reverse repurchase agreement

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Reverse Repurchase Agreement

A practice in which a bank or other financial institution buys securities or another asset with the proviso that it will resell these same securities or asset to the same seller for an agreed-upon price on a certain day (often the next day). Investors and financial institutions do this in order to raise short-term capital. Indeed, it is the equivalent of a short-term loan with the securities or asset serving as collateral. A reverse repurchase agreement is the same as a repurchase agreement, but from the perspective of the buyer rather than the seller. It is also called a matched sale transaction or simply a reverse.

reverse repurchase agreement

The purchase of an asset with a simultaneous agreement to resell the asset on a given date at a specified price. The result is simply a loan at a prescribed rate for a predetermined period while holding the asset as collateral. Also called reverse. Compare repurchase agreement.
References in periodicals archive ?
dollars) of seven-day reverse repurchase agreements (repo), a process in which central banks purchase securities from banks with an agreement to resell them in the future.
Investment Operations may include the use of certain portfolio management techniques such as credit default swaps, dollar rolls, negative cash, reverse repurchase agreements and when-issued securities.
TOKYO, Feb 26 (KUNA) -- China's central bank pumped money into the markets through reverse repurchase agreements on Thursday to ease liquidity after last week's national holiday, the official Xinhua News Agency reported.
The PBOC injected CNY120bn through reverse repurchase agreements as part of its regular open market operations.
These gains were partially offset by interest expense on reverse repurchase agreements.
3, Deposits with Financial Institutions, Investments (including Repurchase Agreements), and Reverse Repurchase Agreements.
If cash is received as collateral (or securities that may be pledged or sold even without a default), the transaction would be treated as a collateralized loan, much like most reverse repurchase agreements.
NEW YORK -- PIMCO Income Opportunity Fund (NYSE:PKO) (the "Fund"), announced that, effective today, the Fund's maximum 38% aggregate leverage policy has been revised to permit the Fund to utilize reverse repurchase agreements up to 50% of the Fund's total assets and to utilize other forms of leverage covered by the prior policy up to the maximum extent permitted by the Investment Company Act of 1940 (the "1940 Act").
The Central Bank said that it had injected KES6bn into the money Markets, using reverse repurchase agreements (repo), at a weighted average rate of 8.
Some of the main issues for Chase involved repurchase agreements (repos) and reverse repurchase agreements, which generally are short-lived borrowings commonly used by banks in their financing arrangements.
The Fund may employ leverage in the form of loans, preferred stock, reverse repurchase agreements and/or other instruments.
The People's Bank of China (PBOC) offered CNY15bn in 14-day reverse repurchase agreements through its regular open market operations, according to traders participating in the operation.