Hypothecation Agreement Rate

First, the purchased assets can be mortgaged, so that if the investor is not able to maintain credit repayments, the broker can sell some of the securities; [1] The broker can also sell the securities if they lose value and if the investor does not respond to a margin call. The second meaning is that the initial deposit deposited by the investor for the Margin account can be made itself in the form of securities and not in the form of 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 is usually not in possession of the securities, as they are in accounts controlled by the broker, but the borrower still retains legal ownership.