ICE) this is the deposit rate 'IDR').

External links

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