A general loan and collateral agreement is a kind of an agreement which is formed between a broker dealer and an entity that facilitates the borrowing of funds. These agreements are made to govern the borrowing of the funds so that securities can be purchased through that amount of money. These agreements are legally binding in nature and consist of certain terms and conditions which are obligatory and important for both the parties to following and abide by.
Any general loan and collateral agreement is open ended in nature which basically means that the broker can borrow funds continuously for day to day transactions or requirements. These requirements may include tasks like carrying customer margin amounts, financing the new issue underwriting, carrying inventory etc. An agreement of this kind consists of the details of the parties, details of money lent, terms and conditions and the signatures of the involved parties as well.
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