Repurchase agreements

Repo is essentially a secured loan. The term comes from sale and repurchase agreement however, this is not necessarily the best way to look at it. Although in a classic repo transaction legal title of an asset is transferred from the seller to the buyer during the term of the repo, in the author s opinion this detracts from the essence of the instrument a secured loan of cash. It is therefore a money market instrument. Later we formally define repo and illustrate its use for the moment we need only to think of it as a secured loan. The interest on this loan is the payment made in the repo. 

This is the BMA/ISMA Global Master Repurchase Agreement. 

Repo (short for repurchase agreement) is the most common method of creating leverage in a transaction. Borrowing in the repo market is often... 

This risk-free rate is known as the implied repo rate, because the rate is similar to a repurchase agreement carried out in the futures market. Generally, high implied repo rates indicate high futures prices, low rates imply low prices. The rates can be used to compare contracts that have different terms to maturity and even underlying assets. The implied repo rate for the contract is more stable than its basis, but as maturity approaches, it becomes very sensitive to changes in the futures price, spot price, and (by definition) time to maturity. 

Fundamentally both classic repo and sell/buybacks are money market instruments that are a means by which one party may lend cash to another party, secured against collateral in the form of stocks and bonds. Both transactions are a contract for one party to sell securities, with a simultaneous agreement to repurchase them at a specified future. They also involve ... 

---