reverse repurchase agreement

(redirected from Reverse Repos)

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 ?
The central bank conducted CNY160bn of seven-day reverse repos, CNY130bn of 28-day reverse repos and CNY60bn of 63-day reverse repos.
Through seven-day reverse repos the People's Bank of China (PBOC) pumped 130 billion yuan into the money market.
Reverse repos worth 65 billion yuan matured on Tuesday, so the central bank has effectively injected 55 billion yuan into the market.
As described above, the clearing banks receive instructions from FICC to settle dealers' net positions, where a net position is the difference between the value of repos and the value of reverse repos that a dealer has traded for a particular collateral class.
The changes, involving reverse repos and derivatives, reduce the assets included in the calculation and make it easier for them to meet leverage ratio requirements, depending on the final rules adopted by national regulators.
Idle cash is invested via reverse repos, while cash shortages are financed via repos.
7 billion) into the financial system via reverse repos in order to ease a cash squeeze at the end of the month, the central bank said in a statement carried by Xinhua.
As sponsored members, mutual funds will receive the benefits of guaranteed settlement enjoyed by the sell side (broker/dealers, banks), as well as expanded access to financing opportunities through reverse repos executed with the sponsoring bank.
Global Banking News-June 16, 2017--China's central bank keeps reverse repos rates unchanged
dollars) into seven-day reverse repos, a procedure by which central banks acquire securities from banks with a deal to sell them back in the future.
This week's injections have resulted in a net 15 billion yuan pumped into the market, offset by 380 billion yuan in maturing reverse repos.
The "gross" part of this ratio is the sum of the value of all repos and reverse repos a dealer trades in a day, and is thus a measure of the totality of a dealer's activity.