Repo

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The Hindu Business Line  Aug 29  Comment 
With the Budget 2018-19 pencilling in unchanged receipts from dividends, the central bank’s higher pay-out may boost non-tax revenues of the government
The Hindu Business Line  Aug 27  Comment 
Axis SecuritiesMinda Ind (Buy)CMP: ₹416.1Target: ₹449Minda Industries Ltd (MIL) reported excellent set of results for Q1FY19. Total revenues were repo
The Hindu Business Line  Aug 25  Comment 
Two medium intensity earthquakes shook Andaman and Nicobar islands today while a minor one was experienced in Rajasthan. There was no immediate repo
The Economic Times  Aug 17  Comment 
Vulnerabilities arising from global financial markets continue to impart uncertainty to the inflation outlook.
The Economic Times  Aug 3  Comment 
The key question now is the intensity of transmission of the policy rate hike to bank (and to an extent market) lending rates.
The Times of India  Aug 2  Comment 
On Wednesday, the monetary policy committee (MPC) of the RBI effected the first back-to-back rate hike in almost five years, citing inflationary pressure. As a result, the benchmark Sensex snapped a seven-day winning run during which it had gained...
The Hindu Business Line  Aug 1  Comment 
 The RBI’s decision to hike the key policy repo rate by 25 basis points should not entirely come as a surprise as the markets have very nearly priced
The Economic Times  Aug 1  Comment 
The RBI hiked repo rate by 25 basis points citing reasons that the headline inflation has remained away from its medium term target of 4 per cent for several months.
The Hindu Business Line  Aug 1  Comment 
The Economic Times  Jul 30  Comment 
MPC may raise the repo rate by a total of 25-50 bps in the last three quarters of FY2019.




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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.

References

  1. WSJ Online, retrieved October 31, 2008

http://www.bestcashloans.org.uk/

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