the pledged collateral is not owned by these firms, but due to rehypothecation rights, these firms are legally allowed to use the collateral in their own name" (Singh, Aitken, 2010, p.
In consequence, rehypothecation has been one of the dominant drivers of the financial crisis of 2007-2008 and the 2011 failure of MF Global (Maurin, 2015).
Derivatives and Rehypothecation Failure: It's 3:00 p.
Deleveraging after Lehman--Evidence from Reduced Rehypothecation.
Because no measure presently exists of the whole of the repo market, we do not know its full size or the extent of rehypothecation.
Rehypothecation creates a multiplier process for collateral, similar to the more familiar money multiplier.
refers to the practice of an institution lending securities that its clients have pledged as collateral.
Second, from the contractual perspective, transactions are often embedded with certain credit rating downgrade triggers requiring the posting of additional collateral or imposing more constraining restrictions on rights of rehypothecation.
With respect to levels of rehypothecation, we draw upon the example of Lehman Brothers to illustrate the magnitude of contraction in a case that ultimately ended in bankruptcy and liquidation.
principles, initially focusing on rehypothecation, a distortion whose
practice known as rehypothecation, (2) caused a type of intermediary
Deleveraging after Lehman: Evidence from Reduced Rehypothecation