Purchase and Resale Agreement


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Purchase and Resale Agreement

An agreement between the Bank of Canada and a dealer on an exchange in which the Bank buys Canadian Treasury securities from the dealer and the dealer agrees to buy the same securities back the following day. A PRA provides liquidity to a dealer, which in turn provides liquidity to market trading. See also: Murabaha, Double Sale.
References in periodicals archive ?
On Tuesday, the bank will auction CAD1bn in an 85-day term purchase and resale agreement for private-sector instruments.
With this, the total money that has been injected into the banking system under the term purchase and resale agreement has increased to a record CAD8bn.
The bank operates through Special Purchase and Resale Agreements, or SPRAs, buying securities with the agreement to sell them back the next business day, effectively injecting money into markets.