Reuse - PB Provision

Hedge Funds & Prime Brokerage Anatomy™ Go Premium {{{2}}} There is no industry standard prime brokerage agreement, so this is not so much an anatomy as a collection of resources about an amorphous subject. Hedge fund | AIFMD | Depositary | Prime broker | prime brokerage agreement | synthetic prime brokerage | margin lending | custody asset | CASS Anatomy | reuse & rehypothecation | hedge fund | leveraged alpha | greeks | short selling Index: Click ᐅ to expand: Prime Brokerage Securities Financing Investment Strategies Comments? Questions? Suggestions? Requests? Insults? We’d love to 📧 hear from you. Sign up for our newsletter.

Reuse — often, though misguidedly, labeled rehypothecation — is the right a prime broker has over its client’s custody assets to take those assets and sell them in the market to offset its lending costs, against an obligation to return equivalent assets (which it must buy in the market) when the client wants them back.

It is a fundamental part of the prime brokerage business. This is how a prime broker manages its costs of lending to funds to buy the assets: it is not a credit risk mitigation technique (for that see security and margin.