Reverse repurchase agreement: Difference between revisions
From ACT Wiki
Jump to navigationJump to search
imported>Doug Williamson m (Spacing 20/8/13) |
imported>Doug Williamson (Linked to The Treasurers Handbook - Cash in the new post-crisis world) |
||
| Line 16: | Line 16: | ||
* [[Tri-party repurchase agreement]] | * [[Tri-party repurchase agreement]] | ||
* [[Repurchase agreement]] | * [[Repurchase agreement]] | ||
* [[Cash in the new post-crisis world]] | |||
Revision as of 10:51, 1 December 2014
(Reverse repo).
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”.
