reverse repurchase agreement


Also found in: Dictionary, Thesaurus, Legal, Encyclopedia.
Related to reverse repurchase agreement: Reverse Repo, Repo transaction

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 repurchase and reverse repurchase agreements are executed in accordance with a master netting agreement (MNA).
The basis for the convention by which repo borrowers gave margin to creditors--because creditors were generally more creditworthy than borrowers--began to erode when dealers started lending money to regional banks and institutional investors on special collateral reverse repurchase agreements in order to borrow securities needed to deliver against short sales.
Computed to include reverse repurchase agreements entered into by banks, total lending decelerated to 17.6 percent last month from 18.4 percent.
The People's Bank of China (PBOC) said it had increased the interest rate on seven-day reverse repurchase agreements, or reverse repos that are used to control liquidity in the banking system, by five basis points.
The fund opportunistically invests primarily in loan and debt instruments (and loan-related or debt-related instruments, including repurchase and reverse repurchase agreements and derivative instruments) of issues that operate in a variety of industries and geographic regions.
TOKYO - China injects CNY 400 billion (USD 60.8 billion) into its financial system through reverse repurchase agreements, representing the biggest one-day injection since February 2013.
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.
At its meeting in August 1999, the Committee had voted to expand the collateral that could be accepted in System repurchase transactions and had authorized the use of reverse repurchase agreements. These authorizations were scheduled to expire at the end of April 2000.
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.
3, Deposits with Financial Institutions, Investments (including Repurchase Agreements), and Reverse Repurchase Agreements, requires governments to classify deposits and investments based upon their exposure to custodial credit risk.
PFL's effective leverage ratio was approximately 24%, which included preferred shares, reverse repurchase agreements, and credit default swaps.
It uses the repo or reverse repurchase agreements wherein it buys government securities from a bank with a commitment to sell it back at a specified future date at a predetermined rate as well as the outright purchases and sales of securities for the purpose of increasing or decreasing liquidity on a more permanent basis.