Financial Markets – Global Securities Finance

□ Published by ING

□ Summary of the book:

Repurchase agreements commonly referred to as ‘repos’, are contracts involving the simultaneous sale and future repurchase of an asset. The buyer in effect lends the seller money for the fixed period of the agreement, and the terms of the agreement are structured to compensate the buyer. The seller agrees to buy back the asset at the same price at which they sold it on the future repurchase date. This buy and sell represents a temporary transfer of legal ownership from seller to buyer. The entitlement of economical benefits of the asset remains with the seller or lender of securities. The seller pays the buyer interest on the implicit loan created by the transaction.