Buy/Sell Back Transaction - GMRA Provision

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2000 Global Master Repurchase Agreement
A Jolly Contrarian owner’s manual

Paragraph 1(b) in a Nutshell
Use at your own risk, campers!

1(b)Transactions” may be “Repurchase Transactions” or “Buy/Sell Back Transactions” and will be governed by this Agreement and Annex I.
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Paragraph 1(b) in full

1(b) Each such transaction (which may be a repurchase transaction (“Repurchase Transaction”) or a buy and sell back transaction (“Buy/Sell Back Transaction”) shall be referred to herein as a “Transaction” and shall be governed by this Agreement, including any supplemental terms or conditions contained in Annex I hereto, unless otherwise agreed in writing.
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Related agreements and comparisons

Related agreements: Click here for the same clause in the 1996 MRA, when we get round to finding out the first thing about it.
Comparison: Knowing and, really, caring very little about other kinds of repo agreement, we have nothing presently to compare the Global Master Repurchase Agreement with.

Resources and navigation

Resources: 2010 GMRA: Full wikitext · Nutshell wikitext | 1996 MRA: MRA Full wikitext · MRA nutshell wikitextNavigation
2000 GMRA 1 · 2 · 3 · 4 · 5 · 6 · 7 · 8 · 9 · 10 · 11 · 12 · 13 · 14 · 15 · 16 · 17 · 18 · 19 · 20 · 21 · Schedule · Equities Annex: EA 1 · EA 2 · EA 3 · EA 4 · EA 5
1996 MRA 1 · 2 · 3 · 4 · 5 · 6 · 7 · 8 · 9 · 10 · 11 · 12 · 13 · 14 · 15 · 16 · 17 · 18 · 19 · 20 · Schedule ·

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Content and comparisons

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Summary

Difference between Repurchase Transaction and a Buy/Sell Back Transaction

The official explanation

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-backs: 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.

The Jolly Contrarian’s explanation

Unless you have a taste for paradox (and who, in our shadow-flecked modern world doesn’t?) there’s no difference between a repo and a sell/buy-back, and even seasoned industry professionals get fidgety and make their excuses to pop off to the bathroom if you ask them to give one. To the sentiment that buy/sell-backs are undocumented, the lie is somewhat given to that by the fact that the Global Master Repurchase Agreement expressly incoporates the Buy/Sell Back Transaction as a defined term with its own freaking Annex, meticulously negotiated into the master by negotiators the world over.

And a reverse Repo is?

A “reverse Repo” is just a repo viewed from the Buyer’s and not the Seller’s perspective. Buyer gets in cash, sells bonds; later, buys bonds, givers back cash.

You don’t hear much talk about a “reverse Buy/Sell Back Transaction”, but probably only because this sounds, on its face, idiotic, rather than merely idiotic if you spend the idlest moment thinking about it and the one thing we know financial services professionals like less than idly thinking about things is looking idiotic without having, even idly, to think about things.
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General discussion

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See also

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References