Define "Rehypothecation" in Traditional Finance ⎊ Path

Define “Rehypothecation” in Traditional Finance.

Rehypothecation is the practice where a bank or broker uses a client's pledged collateral (e.g. securities used as margin) for its own purposes, such as collateralizing its own loans or short sales. While common in traditional finance, it increases leverage and counterparty risk, as the client's assets are exposed to the broker's financial health.

It is generally not permitted in non-custodial learn.

How Does the Process of ‘Rehypothecation’ Affect a Prime Broker’s Client Assets?

What Regulatory Differences Exist for Custodial and Non-Custodial Derivatives Exchanges?

Explain the Difference between ‘Hypothecation’ and ‘Rehypothecation’

How Does the ‘Rehypothecation’ of Collateral Differ in Crypto Vs. Traditional Finance?

Define the Term “Rehypothecation” and Its Relevance to Prime Brokerage

Define “Custodial” versus “Non-Custodial” in Crypto

How Does Counterparty Risk Differ between Custodial and Non-Custodial Exchanges?

How Does the Client Agreement Typically Address the Right of Rehypothecation?

Glossar

Rehypothecation

Practice ⎊ This involves the reuse of collateral that has been posted by one counterparty to secure obligations with a second counterparty, often without explicit notification to the original collateral provider.