(20) According to the law, "in the United Kingdom, an unlimited amount of the customer's assets can be rehypothecated and there are no customer protection rules.
(28) Indeed, we can say that almost all money on retail deposit is effectively rehypothecated to other entities.
In most cases, clearing bank 2 begins the unwind by first extending credit to the reverse repo dealer and pulling back all GCF Repo-related securities that have been rehypothecated through tri-party repo using a securities-for-cash substitution mechanism (not shown in Exhibit 5).
(11) This step is not necessary if the reverse repo dealer has not rehypothecated the securities.
Treasury securities are extensively rehypothecated
(Krishnamurthy and Vissing-Jorgensen 2010) and therefore should be viewed as money.
Internalization occurs when a separate client has sold short the same security, and therefore the collateral backing the margin loan is rehypothecated and delivered into the short position (Transaction 2b).
For example, a client may liquidate its account by repaying its margin loan, resulting in a cash inflow to the dealer; however, the dealer may have already rehypothecated the underlying collateral for the margin loan to deliver into another client's short sale.
First, the level of collateral received that has been rehypothecated indicates firms' reliance on "customer collateral" generated through secured lending activities and derivatives to raise financing, from both internal and external sources; these data allow us to directly measure the banks' "collateral efficiency," as we have defined it.
We first display a measure of "collateral efficiency," which we earlier defined as the percentage of a dealer bank's collateral received that is rehypothecated. Recall that it is likely that collateral efficiency is increasing with the size of the dealer's collateral pool, as a larger portfolio of collateral will contain securities that match more customer demands than would a smaller portfolio.
the securities have been rehypothecated. If customer securities were to
had lobbied in the UCC revision process to exempt rehypothecated
rehypothecated, resulting in intermediary risk that can motivate the