# How Does the 140% Rule in Rehypothecation Function to Protect Investor Assets? ▴ Question

**Published:** 2025-08-14
**Categories:** Question

---

![A luminous digital market microstructure diagram depicts intersecting high-fidelity execution paths over a transparent liquidity pool. A central RFQ engine processes aggregated inquiries for institutional digital asset derivatives, optimizing price discovery and capital efficiency within a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocols-high-fidelity-execution-principal-operational-framework-price-discovery.jpg)

![Two sleek, abstract forms, one dark, one light, are precisely stacked, symbolizing a multi-layered institutional trading system. This embodies sophisticated RFQ protocols, high-fidelity execution, and optimal liquidity aggregation for digital asset derivatives, ensuring robust market microstructure and capital efficiency within a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/institutional-grade-digital-asset-derivatives-platform-architecture-high-fidelity-execution-protocols-and-liquidity-aggregation.jpg)

## Concept

The architecture of [investor protection](https://prime.greeks.live/question/what-is-the-role-of-an-agency-agreement-in-securing-safe-harbor-protection/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) within the United States capital markets is a complex assembly of interlocking rules and systemic safeguards. At its core lies a fundamental principle ▴ the preservation of client assets against the operational and financial risks of the brokerage firms that act as their custodians. The 140% rule, formally a component of SEC Rule 15c3-3, the [Customer Protection Rule](https://prime.greeks.live/area/customer-protection-rule/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), is a critical load-bearing element in this structure.

Its function can be understood as a precisely calibrated governor on a [broker-dealer](https://prime.greeks.live/area/broker-dealer/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)’s ability to leverage its clients’ assets for its own financing activities. This mechanism is an engineered solution to a persistent vulnerability in the financial system ▴ the risk that arises when client collateral is commingled with and used by the firm.

[Rehypothecation](https://prime.greeks.live/area/rehypothecation/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) is the practice wherein a broker-dealer takes securities posted as collateral by a client for their own [margin loan](https://prime.greeks.live/area/margin-loan/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) and uses those same securities as collateral for its own borrowing. In essence, the client’s assets are being re-pledged. This process is integral to the liquidity and efficiency of the securities lending and financing markets. It allows for the fluid movement of collateral throughout the system, reducing the cost of borrowing for all participants.

The practice, however, introduces a direct channel for [counterparty risk](https://prime.greeks.live/area/counterparty-risk/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). Should the broker-dealer fail, the client’s assets, now pledged to the broker’s own creditors, could be trapped or lost in the subsequent insolvency proceedings. The 140% rule directly addresses this risk by imposing a hard, quantitative limit on the extent of this re-use.

The rule specifies that a broker-dealer can rehypothecate a client’s securities with a market value up to 140% of that client’s debit balance. The debit balance is the amount of money the client has borrowed from the broker-dealer, typically to purchase securities on margin. Any securities held in the account that exceed this 140% threshold are defined as “[excess margin securities](https://prime.greeks.live/area/excess-margin-securities/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite).” These excess [margin securities](https://prime.greeks.live/question/what-are-the-primary-differences-between-fully-paid-and-excess-margin-securities/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), along with any fully paid-for securities, must be segregated from the firm’s own assets and held in a location that is under the broker-dealer’s possession or control, but for the exclusive benefit of the customers. This creates a buffer, a pool of client assets that are insulated from the claims of the broker-dealer’s creditors in a liquidation scenario.

This structural separation is a cornerstone of U.S. investor protection, a deliberate design choice that stands in contrast to regulatory regimes in other jurisdictions, such as the United Kingdom, which have historically permitted more extensive, or even unlimited, rehypothecation. This distinction highlights the U.S. system’s prioritization of client asset protection, even at the potential cost of reduced leverage and liquidity in the system.

![Sharp, transparent, teal structures and a golden line intersect a dark void. This symbolizes market microstructure for institutional digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-precision-execution-leveraging-granular-market-microstructure-intelligence.jpg)

![A sleek, multi-component device with a prominent lens, embodying a sophisticated RFQ workflow engine. Its modular design signifies integrated liquidity pools and dynamic price discovery for institutional digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-microstructure-2.jpg)

## Strategy

The strategic function of the 140% rule extends beyond a simple numerical limit; it imposes a specific operational discipline on broker-dealers and shapes the risk landscape for their clients. From a systemic perspective, the rule acts as a circuit breaker, preventing the infinite “churning” or re-use of collateral that can create opaque, interconnected chains of leverage. A single security, in a less regulated environment, could be rehypothecated multiple times, creating a complex web of claims that becomes nearly impossible to untangle in a crisis. The 140% cap severs these chains, limiting the contagion effect of a single firm’s failure.

> The 140% rule is a systemically important constraint on leverage, designed to contain the fallout from a broker-dealer insolvency.

For a broker-dealer, the 140% rule is a central parameter in its treasury and collateral management functions. The firm must have robust systems in place to continuously track the [market value](https://prime.greeks.live/question/what-is-the-difference-between-fair-value-and-fair-market-value-in-a-buyout/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) of each client’s securities and their corresponding [debit balance](https://prime.greeks.live/area/debit-balance/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). This calculation determines the firm’s “rehypothecatable” pool of collateral. The firm’s treasury department will then use this pool to finance the firm’s own activities, such as covering short sales or financing its own inventory of securities.

The 40% buffer (the amount between 100% and 140% of the debit balance) provides the broker-dealer with operational flexibility. It allows the firm to manage fluctuations in market value and collateral requirements without having to recall loans or demand additional collateral from clients on a daily basis. This buffer is a critical component of the firm’s liquidity management strategy.

