A customer must sign and return a hypothecation agreement when opening a margin account with 15 days of account opening.
A "margin account" is a specific kind of brokerage account where your broker-dealer lends you money to buy securities (sometimes referred to as "margin securities") while using the account as security. You might be able to hold a cash account and a margin account simultaneously with some brokerage firms. Before trading can start, customers who open margin accounts must sign the margin agreement. Credit agreement, hypothecation agreement, and loan consent document are the three components of the deal.
The nominal owner is permitted to pledge customer margin securities as security under a hypothecation arrangement.
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