The work of the Stock Exchange

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Monograph

Identifikator:: 1831284952

URN:: urn:nbn:de:zbw-retromon-225876

Document type:: Monograph

Author:: Meeker, James Edward http://d-nb.info/gnd/126597340

Title:: The work of the Stock Exchange

Edition:: Revised edition

Place of publication:: New York

Publisher:: The Ronald Press Company

Year of publication:: [1930]

Scope:: XVI, 720 Seiten; Illustrationen, Diagramme

Digitisation:: 2022

Collection:: Economics Books

Usage license:: Get license information via the feedback formular.

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Document type:: Monograph

Structure type:: Chapter

Title:: Chapter XI. The security collateral loan market

Collection:: Economics Books

SECURITY COLLATERAL LOAN MARKET 281 the borrower allows the value of his collateral securing a time loan to decline below the margin agreed upon, then by the terms of the time loan agreement the loan immediately becomes due, irrespective of its maturity date, and the lender can at once demand payment. This being refused, he can at once sell the collateral securities to recover the principal and interest of his loan. In practice the borrower always hastens to put up more collateral on his time loans, whenever such a course is necessary. Generally speaking, the interest rate for time money relates to the prevailing and anticipated movement in the rates for call loans. The proportion of time and call loans in total security loans varies from time to time according to conditions, but the call money always constitutes the larger part, owing primarily to its greater popularity with lenders. For the same reason, it is normal for call interest rates to rule slightly lower than time loan rates. Time funds have constituted more than 40% and as little as 10% of all outstanding security loans. The Call or Demand Loan.—As its name implies, the call or demand loan can be “called” or terminated on the demand of either the borrower or the lender, the day after it is made. Legally, indeed, the call loan can be terminated at any time, but the unwritten custom of Wall Street forbids the calling of loans after noon, and thus they constitute at least overnight funds. Only a small proportion of call loans, however, is actually called each day; the bulk of such loans outstanding are renewed daily, frequently at varying interest rates. Some call loans have actually been outstanding for fifteen or twenty years, but such cases are of course exceptional. Due to the high degree of market organization, the calling of loans in- volves no personal feeling on the part of either borrower or lender The Demand for Security Collateral Loans.—I pans are often made on security collateral by American banks entirely outside of Wall Street, either to facilitate investing or trading

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