The Loan Consent Agreement
Amount, the rule rehypothecatedSEC 15c3-3, The customer protection rule can be, allows DriveWealth to use shares with a value of 140% of the customer`s debit balance as collateral for a bank loan. DriveWealth can only borrow the amount it has lent to the customer, but it can guarantee this loan with shares worth 140% of the balance. The example below clarifies this point: 😀 margin of demand. T of Regulation T is 50%. A client buys back shares at a total cost of $100,000 and deposits 50,000 $US to the company. The company lends $50,000 to the customer. The broker wants to replace the $50,000 he lent to the client by paying himself in a bank. The amount she can borrow from the bank using the client`s portfolio as collateral for the loan is $50,000. However, the bank will need more than $50,000 in collateral to secure its loan.
The broker-trader can use shares worth 140% of the client`s debit balance or 70,000 $US and this as collateral for the rehypocate loan. The remaining $30,000 of the client`s shares are called excess margin securities. Excess marginal securities must be separated, which means that the broker sets these shares aside and does not use them as collateral. DriveWealth must not borrow more than a customer borrows. The 140% rule applies to the amount of stock that can be used as collateral, not the amount that can be borrowed.