![A sleek, light-colored, egg-shaped component precisely connects to a darker, ergonomic base, signifying high-fidelity integration. This modular design embodies an institutional-grade Crypto Derivatives OS, optimizing RFQ protocols for atomic settlement and best execution within a robust Principal's operational framework, enhancing market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-core-principal-system.jpg)

## A Comparative Framework of Rehypothecation Regimes

The strategic importance of the 140% rule is most clearly understood when compared to other regulatory approaches. The following table illustrates the key differences between the U.S. model and the more permissive model historically found in the United Kingdom.

| Feature | United States (SEC Rule 15c3-3) | United Kingdom (Traditional Model) |
| --- | --- | --- |
| Rehypothecation Limit | Capped at 140% of the client’s debit balance. | Historically, no regulatory cap. Limits are a matter of contractual agreement. |
| Client Asset Segregation | Mandatory for fully paid and excess margin securities. These assets must be kept separate from the firm’s own assets. | Client assets may be held in an omnibus account with other clients’ assets, and historically, with fewer restrictions on commingling with the firm’s assets. |
| Investor Protection Focus | Rule-based, with a strong emphasis on preventing the use of client assets for the firm’s proprietary activities. | Contract-based, with a greater emphasis on disclosure and the sophistication of the client. |
| Systemic Risk Implication | The cap on rehypothecation is designed to limit the build-up of systemic leverage and reduce the risk of contagion. | The potential for unlimited rehypothecation can lead to higher levels of leverage and more complex, interconnected risk profiles. |

![A precision-engineered metallic component with a central circular mechanism, secured by fasteners, embodies a Prime RFQ engine. It drives institutional liquidity and high-fidelity execution for digital asset derivatives, facilitating atomic settlement of block trades and private quotation within market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/precision-engineered-institutional-digital-asset-derivatives-platform-rfq-engine-for-high-fidelity-execution-and-atomic-settlement-of-block-trades.jpg)

## The Strategic Calculus for Institutional Clients

For [institutional clients](https://prime.greeks.live/question/why-did-esmas-binary-options-ban-apply-to-retail-clients-but-not-professional-clients/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), particularly hedge funds, the 140% rule is a key factor in their choice of a [prime broker](https://prime.greeks.live/question/what-are-the-primary-differences-between-an-executing-broker-and-a-prime-broker/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). While the U.S. system offers greater protection, the more permissive European model has historically allowed for greater leverage and potentially lower financing costs. A hedge fund seeking to maximize its leverage might have been drawn to a UK-based prime broker. However, the failure of Lehman Brothers in 2008 starkly illustrated the risks of this approach.

Clients of Lehman’s U.S. entity, protected by the 140% rule and the Securities Investor Protection Act (SIPA), were made whole relatively quickly. In contrast, clients of Lehman’s UK entity found their assets, which had been extensively rehypothecated, frozen and subject to the lengthy and complex claims process of the firm’s general creditors. This event prompted a strategic reassessment across the industry, with many institutional clients now placing a higher premium on the structural protections offered by the U.S. regulatory framework.

The 140% rule also has strategic implications for the types of financing that broker-dealers can offer. The rule makes it more difficult and expensive for broker-dealers to finance certain types of activities, such as those involving less liquid securities or complex derivatives. This can impact the strategies that institutional clients are able to execute. The rule, therefore, acts as a subtle but powerful force shaping the types of risk that are prevalent in the U.S. financial system.

![A glowing green ring encircles a dark, reflective sphere, symbolizing a principal's intelligence layer for high-fidelity RFQ execution. It reflects intricate market microstructure, signifying precise algorithmic trading for institutional digital asset derivatives, optimizing price discovery and managing latent liquidity](https://options.greeks.live/wp-content/uploads/2025/07/core-institutional-digital-asset-derivatives-rfq-execution-system-hub.jpg)

![A precision optical system with a teal-hued lens and integrated control module symbolizes institutional-grade digital asset derivatives infrastructure. It facilitates RFQ protocols for high-fidelity execution, price discovery within market microstructure, algorithmic liquidity provision, and portfolio margin optimization via Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/08/principal-grade-digital-asset-derivatives-rfq-optics-for-high-fidelity-execution-and-optimized-liquidity.jpg)

## Execution

The execution of the 140% rule is a continuous, data-intensive process that resides at the heart of a broker-dealer’s compliance and operations functions. It is not a one-time calculation but a dynamic surveillance system that must react to the constant flux of market prices and client account balances. The operational integrity of this process is paramount, as a failure to comply with the rule can result in severe regulatory penalties and reputational damage.

![A polished, dark teal institutional-grade mechanism reveals an internal beige interface, precisely deploying a metallic, arrow-etched component. This signifies high-fidelity execution within an RFQ protocol, enabling atomic settlement and optimized price discovery for institutional digital asset derivatives and multi-leg spreads, ensuring minimal slippage and robust capital efficiency](https://options.greeks.live/wp-content/uploads/2025/08/quantitative-finance-driven-rfq-workflow-for-best-execution-in-digital-assets.jpg)

## The Daily Calculation Cycle

At the end of each trading day, a broker-dealer must perform a series of calculations for every single customer margin account. This process, known as the “reserve formula” calculation, is a key component of [SEC Rule 15c3-3](https://prime.greeks.live/area/sec-rule-15c3-3/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). While the full reserve formula is complex, the portion relevant to the 140% rule can be broken down into the following steps:

- **Determine the Debit Balance** ▴ For each client, the firm calculates the total debit balance across all of their securities accounts. This is the total amount of money the client owes the firm.

- **Calculate the [Rehypothecation Limit](https://prime.greeks.live/question/how-do-different-jurisdictional-rules-on-rehypothecation-affect-a-prime-brokers-global-strategy/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)** ▴ The firm multiplies the client’s debit balance by 140%. This number represents the maximum market value of that client’s securities that the firm is permitted to rehypothecate.

