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Template:Differences between repo and sell buyback: Difference between revisions
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Template:Differences between repo and sell buyback (view source)
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===Difference between {{gmraprov|Repurchase Transaction}} and a {{gmraprov|Buy/Sell Back Transaction}}=== | ===Difference between {{gmraprov|Repurchase Transaction}} and a {{gmraprov|Buy/Sell Back Transaction}}=== | ||
====The official explanation==== | |||
According to [[ICMA]]’s helpful website<ref>[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]</ref> economically, [[repo]]s and [[sell/buy-back]]s both behave like [[secured loan]]s; 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. | According to [[ICMA]]’s helpful website<ref>[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]</ref> economically, [[repo]]s and [[sell/buy-back]]s both behave like [[secured loan]]s; 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. | ||
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**Differences in the [[margin]]ing process | **Differences in the [[margin]]ing process | ||
**What happens when {{gmraprov|income}} is paid on {{gmraprov|collateral}}. | **What happens when {{gmraprov|income}} is paid on {{gmraprov|collateral}}. | ||
====The Jolly Contrarian’s explanation==== | |||
There’s no difference between them, and even seasoned industry professionals get fidgety and make their excuses to pop off to the bathroom if you ask them. To the sentiment that [[buy/sell-back]]s are undocumented, the lie is somewhat given to that by the fact that the {{gmra}} expressly incoporates the Buy/Sell Back Transaction and its own freaking Annex, into the meticulously negotiated master documentation. Unless you have a taste for paradox (and who, in our shadow-flecked modern world doesn’t) it doesn’t hold water. | |||