Rehypothecation

Rehypothecation is an important concept in collateral management - arguably more important than "hypothecation" which is a term you don't often see (and which as far as I know simply means to pledge assets by way of security for a debt). Rehypothecation achieves the chimaerical effect of allowing a recipient of pledged collateral - ie collateral the recipient doesn't actually own, but simply possesses with a security interest - to sell that collateral outright in the market to a third party, provided it remains liable to return an indentical ("fungible") asset at the conclusion of the pledge. Challenging, you would think, because "nemo dat quod non habet" - you can't give title to something you don't yourself own. But somehow, under US law, one manages it. (nb the equivalent concept doesn't exist under common law).