SeekingAlpha  Jul 20  Comment 
By Joseph Y. Calhoun III: By Jeffrey P. Snider I have to say that I am more than a little amused by the "news" that the US Treasury Dept. is asking for comment from the primary dealers about the recent repo fails. As Bloomberg put it...
The Hindu Business Line  Jul 17  Comment 
Spot pepper prices continued to rule steady on Thursday on limited activities. Good day-trading of about 40 tonnes was reported on the IPSTA platform, while no activities were repo...
SeekingAlpha  Jul 17  Comment 
By Joseph Y. Calhoun III: By Jeffrey P. Snider With the latest data from FRBNY in hand, the surge in repo fails authorities and certain credit market observers that were stressed over the affair, it is actually confirmation of regularity, and...  Jul 16  Comment 
STOCKHOLM (dpa-AFX) - The large reduction in the Sweden's repo rate and the revision of the interest rate path send a clear signal that rising inflation is the most important task for monetary policy, the minutes of the central bank meeting...
The Economic Times  Jul 8  Comment 
On the role of the Reserve Bank in keeping prices in check, she said the RBI hiked the repo rate thrice during 2013-14 by 0.25 per cent each.
The Economic Times  Jul 3  Comment 
On Thursday, banks lent a meagre Rs 200 crore compared to the total limit of Rs 20,000 crore slated for the auction.


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

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