Financial Times  Oct 20  Comment 
Demand for collateral rather than cash increasingly drives transactions
The Hindu Business Line  Oct 17  Comment 
Term finance lender IFCI today lowered short-term lending rate by a steep 0.8 per cent following the 0.25 per cent repo rate cut by the RBI.The company has reduced its short-term benchmark rate (IBR-...
Mondo Visione  Oct 4  Comment 
Moscow Exchange's Money Market saw record activity in all segments in September. The total volume of repo transactions as well as deposit and credit operations reached a record RUB 31.6 trln, up 76.7% YoY.  Repo with general collateral...
The Economic Times  Oct 4  Comment 
The reverse repo rate under the LAF stands adjusted to 5.75% and the marginal standing facility (MSF) rate and the bank rate comes down to 6.75 per cent.
The Economic Times  Oct 4  Comment 
The Hindu Business Line  Oct 4  Comment 
The Sensex and Nifty ended higher by nearly 0.4 per cent as the RBI has decided to cut its key policy rate, or the repo rate, by 25 bps to 6.25 per cent The benchmark BSE Sensex ended higher by 91...
The Economic Times  Oct 3  Comment 
Banks typically rein in collateral lending as they shore up balance sheets, driving up rates on repurchase agreements.
Reuters  Sep 21  Comment 
The Federal Reserve on Wednesday awarded $176.84 billion of one-day, fixed-rate reverse repurchase agreements to 51 bidders at an interest rate of 0.25 percent, the New York Fed said on its website.
Reuters  Sep 21  Comment 
Wells Fargo & Co Chief Executive John Stumpf prides himself on being a banker who understands the little guy's financial problems. He has spoken publicly about growing up poor on a Minnesota farm, starting his career as a low-level repo man and...  Sep 7  Comment 
STOCKHOLM (dpa-AFX) - Sweden's central bank decided to keep its negative interest rate and quantitative easing unchanged on Wednesday. The Executive Board of the Riksbank maintained the repo rate at -0.50 percent as economists had...


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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