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To: Camster91 who wrote (83594)12/9/2011 1:40:13 AM
From: elmatador   of 218227
 
The asymmetry between U.K. and the U.S. on the use of client’s collateral is an example that highlights the recent policy recommendations to limit leverage and jurisdictional arbitrage (Tucker, 2010).

Following the collapse of Lehman, hedge funds have become more cognizant of the way the client money and asset regime operates in the United Kingdom. For some, the United Kingdom provides a platform for higher leveraging (and deleveraging) that is not available in the United States. In general, post Lehman, one would expect an increasing tendency for those providing collateral to counterparties to ask for their collateral to be segregated from the counterparty’s assets and to place limits on its further use.

Our understanding is that the U.K. FSA has not yet made any changes on the use (and re-use) of collateral since their LBIE experience that would remove or reduce the asymmetry in the U.K. and the U.S.

The (sizable) Role of Rehypothecation in the Shadow Banking System
imf.org
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