Customer's Loan Consent

AAA

DEFINITION of 'Customer's Loan Consent'

An agreement signed by the customer of an investment firm. The customer's loan-consent form authorizes the firm to borrow margined securities to the limit possible, given the customer's debit balance. This is done if it is necessary for the firm to cover other short positions by the firm, or the customer's failure to complete delivery.

INVESTOPEDIA EXPLAINS 'Customer's Loan Consent'

Since only securities that trade above a certain dollar amount are maginable - $5 for some brokers - the broker would not be able to borrow securities that trade below that threshold. This makes it very difficult, or impossible, to find shares to borrow for a short sale for securities trading at low prices.

RELATED TERMS
  1. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  2. Lender

    Someone who makes funds available to another with the expectation ...
  3. Consent Solicitation

    The process by which a security's issuer proposes changes to ...
  4. Interest

    1. The charge for the privilege of borrowing money, typically ...
  5. Interest Rate

    The amount charged, expressed as a percentage of principal, by ...
  6. Loan

    The act of giving money, property or other material goods to ...
Related Articles
  1. Investing Basics

    Finding Your Margin Investment Sweet Spot

    Borrowing to increase profits isn't for the faint of heart, but margin trading can mean big returns.
  2. Options & Futures

    Leveraged Investment Showdown

    Margin loans, futures and ETF options can all mean better returns, but which one should you pick?
  3. Forex Education

    Forex Leverage: A Double-Edged Sword

    Find out how this flexible and customizable tool magnifies both gains and losses.
  4. Trading Strategies

    Day Trading Strategies For Beginners

    From picking the right type of stock to setting stop-losses, learn how to trade wisely.
  5. Forex

    How does margin trading in the forex market work?

    When an investor uses a margin account, he or she is essentially borrowing to increase the possible return on investment. Most often, investors use margin accounts when they want to invest in ...
  6. Options & Futures

    Margin Trading

    Find out what margin is, how margin calls work, the advantages of leverage and why using margin can be risky.
  7. Insurance

    Who are the best-rated auto insurance companies in the US?

    Learn which U.S. auto insurance companies have the best consumer ratings and who is eligible to purchase auto insurance from these companies.
  8. Investing News

    What PayPal’s Split From EBay Means For Customers

    EBay announced Tuesday that it will be splitting from PayPal to make the payment company its own entity.
  9. Professionals

    5 Services To Usher In New Clients

    Discover ways in which advisors are increasingly choosing to promote their businesses.
  10. Professionals

    Manage Your Clients' Expectations

    You can't control how they react to the market, but you can help them understand the reality of the situation.

You May Also Like

Hot Definitions
  1. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  2. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  3. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  4. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
  5. Annual Percentage Rate - APR

    The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents ...
  6. Free Carrier - FCA

    A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. ...
Trading Center