What does “re-hypothecation” mean?

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The term “re-hypothecation” came up a lot during the MF Global meltdown. It’s quite a common term in the securities market – but what does it mean?

Re-hypothecation from Marketplace on Vimeo.

Source: Paddy Hirsch, Marketplace, January 7, 2012 (hat tip: The Big Picture).

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2 comments to What does “re-hypothecation” mean?

  • Alan Harris

    This is not what happened at MF Global. The securities were not pledged, but were in segregated accounts with no money owing to anyone. MF just pledged something that was not theirs to pledge. The problem is that a recipient of stolen goods does not get good title, yet the rightful owners are being denied their property. Re-hypoing in that case is really just stealing.

  • Will

    So far it means that they can steal your money and you have no recourse.

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