Saturday, October 10, 2015

How does rehypothecation cause systemic risk? - Quantitative Finance Stack Exchange

How does rehypothecation cause systemic risk? - Quantitative Finance Stack Exchange: This is all about the re-used of repos.



"Re-hypothecation occurs when banks or broker-dealers re-use the collateral posted by clients such as hedge funds to back the broker's own trades and borrowing."


This is an interesting story to add to the general trading game. It is also interesting for the regulation of finance post-crisis.

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