When a brokerage, in order to make a loan to a customer, borrows money and puts up money or stocks from the customer's own collateral as collateral for the loan, this is called rehypothecation, I think. Is this correct? If it is, why are the terms "hypothecation" and "rehypothecation" so rarely used? Would it be correct to assume that the term "pledge" is a more common way of saying the same thing?
[Sorry, I hit enter before I was done...]Last question: what is the company which loans the money called? For example, Brokerage A is going to lend money to Customer A, so it borrows from Company B, using Customer A's collateral as the collateral for the loan. What is Company B called in this situation? Is there a special term? And if there isn't, would something simple, like "the loaning company" work?Thanks,Marc
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