- **Identify [Pledged Securities](https://prime.greeks.live/question/how-can-a-firm-best-measure-the-opportunity-cost-of-pledged-collateral/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)** ▴ The firm identifies the specific securities in the client’s account that have been pledged as collateral for the margin loan.

- **Value the Pledged Securities** ▴ The firm calculates the current market value of all the pledged securities.

- **Compare and Segregate** ▴ The firm compares the market value of the pledged securities to the 140% rehypothecation limit. Any securities with a value exceeding this limit are designated as “[excess margin](https://prime.greeks.live/question/what-are-the-primary-differences-between-fully-paid-and-excess-margin-securities/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) securities.” These securities, along with any fully paid securities in the account, must be moved into a segregated “possession or control” account. This is a separate account, often held at a third-party custodian or clearinghouse, that is legally insulated from the claims of the broker-dealer’s own creditors.

![A sleek, futuristic institutional grade platform with a translucent teal dome signifies a secure environment for private quotation and high-fidelity execution. A dark, reflective sphere represents an intelligence layer for algorithmic trading and price discovery within market microstructure, ensuring capital efficiency for digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/precision-rfq-execution-for-institutional-digital-asset-derivatives-1.jpg)

## A Practical Example of the 140% Rule in Action

To illustrate the operational flow, consider the following hypothetical scenario for an institutional client of a prime broker.

| Metric | Value | Description |
| --- | --- | --- |
| Total Market Value of Securities | $10,000,000 | The total value of all securities held in the client’s account. |
| Client Debit Balance | $3,000,000 | The amount the client has borrowed from the prime broker. |
| Rehypothecation Limit (140% of Debit) | $4,200,000 | Calculated as $3,000,000 1.40. This is the maximum value of securities the broker can re-use. |
| Value of Rehypothecated Securities | $4,200,000 | The broker will typically use the full amount of permissible collateral for its own financing needs. |
| Value of Excess Margin Securities | $5,800,000 | Calculated as $10,000,000 (Total Value) – $4,200,000 (Rehypothecated Value). |
| Required Action | Segregate $5,800,000 of securities. | The broker must ensure that securities with a market value of at least $5.8 million are held in a customer protection account, separate from the firm’s own assets. |

> The daily segregation of excess margin securities is the critical enforcement mechanism of the 140% rule.

![Central reflective hub with radiating metallic rods and layered translucent blades. This visualizes an RFQ protocol engine, symbolizing the Prime RFQ orchestrating multi-dealer liquidity for institutional digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/high-fidelity-digital-asset-rfq-execution-and-liquidity-management.jpg)

## Systemic Safeguards and Compliance

The execution of the 140% rule is not left to the discretion of the broker-dealer alone. It is embedded within a multi-layered system of safeguards and compliance checks.

- **The Reserve Formula** ▴ The 140% rule is part of the broader “Special Reserve Bank Account for the Exclusive Benefit of Customers” calculation. This formula, which must be computed weekly, determines the total amount of cash or qualified securities that a broker-dealer must deposit into a segregated reserve account. The formula includes credits (money owed by the broker to customers) and debits (money owed by customers to the broker). The rehypothecation of customer securities reduces the credits in this formula, thereby directly impacting the amount the broker must set aside. This creates a powerful financial incentive for the broker to accurately track and limit its rehypothecation activities.

- **Audits and Examinations** ▴ Broker-dealers are subject to regular audits by both their internal audit departments and independent public accountants. They are also subject to periodic examinations by the SEC and the Financial Industry Regulatory Authority (FINRA). These audits and examinations include a detailed review of the firm’s compliance with [Rule 15c3-3](https://prime.greeks.live/area/rule-15c3-3/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), including the 140% rule calculations and the segregation of customer assets.

- **Reporting Requirements** ▴ Broker-dealers are required to file regular financial reports with the SEC, including the FOCUS (Financial and Operational Combined Uniform Single) report. These reports provide detailed information about the firm’s financial condition, including its customer-related assets and liabilities, and its compliance with the net capital and [customer protection](https://prime.greeks.live/question/how-does-the-customer-protection-rules-reserve-formula-work-in-practice/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) rules.

The 140% rule is a powerful example of how a precisely calibrated quantitative limit, when embedded within a robust system of operational controls and regulatory oversight, can function as a critical safeguard for investor assets. It is a testament to a regulatory philosophy that prioritizes the structural integrity of the market and the protection of its participants.

![Stacked modular components with a sharp fin embody Market Microstructure for Digital Asset Derivatives. This represents High-Fidelity Execution via RFQ protocols, enabling Price Discovery, optimizing Capital Efficiency, and managing Gamma Exposure within an Institutional Prime RFQ for Block Trades](https://options.greeks.live/wp-content/uploads/2025/07/modular-system-for-institutional-digital-asset-derivatives-rfq-protocol-optimization.jpg)

## References

- Singh, Manmohan, and James Aitken. “The (Sizable) Role of Rehypothecation in the Shadow Banking System.” IMF Working Paper, no. 10/172, 2010.

- International Monetary Fund. “Counterparty risk – where do you stand?” IPE, 2010.

- Choi, Gongpil, Federico Ortega, and Manmohan Singh. “Emerging Market Securities Access to Global Plumbing.” IMF Working Paper, no. 21/094, 2021.

- U.S. Securities and Exchange Commission. “File No. S7-04-23, Release No. IA-6297; Comments on Proposed Rule ▴ Safeguarding Advisory Client Assets.” 2023.

- U.S. Securities and Exchange Commission. “SEC Rule 15c3-3, ‘Customer Protection ▴ Reserves and Custody of Securities’.” 2024.

