Wiley FINRA Series 6 Exam Review 2017 by Wiley

Author:Wiley
Language: eng
Format: epub
ISBN: 9781119400011
Publisher: Wiley
Published: 2015-10-27T00:00:00+00:00

The Hypothecation Agreement

The hypothecation agreement pledges the customer's securities that were purchased on margin as collateral for the loan. It also allows the brokerage firm to take the same securities and repledge or rehypothecate them as collateral for a loan at a bank to obtain a loan for the customer.

Loan Consent

By signing a loan consent agreement, the customer allows the brokerage firm to lend out the securities to customers who wish to sell the securities short. This is the only part of the margin agreement that the customer is not required to sign. The credit and hypothecation agreement must be signed prior to the account being approved to purchase securities on margin.

All securities purchased in a margin account will be held in street name, the name of the brokerage firm, so that the broker dealer may sell the securities to protect itself if the value of the securities falls significantly.

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