Brokered Deposit

AAA

DEFINITION of 'Brokered Deposit'

A large-denomination bank deposit that is sold by a bank to a brokerage, which then divides it into smaller pieces for sale to its customers. Core deposits - such as deposits to checking accounts, savings accounts and certificates of deposit made by individuals - are the other key component of a bank's deposits.

INVESTOPEDIA EXPLAINS 'Brokered Deposit'

Under FDIC rules, only well-capitalized banks can solicit and accept brokered deposits. Adequately capitalized ones may accept them after being granted a waiver, and undercapitalized banks cannot accept them at all. By accepting brokered deposits, a bank can gain access to a larger pool of potential investment funds and improve its liquidity. It can also save money, compared to handling an equivalent dollar amount of numerous smaller deposits, even though brokered deposits tend to pay a higher rate of interest.

RELATED TERMS
  1. Deposit In Transit

    A deposit in transit is money that has been received by a company ...
  2. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. ...
  3. Broker

    1. An individual or firm that charges a fee or commission for ...
  4. Deposit

    1. A transaction involving a transfer of funds to another party ...
  5. Deposit Broker

    An individual or firm that facilitates the placement of investors' ...
  6. Business Broker

    A professional who specializes in the purchase and sale of companies. ...
Related Articles
  1. Are Your Bank Deposits Insured?
    Savings

    Are Your Bank Deposits Insured?

  2. Getting To Know The Money Market
    Options & Futures

    Getting To Know The Money Market

  3. When Wholesale Funding Goes Bad
    Entrepreneurship

    When Wholesale Funding Goes Bad

  4. How Interest Rate Cuts Affect Consumers
    Credit & Loans

    How Interest Rate Cuts Affect Consumers

comments powered by Disqus
Hot Definitions
  1. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  2. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  3. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  5. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
Trading Center