Rehypothecation: Difference between revisions

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-{{anat|security}}{{pbprov|Rehypothecation}} is an important part of {{pbprov|margin lending}} [[collateral management]]: more important than ordinary [[hypothecation]], 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]]).
+''Compare with [[title transfer]]. Often used in place of the term {{pbprov|reuse}}, {{pbprov|rehypothecation}} is a specific US law means of achieving reuse of pledged assets. It is not strictly accurate when applied to English law contracts where a PB takes collateral by [[title transfer]] in the first place, therefore owns it absolutely, and does not therefore need a right to rehypothecate it. ''
-''Re''hypothecation achieves the chimaerical effect of allowing a recipient of ''[[pledge|pledged]]'' [[collateral]] — i.e., [[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, on condition that 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 {{tag|US law}}, one manages it. It is part of the [[Uniform Commercial Code]].
+{{anat|security}}{{pbprov|Rehypothecation}}, or "{{pbprov|rehypo}}", is an important part of {{pbprov|margin lending}}: more important than ordinary [[hypothecation]], 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]]).
+''Re''hypothecation achieves the chimaerical effect of allowing a recipient of ''[[pledge|pledged]]'' [[collateral]] — i.e., [[collateral]] the recipient doesn’t ''own'', but simply possesses with a [[security interest]] — to sell that [[collateral]] outright to a third party, on condition that it remains liable the original pledgor 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 {{tag|US Law}}, one manages it. It is part of the [[Uniform Commercial Code]].
 The equivalent concept doesn’t exist under [[common law]]: under [[English law]] [[title transfer collateral arrangement]] the collateral a lady receives is hers to keep and do with as she pleases, as long as she returns something [[equivalent]] when the time it right.<ref>If someone tells you they wish to [[rehypothecate]] collateral they’ve taken under a [[title transfer collateral arrangement]], quickly find a sleeve you can laugh up.</ref>If she receives a [[security interest]] over collateral she cannot sell it — it not being hers to sell — but must return the self-same thing.