![Reflective planes and intersecting elements depict institutional digital asset derivatives market microstructure. A central Principal-driven RFQ protocol ensures high-fidelity execution and atomic settlement across diverse liquidity pools, optimizing multi-leg spread strategies on a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-precision.jpg)

## Reflection

The structural integrity of a financial system is not an abstract concept; it is the sum of its meticulously engineered and rigorously enforced rules. The 140% rule, as a component of the broader Customer Protection Rule, serves as a powerful reminder that the free flow of capital and the extension of credit must be balanced against the imperative of asset protection. Its existence prompts a critical question for every market participant ▴ to what degree is your operational framework reliant on the explicit protections of the regulatory environment, and where does your own due diligence and counterparty risk management begin?

Understanding the mechanics of a rule like this is the first step. Integrating that understanding into a holistic view of [systemic risk](https://prime.greeks.live/area/systemic-risk/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) and operational resilience is the hallmark of a truly sophisticated market participant.

![A sleek, multi-component device in dark blue and beige, symbolizing an advanced institutional digital asset derivatives platform. The central sphere denotes a robust liquidity pool for aggregated inquiry](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-rfq-execution-platform-system.jpg)

## Glossary

<a href="https://prime.greeks.live/area/customer-protection-rule/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Precision-machined metallic mechanism with intersecting brushed steel bars and central hub, revealing an intelligence layer, on a polished base with control buttons. This symbolizes a robust RFQ protocol engine, ensuring high-fidelity execution, atomic settlement, and optimized price discovery for institutional digital asset derivatives within complex market microstructure](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-rfq-protocol-engine-1.jpg)

## Customer Protection Rule

Meaning ▴ The Customer Protection Rule, codified as SEC Rule 15c3-3, mandates that broker-dealers safeguard customer funds and securities, prohibiting their use for proprietary firm operations. </a><a href="https://prime.greeks.live/question/what-is-the-role-of-an-agency-agreement-in-securing-safe-harbor-protection/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Precision-engineered multi-vane system with opaque, reflective, and translucent teal blades. This visualizes Institutional Grade Digital Asset Derivatives Market Microstructure, driving High-Fidelity Execution via RFQ protocols, optimizing Liquidity Pool aggregation, and Multi-Leg Spread management on a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/precision-engineered-multi-vane-system-illustrating-institutional-digital-asset-derivatives-rfq-protocols-market-microstructure-optimized-liquidity-aggregation-prime-os-high-fidelity-execution.jpg)

## Investor Protection

An agency agreement is the architectural blueprint defining an employer's limited role to secure the ERISA voluntary plan safe harbor. </a><a href="https://prime.greeks.live/area/broker-dealer/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Stacked, glossy modular components depict an institutional-grade Digital Asset Derivatives platform. Layers signify RFQ protocol orchestration, high-fidelity execution, and liquidity aggregation](https://options.greeks.live/wp-content/uploads/2025/07/layered-digital-asset-derivatives-rfq-protocol-stack-for-prime-brokerage.jpg)

## Broker-Dealer

Meaning ▴ A Broker-Dealer is a financial entity operating under regulatory oversight that performs two distinct functions ▴ executing securities trades on behalf of clients (brokerage) and trading for its own account (dealing). </a><a href="https://prime.greeks.live/area/rehypothecation/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A translucent teal dome, brimming with luminous particles, symbolizes a dynamic liquidity pool within an RFQ protocol. Precisely mounted metallic hardware signifies high-fidelity execution and the core intelligence layer for institutional digital asset derivatives, underpinned by granular market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-core-intelligence-layer.jpg)

## Rehypothecation

Meaning ▴ Rehypothecation defines a financial practice where a broker-dealer or prime broker utilizes client collateral, posted for margin or securities lending, as collateral for its own borrowings or to cover its proprietary positions. </a><a href="https://prime.greeks.live/area/margin-loan/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Sleek, domed institutional-grade interface with glowing green and blue indicators highlights active RFQ protocols and price discovery. This signifies high-fidelity execution within a Prime RFQ for digital asset derivatives, ensuring real-time liquidity and capital efficiency](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-rfq-prime-os-execution-interface.jpg)

## Margin Loan

Meaning ▴ A margin loan represents a credit facility extended by a Prime Brokerage Operating System (Prime RFQ) to a Principal, collateralized by eligible digital assets or other securities held within their account, enabling the Principal to amplify their trading capital and acquire increased exposure to financial instruments, including digital asset derivatives, beyond their immediate cash holdings. </a><a href="https://prime.greeks.live/area/counterparty-risk/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A central metallic mechanism, an institutional-grade Prime RFQ, anchors four colored quadrants. These symbolize multi-leg spread components and distinct liquidity pools](https://options.greeks.live/wp-content/uploads/2025/07/high-fidelity-digital-asset-derivatives-rfq-engine-prime-os.jpg)

## Counterparty Risk

Meaning ▴ Counterparty risk denotes the potential for financial loss stemming from a counterparty's failure to fulfill its contractual obligations in a transaction. </a><a href="https://prime.greeks.live/area/excess-margin-securities/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A detailed cutaway of a spherical institutional trading system reveals an internal disk, symbolizing a deep liquidity pool. A high-fidelity probe interacts for atomic settlement, reflecting precise RFQ protocol execution within complex market microstructure for digital asset derivatives and Bitcoin options](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-microstructure-revealed.jpg)

## Excess Margin Securities

Meaning ▴ Excess Margin Securities denote those assets held within a client's margin account that possess a market value exceeding the sum of regulatory and house margin requirements. </a><a href="https://prime.greeks.live/question/what-are-the-primary-differences-between-fully-paid-and-excess-margin-securities/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Precision-engineered institutional grade components, representing prime brokerage infrastructure, intersect via a translucent teal bar embodying a high-fidelity execution RFQ protocol. This depicts seamless liquidity aggregation and atomic settlement for digital asset derivatives, reflecting complex market microstructure and efficient price discovery](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-prime-os-core.jpg)

