What is Rehypothecation?
Rehypothecation is the practice by banks and brokers of using, for their own purposes, assets that have been posted as collateral by their clients. Clients who permit rehypothecation of their collateral may be compensated either through a lower cost of borrowing or a rebate on fees. In a typical example of rehypothecation, securities that have been posted with a prime brokerage as collateral by a hedge fund are used by the brokerage to back its own transactions and trades.
OTHER TERMS BEGINNING WITH "R"
Recourse is when a borrower agrees to pledge their own assets against funding from a bank or other lender in case the borrower is unable to meet the debt obligations. Recourse factoring is when the client will repay or replace…
- Refrigerated Carriers
Truckload carriers designed to ensure perishable goods stay refrigerated during transportation.
- Request for Proposal (RFP)
Request For Proposal (RFP) is a type of bidding solicitation in which a company or organization announces that funding is available for a particular project or program, and companies can place bids for the project's completion. It outlines the bidding…
- Restrictive Covenant
When a company raises debt, it is often subject to conditions, restrictions, and terms known as debt (or financial) covenants. A restrictive covenant is a condition that restricts, limits, prohibits, or prevents the actions of someone named in an enforceable agreement. In…
- Retention (Contractors)
Retention is the percentage of payments for a job in a process that is held back to ensure adequate performance. Retention is considered an ineligible A/R because it takes a long time to collect and it is common for disputes…
- Reverse Factoring or Supply Chain Financing
Reverse Factoring or Supply Chain Financing is when a bank or finance company commits to pay a company’s invoices to the suppliers at an accelerated rate in exchange for a discount. It is unlike traditional invoice factoring, where a supplier…
- Revolving Line of Credit (RLOC)
A revolving line of credit is an agreement that permits an account holder to borrow money repeatedly up to a set dollar limit while repaying a portion of the current balance due in regular payments. Each payment, minus the interest…
- Route Trucks Delivery
Trucks that travel fixed routes, typically along local routes with frequent stops and deliveries.