repurchase agreement

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Related to Repo transaction: repo rate

Repurchase agreement

An agreement with a commitment by the seller (dealer) to buy a security back from the purchaser (customer) at a specified price at a designated future date. Also called a repo, it represents a collateralized short-term loan for which, where the collateral may be a Treasury security, money market instrument, federal agency security, or mortgage-backed security. From the purchaser's (customer's) perspective, the deal is reported as a reverse repo.

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.

repurchase agreement (RP)

The sale of an asset at the same time an agreement is made to repurchase the asset at a specified price on a given date. Essentially, this process involves taking out a loan and using the asset as collateral. Also called repo. Compare reverse repurchase agreement. See also overnight repo.

repurchase agreement

An agreement to buy something back from the purchaser.This is encountered most often in two situations:(1) The thing purchased turns out to be less valuable than originally thought, such as when someone buys a promissory note, or a partial interest in a promissory note,and the obligor then defaults.(2) Especially with condominium units in facilities specializing in elder care, the seller of the units will agree to buy them back at a preestablished price if the owner dies or becomes so disabled as to require nursing home or similar care.

References in periodicals archive ?
The DFM may now process requests for transfer of securities listed on DFM for Repo transactions between a Repo seller and a Repo buyer who have agreed on a repurchase agreement in accordance with DFM requirements, the statement added.
subsidiary, MFGUK, then repoed them back to MFGUK, which then initiated another repo transaction with the London Clearing House (LCH).
Commercial Bank of Africa (CBA) and Standard Bank of Southern Africa (SBSA) have executed a USD25 million cross-currency repo transaction in a deal facilitated and guaranteed by Frontclear, the company said.
Once a trade has been brokered, the IDB submits the trade details to FICC, which, acting as a central counterparty, interposes itself and becomes the legal counterparty to each side of the repo transaction for settlement purposes.
However, the available evidence suggests that the level and sensitivity of haircuts depend on the kind of repo transaction being considered.
A CCP would provide insurance against collateral risk and ensure settlement associated with the repo transaction.
Lehman vetted the concept of a SFAS 140 repo transaction with its outside auditor, before the firm formalized a Repo 105 accounting policy and approved Repo 105 transactions for use by firm personnel (Examiner's Report, 2010, Vol.
If one party to the repo transaction fails, the other party can unilaterally terminate the transaction and keep the cash or sell the bond, depending on which side of the transaction that party has taken.
Term repo: Any repo transaction with an initial maturity longer than one business day.
In a repo transaction a security (such as bonds or shares) is purchased or exchanged for cash and, at the same time, the parties agree that the seller will repurchase or re-acquire the equivalent security at a date in the future.
A repo transaction expands the level of money supply as it increases the bank's level of reserves while the reverse repo translates to a contraction in money supply as it reduces the reserve account of banks.