repurchase agreement

repurchase agreement
repurchase agreement ( RP)
A form of secured, short-term borrowing in which a security is sold with a simultaneous agreement to buy it back from the purchaser at a future date. The purchase and sales agreements are simultaneous but the transactions are not. The sale is a cash transaction while the return purchase is a forward transaction since it occurs at a future date. The seller/borrower pays interest to the buyer at a rate negotiated between the parties. Rates paid on repos are short-term money market interest rates and are completely unrelated to the coupon rate paid on the instrument being purchased. Informally known as repos.
Sometimes called a classic repo to distinguish between these transactions and sell/buybacks. Every transaction where a security is sold under an agreement to be repurchased is a repo from the seller/borrower's point of view and a reverse from the buyer/lender's point of view. Repos and reverses are often used to finance investment purchases, especially by traders. American Banker Glossary
An agreement with a commitment by the seller ( dealer) to buy a security back from the purchaser ( customer) at a specified price at a designated future date. Also called a repo, it represents a collateralized short-term loan for which, where the collateral may be a Treasury security ( Treasury securities), money market instrument, federal agency security , or mortgage-backed security. From the purchaser's (customer's) perspective, the deal is reported as a reverse repo. Bloomberg Financial Dictionary
Meaning sale and repurchase agreement. An agreement to sell a bond (often a government bond) at one price with a simultaneous agreement to repurchase the bond at a later date at a price agreed today. Effectively, a repo trade enables the holder of a bond to borrow money while using the bond as financial collateral with the lender. Dresdner Kleinwort Wasserstein financial glossary
repo / buybacks / RPs Euroclear Clearing and Settlement glossary
Contract to sell and subsequently repurchase securities at a specified date and price. Economically, it represents a cash loan against securities collateral. Full ownership of the securities is transferred, with a firm commitment that the seller will repurchase the securities at an agreed price and date. Euroclear Clearing and Settlement glossary
Borrowing funds by providing a government security for collateral and promising to 'repurchase' the security at the end of the agreed upon time period. The associated interest rate is the 'repo rate'. LIFFE

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repurchase agreement repurchase agreement agreement

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   A repurchase agreement or Repo is a transaction in which Party A sells a security to Party B and agrees to repurchase it at a specific date in the future and at a pre-agreed price. Repos allow Party B to borrow securities and sell them short in the belief that they can be bought back in the market at a cheaper price by the time they must be returned to Party A. The advantage for party A is that it earns added income by lending the securities. Through this operation trader B is effectively a borrower of funds to finance further purchases of securities, and he pays interest to the holder, trader A. The rate of interest used is known as the repo rate. A reverse repo is the reverse situation, whereby the Party A agrees to buy securities from Party B and sell them back at a pre-agreed price and date. Party B is then effectively the lender of funds. Some central banks use repos and reverse repos in government debt as part of their money market operations.

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repurchase agreement UK US noun [C] (also sale and repurchase agreement, also INFORMAL repo, repo agreement) FINANCE, STOCK MARKET
an agreement to sell bonds, shares, etc. and buy them back at a later date: »

The issuer of a repurchase agreement must not fail to repurchase the underlying security within the specified time.

Compare REVERSE REPURCHASE AGREEMENT(Cf. ↑reverse repurchase agreement)

Financial and business terms. 2012.

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Look at other dictionaries:

  • repurchase agreement — n: a contract giving the seller of securities (as Treasury bills) the right to repurchase after a stated period and the buyer the right to retain interest earnings Merriam Webster’s Dictionary of Law. Merriam Webster. 1996. repurchase agreement …   Law dictionary

  • repurchase agreement — Under Title 11 U.S.C. Section 101: (47) The term repurchase agreement (which definition also applies to a reverse repurchase agreement) (A) means (i) an agreement, including related terms, which provides for the transfer of one or more… …   Glossary of Bankruptcy

  • repurchase agreement — [rē pʉr′chəs] n. an agreement to sell certain securities and then purchase them again on a specified date, usually within a few day, thereby serving the function of a secured loan that meets the short term financing needs of both buyer and seller …   English World dictionary

  • Repurchase agreement — Better known as Repurchase agreements (RPs or repos), a Sale and Repurchase Agreement has a borrower (seller/cash receiver) sell securities for cash to a lender (buyer/cash provider) and agree to repurchase those securities at a later date for… …   Wikipedia

  • Repurchase agreement — An agreement with a commitment by the seller ( dealer) to buy a security back from the purchaser ( customer) at a specified price at a designated future date. Also called a repo, it represents a collateralized short term loan, where the… …   Financial and business terms

  • repurchase agreement — UK [riːˈpɜː(r)tʃɪs əˌɡriːmənt] / US [rɪˈpɜrtʃəs əˌɡrɪmənt] noun [countable] Word forms repurchase agreement : singular repurchase agreement plural repurchase agreements business an agreement in which someone who has sold something agrees to buy… …   English dictionary

  • repurchase agreement — atpirkimo sandoris statusas Aprobuotas sritis kredito ir finansų įstaigos apibrėžtis Sandoris, kuriuo viena šalis (pardavėjas) įsipareigoja parduoti ar įkeisti finansines priemones ar pinigus kitai šaliai (pirkėjui), o ši sumoka pirkimo kainą, ir …   Lithuanian dictionary (lietuvių žodynas)

  • repurchase agreement — atpirkimo sandoris statusas Aprobuotas sritis buhalterinė apskaita ir finansinė atskaitomybė apibrėžtis Sandoris, pagal kurį viena šalis už pinigus ar kitokį priimtiną atlygį perleidžia kitai šaliai finansinį turtą, įsipareigodama per nustatytą… …   Lithuanian dictionary (lietuvių žodynas)

  • Repurchase Agreement - Repo — A form of short term borrowing for dealers in government securities. The dealer sells the government securities to investors, usually on an overnight basis, and buys them back the following day. For the party selling the security (and agreeing to …   Investment dictionary

  • repurchase agreement — (REPO)  Financial market agreement where the seller agrees to repurchase a security at a set price and stated time in the future. Repos are used in money markets for shortterm investments and cash management …   American business jargon

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