A form of secured, short-term investment in which a security is purchased with a simultaneous agreement to sell it back to the seller at a future date. The purchase and sales agreements are simultaneous but the settlement dates for the transactions are not. The purchase is a cash transaction while the return sale is a forward transaction since it occurs at a future date. A buy/sellback is very similar to a reverse repurchase agreement, except that in a buy/sellback the investor is compensated by the difference between the purchase price and sales price rather than by interest. Unlike a reverse repurchase agreement, a buy/sellback probably does not include a haircut or collateral margin. Furthermore, the buy/sellback may be treated differently in the event of the buyer's bankruptcy. Every transaction that is a buy/sellback from the buyer/lender's point of view is, by definition, a sell/buyback from the seller/borrower's point of view. American Banker Glossary

Financial and business terms. 2012.

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  • collateral — security provided by a borrower to cover the possibility that the loan will not be repaid. Glossary of Business Terms (1) Property that a debtor has pledged, mortgaged, or assigned to a creditor. (2) Securities exchanges in a repo, reverse repo,… …   Financial and business terms

  • sell/buyback — See buy/sellback …   Financial and business terms

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