## Margin Securities

Fully paid and excess margin securities are client assets that a broker must segregate and protect, not use for its own financing. </a><a href="https://prime.greeks.live/area/debit-balance/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Intricate mechanisms represent a Principal's operational framework, showcasing market microstructure of a Crypto Derivatives OS. Transparent elements signify real-time price discovery and high-fidelity execution, facilitating robust RFQ protocols for institutional digital asset derivatives and options trading](https://options.greeks.live/wp-content/uploads/2025/07/principal-rfq-protocol-engine-for-institutional-digital-asset-derivatives.jpg)

## Debit Balance

Meaning ▴ A debit balance represents a negative financial position in an account, indicating an amount owed by a client to a prime broker or financial institution. </a><a href="https://prime.greeks.live/question/what-is-the-difference-between-fair-value-and-fair-market-value-in-a-buyout/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Abstract geometric forms in dark blue, beige, and teal converge around a metallic gear, symbolizing a Prime RFQ for institutional digital asset derivatives. A sleek bar extends, representing high-fidelity execution and precise delta hedging within a multi-leg spread framework, optimizing capital efficiency via RFQ protocols](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-digital-asset-derivatives-rfq-execution-engine-architecture.jpg)

## Market Value

Fair Value is a context-specific legal or accounting standard, while Fair Market Value is a hypothetical, tax-oriented market price. </a><a href="https://prime.greeks.live/question/why-did-esmas-binary-options-ban-apply-to-retail-clients-but-not-professional-clients/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A precision-engineered component, like an RFQ protocol engine, displays a reflective blade and numerical data. It symbolizes high-fidelity execution within market microstructure, driving price discovery, capital efficiency, and algorithmic trading for institutional Digital Asset Derivatives on a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/high-fidelity-execution-engine-core-for-institutional-digital-asset-derivatives-rfq-protocol-price-discovery.jpg)

## Institutional Clients

ESMA's ban targeted retail clients to prevent harm from high-risk products, while professionals were deemed capable of managing those risks. </a><a href="https://prime.greeks.live/question/what-are-the-primary-differences-between-an-executing-broker-and-a-prime-broker/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Abstract geometric representation of an institutional RFQ protocol for digital asset derivatives. Two distinct segments symbolize cross-market liquidity pools and order book dynamics](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-protocol-2.jpg)

## Prime Broker

An executing broker transacts trades; a prime broker centralizes the clearing, financing, and custody for an entire portfolio. </a><a href="https://prime.greeks.live/area/sec-rule-15c3-3/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Precision-engineered system components in beige, teal, and metallic converge at a vibrant blue interface. This symbolizes a critical RFQ protocol junction within an institutional Prime RFQ, facilitating high-fidelity execution and atomic settlement for digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/principal-rfq-connectivity-layer-for-digital-asset-derivatives-execution.jpg)

## Sec Rule 15c3-3

Meaning ▴ SEC Rule 15c3-3, formally designated as the Customer Protection Rule, mandates that registered broker-dealers safeguard customer securities and cash by segregating these assets from the firm's proprietary capital. </a><a href="https://prime.greeks.live/question/how-do-different-jurisdictional-rules-on-rehypothecation-affect-a-prime-brokers-global-strategy/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A central, metallic cross-shaped RFQ protocol engine orchestrates principal liquidity aggregation between two distinct institutional liquidity pools. Its intricate design suggests high-fidelity execution and atomic settlement within digital asset options trading, forming a core Crypto Derivatives OS for algorithmic price discovery](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-architecture-optimizing-liquidity-aggregation-and-high-fidelity-execution.jpg)

## Rehypothecation Limit

Divergent rehypothecation rules force prime brokers to architect a dual strategy, balancing U.S. </a><a href="https://prime.greeks.live/question/how-can-a-firm-best-measure-the-opportunity-cost-of-pledged-collateral/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![An abstract view reveals the internal complexity of an institutional-grade Prime RFQ system. Glowing green and teal circuitry beneath a lifted component symbolizes the Intelligence Layer powering high-fidelity execution for RFQ protocols and digital asset derivatives, ensuring low latency atomic settlement](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-prime-os-core-engine-for-rfq-protocol-execution.jpg)

## Pledged Securities

A firm best measures collateral opportunity cost by pricing the forgone yield of an asset's next best use, typically via repo or securities lending markets. </a><a href="https://prime.greeks.live/question/what-are-the-primary-differences-between-fully-paid-and-excess-margin-securities/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![An institutional-grade platform's RFQ protocol interface, with a price discovery engine and precision guides, enables high-fidelity execution for digital asset derivatives. Integrated controls optimize market microstructure and liquidity aggregation within a Principal's operational framework](https://options.greeks.live/wp-content/uploads/2025/07/proprietary-institutional-digital-asset-derivatives-rfq-protocol-engine-facilitating-high-fidelity-execution-and-granular-market-microstructure-analysis-for-prime-os.jpg)

## Excess Margin

Fully paid and excess margin securities are client assets that a broker must segregate and protect, not use for its own financing. </a><a href="https://prime.greeks.live/area/rule-15c3-3/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek, multi-faceted plane represents a Principal's operational framework and Execution Management System. A central glossy black sphere signifies a block trade digital asset derivative, executed with atomic settlement via an RFQ protocol's private quotation](https://options.greeks.live/wp-content/uploads/2025/07/digital-asset-derivatives-rfq-principal-os-high-fidelity-execution.jpg)

## Rule 15c3-3

Meaning ▴ Rule 15c3-3, formally known as the Customer Protection Rule, establishes a stringent regulatory framework requiring broker-dealers to safeguard customer securities and cash. </a><a href="https://prime.greeks.live/question/how-does-the-customer-protection-rules-reserve-formula-work-in-practice/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A specialized hardware component, showcasing a robust metallic heat sink and intricate circuit board, symbolizes a Prime RFQ dedicated hardware module for institutional digital asset derivatives. It embodies market microstructure enabling high-fidelity execution via RFQ protocols for block trade and multi-leg spread](https://options.greeks.live/wp-content/uploads/2025/08/prime-os-dedicated-hardware-for-institutional-rfq-execution.jpg)

