What is a daily loan?

Daily loans are short -term loans extended by bank banks. The proceeds from the loan, sometimes referred to as a morning loan, are used to buy securities that are designed to be delivered later during the day. Once the securities are received, they can then be promised as a collateral for a daily loan balance and a bank loan is converted to a standard call loan.

The process for the required and getting daily loan is quite simple. The broker identifies the specific securities he wants to buy. Rather than tying existing assets when purchasing, the broker will approach the bank to finance securities. The bank quickly reviews the securities and approves the loan. This action usually takes place in the morning and provides a nickname for a daily loan.

After buying securities with a day loan, securities are marked as a transfer to the broker. This is a process that does not take more than a few hours. If securities are purchased in the morning, they are usually deliveredafternoon. Upon receiving the securities, the broker tells the bank that the securities have been delivered.

The obtained securities are then promised as collateral and the daily loan is converted to what is called a call loan. A call loan is a common tool used by brokers to finance the purchase of securities in the long run. The broker is often able to repay the call loan using a part of the increased securities. After completing the conversion to a call loan, the daily loan is considered to be settled.

The use of a daily loan to ensure new securities allows brokers to move quickly when a good shop is available. Banks are usually open to issue daily loans, especially if the securities concerned are a short -term horizon show a great promise for growth. By not having to deal with a daily loan with many bureaucracy or wait for a very long time before SCHviční awarded. This allows you to pay for securities and start the delivery process earlier than later.

It is also beneficial for the bank to extend the daily loan. This process allows the bank to collect fees for extending the original daily loan and also apply the fees to the transfer process that takes place later during the day. As a result, the bank enjoys generating profits from efforts and also has access to the desired security in the unlikely if the broker fails on a call loan.