- 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 collateral may be a Treasury security, money market instrument, federal agency security, or mortgage-backed security. From the purchaser ( customer) perspective, the deal is reported as a reverse Repo. The New York Times Financial Glossary
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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.
* * *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.
Financial and business terms. 2012.
Look at other dictionaries:
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… … Financial and business terms
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
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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
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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) 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
repurchase agreement — repo / buybacks / RPs 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… … Euroclear glossary