A repurchase agreement (or repo) is an agreement between two parties whereby one party sells the other a security at a specified price with a commitment to buy the security back at a later date for another specified price
Most repos are overnight transactions, with the sale taking place one day and being reversed the next day. Long-term repos—called term repos—can extend for a month or more. Usually, repos are for a fixed period of time, but open-ended deals are also possible.
Reverse repo is a term used to describe the opposite side of a repo transaction. The party who sells and later repurchases a security is said to perform a repo. The other party—who purchases and later resells the security—is said to perform a reverse repo.
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