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What is a margin loan?

Brokers seek to profit on the margin loans they make to their clients, as such, margin loan rates are typically priced at the call rate plus a premium. Many clients trade on margin accounts; an account where a broker-dealer lends a client cash that is used to purchase securities.

What is a broker's call?

The broker's call, also known as the call loan rate, is the interest rate charged by banks on loans made to brokerage firms. These brokers then use these loans, called call loans, to provide leverage to traders using margin accounts. As their name suggests, call loans must be repaid immediately—or "on call"—if so requested by the bank.

What is a margin account & a call loan?

Many clients trade on margin accounts; an account where a broker-dealer lends a client cash that is used to purchase securities. A call loan is made by a bank to a broker so that the broker is able to cover the loan it makes to its client.

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