SECURITY COLLATERAL LOAN MARKET 295
in charge may find its collateral securities unacceptable for
some reason suggested above, in which case the borrower may
be forced to make up a new collateral envelope containing more
or better securities. But if the collateral at first furnished is
satisfactory to the lender, the latter places the envelope in
his safe and pays to the borrower the principal of the
loan. Lenders’ requirements are so well understood by bor-
rowers in Wall Street that ordinarily any exceptional features
in respect to collateral are eliminated by the borrower at the
outset. Loans possessing such unusual collateral features are
usually negotiated direct between lenders and borrowers, in-
stead of through the Stock Exchange money desk, in order to
avoid misunderstandingss and delays.
The Termination of Call Loans.—Call loans may be termi-
nated either by the lender “calling the loan,” or the borrower
on his own volition “paying it off.” If desired, the payment
of money and delivery of securities involved in terminating a
security loan can be handled through the Stock Clearing Cor-
poration.’ But if this is not done, and the matter is handled
“ex-Clearing House,” the borrower must present a certified
check for the principal and interest of the loan to the lender,
whereupon the latter returns to him his security collateral.
Renewal of Call Loans.—QOn any given day, new call loans
made together with old loans called or paid off, constitute only
a very small percentage of total call loans outstanding, of which
over 95% are in fact simply “renewed” each day. But the
interest rate applying to a renewed loan is not necessarily that
originally stipulated when the loan was first made, but instead
the “renewal rate” for each day that it is thus renewed. Conse-
quently, a call loan may actually remain outstanding for a
considerable period, and its interest rate will be marked up or
down each day according to the latest renewal rate.
This renewal rate for call loans is not an “official rate,”
but only an estimate of the fair rate for call money made after
See Chapter XIV, p. 374.
