Forbes  Apr 15  Comment 
Accounting firm Ernst & Young will pay $10 million to settle claims made by the State of New York it was complicit in enabling now-defunct investment bank Lehman Brothers to conceal its financial difficulties ahead of the firm's September 2008...
Wall Street Journal  Apr 15  Comment 
Regulators are urging large financial institutions, who last year waived some of their rights under derivatives contracts, to expand those waivers to repos and securities lending transactions.
The Hindu Business Line  Apr 14  Comment 
There is a need to spur growth, but there are also risks in not reducing the repo rate further
Wall Street Journal  Apr 8  Comment 
Investors and small firms are entering the $2.6 trillion U.S. repo market, taking advantage of banks’ retreat from a key corner of the credit markets.
The Times of India  Apr 7  Comment 
As the benefit of the recent repo cuts are still not passed on to corporates in the form of lower lending rates, some companies are looking at tapping alternative fund sources.
The Economic Times  Apr 7  Comment 
The repo rate, at which RBI lends to the banking system, will continue to be at 7.5 per cent.
The Times of India  Apr 7  Comment 
The Hindu Business Line  Apr 7  Comment 
The RBI left the key repo rate unchanged in its Tuesday’s policy review, after lowering it twice since January. But while the RBI may not have reduced rates this time around, it has laid down the...
Equitymaster  Apr 7  Comment 
Posted by Equitymaster        The Indian equity markets continued to remain volatile and traded mostly in the red during the second half of the trading session after the Reserve Bank of India (RBI) in its first Bi-monthly Monetary...
The Hindu Business Line  Apr 5  Comment 
First bi-monthly policy statement to be released tomorrow
The Times of India  Apr 5  Comment 
The Reserve Bank of India is to announce its first bimonthly monetary policy review of the current fiscal on Tuesday, when it is widely expected to leave the repo rate.


Repurchase agreements, or repos, are transactions in which a borrower "sells" securities to a lender and agrees to purchase it back for at a specified price on a later date. Most repos are overnight transactions between financial institutions and are primarily used in money markets.

In effect, a repo is a secured loan since the lender gets a collateral for the cash being lent out -- the only difference is that the ownership of the collateral is transferred in the case of repos, whereas under a loan the borrower retains ownership of the collateral. The difference between the selling price and the repurchase price is the effective interest in these transaction.

Rates on repo are different from LIBOR rates, since repos are considered a secured loan whereas the LIBOR is used for unsecured interbank lending.

The US repo market is estimated to be around $4.5 trillion in 2008.[1]

Uses of Repo

Securities dealers are primary users of overnight repos. In order to meet liquidity requirements, they enter into these agreements with short-term investors such as money market funds or other investors who need certain securities for a short-term. Repos are used to finance long positions, borrow money to fund speculative investments, and cover short positions in securities. The Federal Reserve also uses repos for open-market operations where they add or decrease reserves to the banking system by trading in US Treasury securities.

Although repo transactions are backed by a collateral, i.e. the lender can sell the securities to redeem the cash, counter-party risks exists. Specifically, the other party may go bankrupt and not repurchase the securities.


  1. WSJ Online, retrieved October 31, 2008

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