As far as I understand this, securities (like stocks) that are owned by X (could be a person, a company, a pension fund) are also part of the collateral pool of Y (the bank that holds the security) and Z (the larger bank(s) above Y in the banking hierarchy).

That means, if Y or Z find themselves in a crisis situation for whatever reason, they can use X's securities to bail themselves out of trouble. Of course that also means that X got robbed blind.