## Customer Protection

The Customer Protection Rule's Reserve Formula mandates a calculation to segregate client assets, ensuring firm solvency. </a><a href="https://prime.greeks.live/area/systemic-risk/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Dark precision apparatus with reflective spheres, central unit, parallel rails. Visualizes institutional-grade Crypto Derivatives OS for RFQ block trade execution, driving liquidity aggregation and algorithmic price discovery](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-system.jpg)

## Systemic Risk

Meaning ▴ Systemic risk denotes the potential for a localized failure within a financial system to propagate and trigger a cascade of subsequent failures across interconnected entities, leading to the collapse of the entire system. </a>

**Tags:** [Prime Brokerage](https://options.greeks.live/area/prime-brokerage/), [Asset Segregation](https://options.greeks.live/area/asset-segregation/), [Rehypothecation](https://options.greeks.live/area/rehypothecation/), [Securities Investor Protection Corporation](https://options.greeks.live/area/securities-investor-protection-corporation/), [Broker-Dealer](https://options.greeks.live/area/broker-dealer/), [Excess Margin Securities](https://options.greeks.live/area/excess-margin-securities/)	

## Discover More

- 
### [What Are the Primary Differences between Good Control Locations under Sec Rule 15c3-3?](https://options.greeks.live/question/what-are-the-primary-differences-between-good-control-locations-under-sec-rule-15c3-3/)
![Sleek, layered surfaces represent an institutional grade Crypto Derivatives OS enabling high-fidelity execution. Circular elements symbolize price discovery via RFQ private quotation protocols, facilitating atomic settlement for multi-leg spread strategies in digital asset derivatives.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-trading-system-core.jpg)

The primary difference between good control locations under SEC Rule 15c3-3 is the specific risk profile and operational framework each presents.

- 
### [What Are the Primary Operational Failures That Lead to a Collapse in a Rehypothecation Chain during a Crisis?](https://options.greeks.live/question/what-are-the-primary-operational-failures-that-lead-to-a-collapse-in-a-rehypothecation-chain-during-a-crisis/)
![A sleek, multi-faceted plane represents a Principal's operational framework and Execution Management System. A central glossy black sphere signifies a block trade digital asset derivative, executed with atomic settlement via an RFQ protocol's private quotation. Textured spheres below denote collateral supporting advanced market microstructure for price discovery.](https://options.greeks.live/wp-content/uploads/2025/07/digital-asset-derivatives-rfq-principal-os-high-fidelity-execution.jpg)

The collapse of a rehypothecation chain is an operational cascade triggered by failures in collateral valuation, tracking, and segregation.

- 
### [How Does a Prime Broker’s Stress Testing for a Concentrated Position Differ from Standard Portfolio Scenarios?](https://options.greeks.live/question/how-does-a-prime-brokers-stress-testing-for-a-concentrated-position-differ-from-standard-portfolio-scenarios/)
![Central teal-lit mechanism with radiating pathways embodies a Prime RFQ for institutional digital asset derivatives. It signifies RFQ protocol processing, liquidity aggregation, and high-fidelity execution for multi-leg spread trades, enabling atomic settlement within market microstructure via quantitative analysis.](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-core-for-institutional-digital-asset-rfq-protocol-execution-engine.jpg)

A prime broker's stress test for a concentrated position is a deterministic analysis of a single point of failure, while a standard portfolio's is a probabilistic assessment of diversified risk.

- 
### [What Are the Key Negotiating Points in a Prime Brokerage Agreement to Mitigate Risk?](https://options.greeks.live/question/what-are-the-key-negotiating-points-in-a-prime-brokerage-agreement-to-mitigate-risk/)
![A precise mechanical instrument with intersecting transparent and opaque hands, representing the intricate market microstructure of institutional digital asset derivatives. This visual metaphor highlights dynamic price discovery and bid-ask spread dynamics within RFQ protocols, emphasizing high-fidelity execution and latent liquidity through a robust Prime RFQ for atomic settlement.](https://options.greeks.live/wp-content/uploads/2025/07/precision-engineering-driving-institutional-digital-asset-derivatives-execution-across-advanced-rfq-protocols-and-prime-brokerage-frameworks.jpg)

A Prime Brokerage Agreement is the operational charter defining a fund's risk and liability with its broker; its negotiation is paramount.

- 
### [How Does the Repo Market Seizure Contribute to Collateral Scarcity during a Financial Shock?](https://options.greeks.live/question/how-does-the-repo-market-seizure-contribute-to-collateral-scarcity-during-a-financial-shock/)
![A sleek, multi-component device with a prominent lens, embodying a sophisticated RFQ workflow engine. Its modular design signifies integrated liquidity pools and dynamic price discovery for institutional digital asset derivatives. This system facilitates high-fidelity execution, real-time risk aggregation, and optimized capital efficiency.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-microstructure-2.jpg)

A repo market seizure transforms high-quality assets into illiquid burdens, creating a systemic funding crisis.

- 
### [How Does the Re-Hypothecation Clause in a Pba Affect a Fund’s Assets?](https://options.greeks.live/question/how-does-the-re-hypothecation-clause-in-a-pba-affect-a-funds-assets/)
![Abstract geometric forms depict institutional digital asset derivatives trading. A dark, speckled surface represents fragmented liquidity and complex market microstructure, interacting with a clean, teal triangular Prime RFQ structure. This symbolizes high-fidelity execution via RFQ protocols, ensuring efficient price discovery and atomic settlement for block trades.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-high-fidelity-execution-system-for-prime-os-liquidity-pool.jpg)

A re-hypothecation clause transforms a fund's collateral into a dynamic risk vector by permitting its reuse by a prime broker.

