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''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. '' | ''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. '' | ||
{{anat|security}}{{pbprov|Rehypothecation}}, or | {{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]]. | ''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]]. |