This provision authorizes Robinhood to pledge, repledge, hypothecate, and re-hypothecate customer margin securities to third parties without notice, potentially for amounts greater than the customer's debit balance, and without retaining equivalent securities for immediate delivery.
This analysis describes what Robinhood's agreement states, permits, or reserves. It does not constitute a legal determination about enforceability. Regulatory applicability and practical outcomes may vary by jurisdiction, enforcement context, and individual circumstances. Read our methodology
This clause authorizes re-hypothecation for amounts potentially exceeding the customer's debit balance, which means third parties may hold customer securities as collateral in amounts beyond the customer's outstanding obligation. SEC Rule 15c3-3 limits the extent to which broker-dealers may re-hypothecate customer securities, and compliance teams should evaluate whether the agreement's language is reconcilable with that regulatory cap.
Interpretive note: The provision states re-hypothecation may occur for a greater sum than the debit balance, but SEC Rule 15c3-3's 140% cap creates a regulatory constraint that may limit this contractual authority in practice.
Under this provision, Robinhood may lend or pledge the customer's margin securities to third parties without notification, and may do so for amounts greater than the amount owed by the customer. The agreement also discloses that dividend payments on loaned securities will be treated as substitute payments for IRS 1099 reporting purposes, which may result in different tax treatment than qualified dividends.
Cross-platform context
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Compare across platforms →"Within the limitations imposed by applicable laws, rules and regulations, all securities now or hereafter held by Robinhood, or carried by Robinhood in any account for the Customer (either individually or jointly with others), or deposited to secure same, may from time to time, without any notice, be carried in its general loans and may be pledged, repledged, hypothecated or re-hypothecated, separately or in common with other securities for the sum due to Robinhood thereon or for a greater sum and without retaining in its possession or control for delivery a like amount of similar securities.Excerpt from Robinhood's Margin Account Rules
(1) REGULATORY LANDSCAPE: This provision directly engages SEC Rule 15c3-3, which limits broker-dealer re-hypothecation of customer securities to 140% of the customer's aggregate debit balances.
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This clause authorizes re-hypothecation for amounts potentially exceeding the customer's debit balance, which means third parties may hold customer securities as collateral in amounts beyond the customer's outstanding obligation. SEC Rule 15c3-3 limits the extent to which broker-dealers may re-hypothecate customer securities, and compliance teams should evaluate whether the agreement's language is reconcilable with that regulatory cap.
Under this provision, Robinhood may lend or pledge the customer's margin securities to third parties without notification, and may do so for amounts greater than the amount owed by the customer. The agreement also discloses that dividend payments on loaned securities will be treated as substitute payments for IRS 1099 reporting purposes, which may result in different tax treatment than …
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