- 
### [How Does the Move to Central Clearing Affect Liquidity in Derivatives Markets?](https://options.greeks.live/question/how-does-the-move-to-central-clearing-affect-liquidity-in-derivatives-markets/)
![A central hub with a teal ring represents a Principal's Operational Framework. Interconnected spherical execution nodes symbolize precise Algorithmic Execution and Liquidity Aggregation via RFQ Protocol. This facilitates High-Fidelity Execution and Price Discovery within Digital Asset Derivatives Market Microstructure.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-microstructure-prime-os-price-liquidity-alpha.jpg)

Central clearing transforms counterparty risk into a quantifiable liquidity cost, demanding a superior operational architecture for efficient execution.

- 
### [How Does Counterparty Scoring Influence Dealer Behavior in OTC Markets?](https://options.greeks.live/question/how-does-counterparty-scoring-influence-dealer-behavior-in-otc-markets/)
![Precision-engineered multi-vane system with opaque, reflective, and translucent teal blades. This visualizes Institutional Grade Digital Asset Derivatives Market Microstructure, driving High-Fidelity Execution via RFQ protocols, optimizing Liquidity Pool aggregation, and Multi-Leg Spread management on a Prime RFQ.](https://options.greeks.live/wp-content/uploads/2025/07/precision-engineered-multi-vane-system-illustrating-institutional-digital-asset-derivatives-rfq-protocols-market-microstructure-optimized-liquidity-aggregation-prime-os-high-fidelity-execution.jpg)

Counterparty scoring is the operating system for trust in OTC markets, dictating market access and pricing.

- 
### [How Do Regulators Address the Core Conflict of Interest in Binary Options?](https://options.greeks.live/question/how-do-regulators-address-the-core-conflict-of-interest-in-binary-options/)
![A sphere split into light and dark segments, revealing a luminous core. This encapsulates the precise Request for Quote RFQ protocol for institutional digital asset derivatives, highlighting high-fidelity execution, optimal price discovery, and advanced market microstructure within aggregated liquidity pools.](https://options.greeks.live/wp-content/uploads/2025/07/high-fidelity-execution-framework-for-institutional-digital-asset-derivatives-request-for-quote-protocol-optimization.jpg)

Regulators neutralize the binary options conflict by mandating exchange trading, structurally separating the broker from the counterparty role.

