Detailed practice and the rules governing the hypothesis vary depending on the context and jurisdiction in which it takes place. In the United States, the creditor`s legal right to assume ownership of the guarantee in the event of the debtor`s delay is considered a pledge. The most common form of the assumption is a repurchase transaction: the creditor grants a loan to the debtor and in return obtains the holding (not the ownership) of a financial asset until the maturity of the loan. An inverted recruit is an “on the other hand” hypothesis: the roles of creditor and debtor exchange. The granting of margins on brokerage accounts is another common form of assumption. When an investor chooses margin or sell-short, he accepts that these securities can be sold if necessary if there is a margin call. The investor holds the securities in his account, but the broker can sell them if he issues a margin call that the investor cannot satisfy to cover the losses of investors. The hypothesis arises when an asset is mortgaged as collateral to secure a loan. The owner of the asset does not waive property, property or property rights, such as . B, income generated by assets.
However, the lender can seize the asset if the terms of the agreement are not met. When an investor asks a broker to buy securities on the margin, an assumption can occur in two directions. First, the acquired assets may be hypothetical, so that the broker can sell some of the securities if the investor does not maintain the credit repayments; [1] The broker may also sell the securities if they lose value and the investor does not respond to a margin call. The second sense is that the initial contribution that the investor makes to the margin account may be itself in the form of securities and not a cash deposit, and again, the securities belong to the investor, but can be sold by the creditor in the event of default. In both cases, unlike consumer or business financing, the borrower generally does not own the securities because they are in the broker`s accounts, but the borrower retains legal ownership. In the United Kingdom, there is no limit to the amount of a client`s assets that can be rehypothecated[3] unless the client has negotiated an agreement with his broker that includes a limit or prohibition. In the United States, re-mortgage is limited to 140% of a customer`s balance. [4] [6] When banks and brokers use hypothetical bonds as collateral to support their own transactions and negotiate with their client`s agreement to guarantee a lower cost of credit or a discount on fees.