Template:Differences between repo and sell buyback

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Difference between Repurchase Transaction and a Buy/Sell Back Transaction

According to ICMA’s helpful website[1] economically, repos and sell/buy-backs both behave like secured loans; legally both amount to a sale and later repurchase of securities. A repurchase agreement is always a written contract; a sell/buy-back need not be.

  • Undocumented sell/buy-back]]s: The sale and repurchase legs of an undocumented sell/buy-back are considered as separate contracts. Since there is no contract between times:
    • The parties cannot call margin on each other for market movements between the transactions
    • Netting is less certain.
  • Documented sell/buyback]]s: There are operational differences between repos and documented sell backs:
    • Differences in the margining process
    • What happens when income is paid on collateral.
  1. ↑ [https://www.icmagroup.org/Regulatory-Policy-and-Market-Practice/repo-and-collateral-markets/icma-ercc-publications/frequently-asked-questions-on-repo/8-what-is-the-difference-between-a-repurchase-agreement-and-a-sell-buy-back/ You can find ICMA’s FAQ here
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