---

## Raw Schema Data

```json
{
    "@context": "https://schema.org",
    "@type": "BreadcrumbList",
    "itemListElement": [
        {
            "@type": "ListItem",
            "position": 1,
            "name": "Home",
            "item": "https://options.greeks.live"
        },
        {
            "@type": "ListItem",
            "position": 2,
            "name": "Question",
            "item": "https://options.greeks.live/question/"
        },
        {
            "@type": "ListItem",
            "position": 3,
            "name": "How Does the 140% Rule in Rehypothecation Function to Protect Investor Assets?",
            "item": "https://options.greeks.live/question/how-does-the-140-rule-in-rehypothecation-function-to-protect-investor-assets/"
        }
    ]
}
```

```json
{
    "@context": "https://schema.org",
    "@type": "Organization",
    "@id": "https://greeks.live/#organization",
    "name": "Greeks.Live",
    "url": "https://greeks.live/",
    "description": "Greeks.live is the definitive toolkit for the professional options trader, dedicated to empowering our users with institutional-grade data, advanced analytics, and a comprehensive suite of trading tools designed to provide a decisive edge in the market. Every article and guide published under the Greeks.live name is a product of our deep commitment to data-driven analysis and our mission to support the global trading community.",
    "email": "support@greeks.live",
    "logo": {
        "@type": "ImageObject",
        "url": "https://options.greeks.live/wp-content/uploads/2025/07/Greeks.Live-Logo-Icon.svg"
    },
    "hasPart": [
        {
            "@type": "WebSite",
            "name": "About Us",
            "url": "https://about.greeks.live"
        },
        {
            "@type": "WebSite",
            "name": "App Download Page",
            "url": "https://about.greeks.live/#/download/basic_trade"
        },
        {
            "@type": "WebSite",
            "name": "Newcomers' Guide",
            "url": "https://twisty-sign-c8b.notion.site/Guide-for-Greeks-live-X-Deribit-Newbies-5a08a3052822427d800af6eaf3704c8d"
        },
        {
            "@type": "WebSite",
            "name": "Knowledge Base",
            "url": "https://linktr.ee/greeks.live"
        },
        {
            "@type": "WebSite",
            "name": "Option Terminology",
            "url": "https://greekslive.notion.site/88dfc00e7c584d4d8969b6302a79a12f?pvs=4"
        },
        {
            "@type": "WebSite",
            "name": "Terms of Service",
            "url": "https://greeks.live/#/tos"
        },
        {
            "@type": "WebSite",
            "name": "Disclaimer",
            "url": "https://greeks.live/#/disclaimer"
        }
    ],
    "sameAs": [
        "https://x.com/greekslive",
        "https://youtube.com/@greeks_live?si=-KjT0Lkw4WUCI0tD",
        "https://t.me/greekslive_notifications",
        "https://t.me/greekslive",
        "https://pinterest.com/greekslive/"
    ],
    "makesOffer": [
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "RFQ Platform",
                "url": "https://rfq.greeks.live",
                "description": "Execute institutional-grade block trades for crypto options and futures. This platform provides deep, over-the-counter (OTC) liquidity via a professional Request for Quote system.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Lending Tools",
                "url": "https://lend.greeks.live",
                "description": "Manage crypto lending and borrowing activities to earn yield or secure loans. This suite of tools helps users analyze interest rates and manage collateralized debt positions.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Data Lab",
                "url": "https://greeks.live/#/deribit/tools/datalab/BTC",
                "description": "Analyze historical and real-time options data with advanced metrics. This tool is designed for backtesting strategies and identifying market trends through comprehensive data visualization.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Profit & Loss Analysis (PnL)",
                "url": "https://greeks.live/#/deribit/tools/pnl_analysis",
                "description": "Track and analyze the Profit and Loss (PnL) of your options portfolio. This tool provides detailed performance metrics to help traders evaluate and refine their strategies.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Position Visualization",
                "url": "https://greeks.live/#/deribit/tools/pv/BTC",
                "description": "Visualize complex options positions and their corresponding risk profiles. This tool generates payoff diagrams to help traders intuitively understand potential profit, loss, and exposure.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Options Calculator",
                "url": "https://greeks.live/#/deribit/tools/calculator",
                "description": "Calculate the theoretical price and risk parameters ('the Greeks') of crypto options. An essential tool for pricing new trades and analyzing the sensitivity of existing positions.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Greeks.live Main Platform",
                "url": "https://greeks.live/",
                "description": "The central hub for the Greeks.live suite of professional cryptocurrency options and derivatives trading tools. Access analytics, manage positions, and explore the ecosystem.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Community Forum",
                "url": "https://t.greeks.live",
                "description": "Join the official Greeks.live community. Connect with other traders, share insights, and receive the latest updates directly from the team.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Greeks.live for Deribit",
                "url": "http://deribit.greeks.live",
                "description": "A dedicated interface for trading on the Deribit exchange. This platform leverages Greeks.live's advanced analytics and tools specifically for users of Deribit's options and futures markets.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Greeks.live for OKX",
                "url": "http://okx.greeks.live",
                "description": "A dedicated interface for trading on the OKX exchange. This platform integrates Greeks.live's powerful analytics with the OKX marketplace, focusing on its options and derivatives products.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "GLVS.AI Trading Platform",
                "url": "https://www.glvs.ai/",
                "description": "An AI-powered platform for automated crypto options trading. Leverage advanced algorithms and data-driven signals to develop and deploy sophisticated, hands-free trading strategies.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "API Testnet & Sandbox",
                "url": "https://test.greeks.live",
                "description": "A dedicated testnet environment for developers to test their API integrations and automated trading strategies. This sandbox allows for full functionality testing without risking real funds.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        }
    ],
    "subOrganization": [
        {
            "@type": "Organization",
            "name": "GreeksLive HK Co., Limited",
            "email": "support@greeks.live",
            "telephone": "+852-56418949",
            "address": {
                "@type": "PostalAddress",
                "streetAddress": "Unit 11, 27/F, K. Wah Centre, 191 Java Road",
                "addressLocality": "Hong Kong",
                "addressRegion": "North Point",
                "addressCountry": "CN",
                "postalCode": "0000"
            },
            "geo": {
                "@type": "GeoCoordinates",
                "latitude": "22.2932357",
                "longitude": "114.2022026"
            },
            "image": "https://options.greeks.live/wp-content/uploads/2025/08/Wah-Centre-Hong-Kong.jpg"
        }
    ]
}
```

```json
{
    "@context": "https://schema.org",
    "@type": "Article",
    "mainEntityOfPage": {
        "@type": "WebPage",
        "@id": "https://options.greeks.live/question/how-does-the-140-rule-in-rehypothecation-function-to-protect-investor-assets/"
    },
    "headline": "How Does the 140% Rule in Rehypothecation Function to Protect Investor Assets? \u25b4 Question",
    "description": "The 140% rule protects investor assets by capping broker-dealer reuse of client collateral, ensuring a buffer of securities remains segregated. \u25b4 Question",
    "url": "https://options.greeks.live/question/how-does-the-140-rule-in-rehypothecation-function-to-protect-investor-assets/",
    "datePublished": "2025-08-14T02:51:58+00:00",
    "dateModified": "2025-08-14T02:51:59+00:00",
    "articleSection": [
        "Question"
    ],
    "author": {
        "@id": "https://greeks.live/#organization"
    },
    "publisher": {
        "@id": "https://greeks.live/#organization"
    },
    "image": {
        "@type": "ImageObject",
        "url": "https://options.greeks.live/wp-content/uploads/2025/07/digital-asset-derivatives-rfq-principal-os-high-fidelity-execution.jpg",
        "caption": "The image depicts an abstract, high-fidelity representation of an institutional digital asset derivatives trading environment. A sleek, multi-planar structure symbolizes a Principal's proprietary Execution Management System and Smart Order Routing capabilities. The central glossy sphere, encircled by a precise ring, illustrates a Bitcoin options block trade facilitated through an optimized RFQ protocol, ensuring atomic settlement and low slippage. Underlying textured spheres suggest aggregated liquidity pools and robust collateral management, navigating complex market microstructure and mitigating counterparty risk for best execution."
    },
    "keywords": [
        "Asset Segregation",
        "Broker-Dealer",
        "Counterparty Risk",
        "Customer Protection Rule",
        "Debit Balance",
        "Excess Margin Securities",
        "Financial Regulation",
        "Investor Assets",
        "Margin Loan",
        "Prime Brokerage",
        "Rehypothecation",
        "Rule 15c3-3",
        "SEC Rule 15c3-3",
        "Securities and Exchange Commission",
        "Securities Investor Protection Corporation",
        "Systemic Risk"
    ]
}
```

```json
{
    "@context": "https://schema.org",
    "@type": "WebSite",
    "url": "https://options.greeks.live/",
    "potentialAction": {
        "@type": "SearchAction",
        "target": "https://options.greeks.live/?s=search_term_string",
        "query-input": "required name=search_term_string"
    }
}
```


---

**Original URL:** https://options.greeks.live/question/how-does-the-140-rule-in-rehypothecation-function-to-protect-investor-assets/
