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{{anat| | {{anat|security}}[[Rehypothecation]] is an important concept in [[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]]). | ||
''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]]. | ''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]]. |