Reverse repurchase agreement: Difference between revisions

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imported>Doug Williamson
m (Amended wording as per Michelle 21/5/13)
imported>Doug Williamson
(Expand.)
 
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(Reverse repo).  
(Reverse repo, or RRP).  


A form of secured investing/lending, seen from the perspective of the investor/lender, using an agreement to buy securities at the start of the contract, and to sell them back at a pre-agreed price at a fixed future date.
A form of secured investing/lending, seen from the perspective of the investor/lender, using an agreement to buy securities at the start of the contract, and to sell them back at a pre-agreed price at a fixed future date.


The investor/lender invests cash at the start (in exchange for the transfer of pre-agreed securities).  
The investor/lender invests cash at the start (in exchange for the transfer of pre-agreed securities).  
At maturity the investor/lender receives their cash back with interest and sells the securities back to the borrower.
At maturity the investor/lender receives their cash back with interest and sells the securities back to the borrower.


A reverse repo is exactly the same transaction as a Repurchase agreement (repo) but from the perspective of the lender (rather than the perspective of the borrower).  
A reverse repo is exactly the same transaction as a Repurchase agreement (repo) but from the perspective of the lender (rather than the perspective of the borrower).  
It could logically have been called a “re-sale agreement”.
It could logically have been called a “re-sale agreement”.


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* [[Tri-party repurchase agreement]]
* [[Tri-party repurchase agreement]]
* [[Repurchase agreement]]
* [[Repurchase agreement]]
* [[Cash in the new post-crisis world]]
[[Category:Liquidity_management]]

Latest revision as of 13:30, 31 October 2016

(Reverse repo, or RRP).

A form of secured investing/lending, seen from the perspective of the investor/lender, using an agreement to buy securities at the start of the contract, and to sell them back at a pre-agreed price at a fixed future date.


The investor/lender invests cash at the start (in exchange for the transfer of pre-agreed securities).

At maturity the investor/lender receives their cash back with interest and sells the securities back to the borrower.


A reverse repo is exactly the same transaction as a Repurchase agreement (repo) but from the perspective of the lender (rather than the perspective of the borrower).

It could logically have been called a “re-sale agreement”.


See also