Deleveraging After Lehman: Evidence From Reduced Rehypothecation

Rehypothecation is the practice that allows collateral posted by, say, a hedge fund to their prime broker to be used again as collateral by that prime broker for its own funding. In the United Kingdom, such use of a customer's assets by a prime broker can be for an unlimited amount of the customer's... Ausführliche Beschreibung

1. Person: Aitken, James
Weitere Personen: Singh, Manmohan
Format: E-Buch
Sprache: English
Veröffentlicht: Washington, D.C. International Monetary Fund 2009, 2009
Beschreibung: 13 p.
Serien: IMF Working Papers; Working Paper
Schlagworte: Financial System
Corporation and Securities Law
Financial Institutions and Services: Government Policy and Regulation
Counterparty Risk
Collateral
General Financial Markets: Government Polic
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Zusammenfassung: Rehypothecation is the practice that allows collateral posted by, say, a hedge fund to their prime broker to be used again as collateral by that prime broker for its own funding. In the United Kingdom, such use of a customer's assets by a prime broker can be for an unlimited amount of the customer's assets. And moreover, there are no customer protection rules (such as in the United States under the Securities Act of 1933). The paper shows evidence that, following Lehman's bankruptcy, the extent of rehypothecation has declined substantially, in part because investment firms fear losing collateral if their prime broker becomes insolvent. While less rehypothecation reduces counterparty risk in the system, it also reduces market liquidity
ISBN: 9781451871906
1451871902

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