Re-Hypothecation, AIG, Lehman, MF Global, and You
http://www.zerohedge.com/news/why-uk-trail-mf-glo…?
http://newsandinsight.thomsonreuters.com/Securiti…
http://market-ticker.org/akcs-www?post=198790
Can someone refute the statements made in these articles with non-spinning insight? If not, how is it even possible to assess risk in trading if literally your entire account could be pledged as collateral to third parties that have precedence in right to that collateral over the depositor? This is frightening.
.... all that an Interactive Brokers senior management member could respond to probes with is this complete non-answer:
http://www.elitetrader.com/vb/showthread.php?s=3a…
"Wow - pretty serious accusations here but how many of you really understand what hypothecation is? This is all about margin and stock loan. Remove the ability to hypothecate and you might as well suck out a massive amount of liquidity from the system."
http://www.imf.org/external/pubs/ft/wp/2011/wp11289.pdf
Nice find. I was reading through the Zerohedge article last night. It really is crazy scary how all rules are non-existent in the city of London. Thanks for the links.
I have a feeling re-hypothecation is soon going to replace CDO as the most hated finance buzzword
"Remove the ability to hypothecate and you might as well suck out a massive amount of liquidity from the system." -- LOL. This is like saying, remove the ability to securitize residential mortgages and you might as well stop real estate prices to go up
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