Repo - how it works

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Published: 15th February 2010 by William Webster

A repo involves two parties. One party, (the seller), gives collateral, normally bonds, to the other party, (the buyer). In return the buyer pays a cash amount to the seller. The cash amount involved is based on the market price of the collateral plus its accrued interest.

The seller does a repo, the buyer a reverse repo:

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elearning > Repurchase agreements (repo)

Learn about the following: How repo works. The terms used in repo transactions. The repo rate and why it changes. The risks of doing repo. How some risks can be reduced. How repo trades can be used.