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===What is a [[repo]]?=== | ===What is a [[repo]]?=== | ||
'''In a {{nutshell}}''': A [[repo]], or [[repurchase agreement]], and its close relation the [[sell/buy-back]]<ref>Or [[buy/sell-back]] - in any case known in the {{gmra}} as a {{gmraprov|Buy/Sell Back Transaction}}.</ref>, is a way of [[borrow]]ing [[government bond]]s. | '''In a {{nutshell}}''': A [[repo]], or [[repurchase agreement]], and its close relation the [[sell/buy-back]]<ref>Or [[buy/sell-back]] - in any case known in the {{gmra}} as a {{gmraprov|Buy/Sell Back Transaction}}.</ref>, is a way of [[borrow]]ing [[government bond]]s. | ||
'''Documentation''': Repos are most commonly documented under a [[2000 Global Master Repurchase Agreement]], the industry standard English law agreement, published by [[The Bond Market Association|TBMA]] and [[International Capital Markets Association|ICMA]] | |||
'''Structure''': Repos are structured as a spot [[DVP]] sale at market, and a later [[DVP]] repurchase, also at market, of the same securities (hence, “repurchase”). In any case there is always a cash leg — by which the “Buyer” pays for the [[govvie]]s — and a securities leg — by which the {{gmraprov|Seller}} delivers them. Contrast that with a stock loan where both the {{gmslaprov|Loan}} and the {{gmslaprov|Collateral}} leg are physical settlements of securities. | '''Structure''': Repos are structured as a spot [[DVP]] sale at market, and a later [[DVP]] repurchase, also at market, of the same securities (hence, “repurchase”). In any case there is always a cash leg — by which the “Buyer” pays for the [[govvie]]s — and a securities leg — by which the {{gmraprov|Seller}} delivers them. Contrast that with a stock loan where both the {{gmslaprov|Loan}} and the {{gmslaprov|Collateral}} leg are physical settlements of securities. | ||