Repo

RECENT NEWS
The Hindu Business Line  Nov 6  Comment 
An increase in provisions by about a fourth has resulted in Canara Bank posting a flat growth in net profit for the September quarter this year. The Bangalore-headquartered public sector bank repo...
OilVoice  Nov 6  Comment 
Madagascar Oil announces that a new updated company presentation is available on the Company39s website which includes the following items which are additional to the information previously repo
The Economic Times  Nov 6  Comment 
Policy uncertainty, stalled project clearances and slowing domestic demand are some of the main reasons for a sharp fall in the expected return on investments.
MarketWatch  Nov 5  Comment 
Broker-dealers should be forced to disclose much more information than they do now about their activities in the overnight repo markets, said Eric Rosengren, the president of the Boston Fed, on Wednesday. Greater disclosure would allow investors...
The Hindu Business Line  Nov 5  Comment 
The recent slowdown in the economy is on account of policy uncertainty and sluggish domestic demand, and a cut in repo rate is unlikely to spur investments, a Crisil report has said. “Fac...
The Hindu Business Line  Nov 4  Comment 
Expects RBI to stick to fighting inflation




RELATED WIKI ARTICLES
 
TOP CONTRIBUTORS

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/

Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki