repo

Repo

An agreement in which one party sells a security to another party and agrees to repurchase it on a specified date for a specified price. See: Repurchase agreement.

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repo

See repurchase agreement.

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Repo

A practice in which a bank or other financial institution buys securities with the proviso that the seller must repurchase the same securities for an agreed-upon price on a certain day. Investors and financial institutions do this in order to raise short-term capital. A repo is also called a repurchase agreement or an overnight repo.

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repo

Slang for repossess.

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Repurchase Agreement (Repo)

What Does Repurchase Agreement (Repo) Mean?

A short-term borrowing instrument for dealers in government securities. The dealer sells the government securities to investors, usually on an overnight basis, and buys them back the next day. For the sellers, who agree to repurchase the securities in the future, it is a repo; for the party on the other end of the transaction (buying the securities and agreeing to sell them in the future), it is a reverse repurchase agreement.

Investopedia explains Repurchase Agreement (Repo)

Repos are classified as money market instruments. They are used to raise short-term capital.

Related Terms:
• Commercial Paper
• Debt
• Liquidity
• Money Market
• U.S. Treasuries