82,903
edits
Template:What is a repo: Difference between revisions
no edit summary
Amwelladmin (talk | contribs) |
Amwelladmin (talk | contribs) No edit summary |
||
| (One intermediate revision by the same user not shown) | |||
| Line 2: | Line 2: | ||
'''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. | ||
''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 | '''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. | |||
'''Term''': Repo trades are usually very short term, typically overnight. | '''Term''': Repo trades are usually very short term, typically overnight. | ||
'''[[Reverse repo]]''': a [[reverse repo]] is just a [[repo]] from the point of view of the buyer. The {{gmraprov|Buyer}} buys and agrees to sell back later; the {{gmraprov|Seller}} sells and agrees to buy back later. | '''[[Reverse repo]]''': a [[reverse repo]] is just a [[repo]] from the point of view of the buyer. The {{gmraprov|Buyer}} buys and agrees to sell back later; the {{gmraprov|Seller}} sells and agrees to buy back later. | ||