Repo

TenStep Supplemental Paper ____________________________________________________________________________________________________________ 22 June 2004 Re buy Agreements (Repos)/Ready fore Transactions A repo is an contract in which a player sells security to acquire immediate funds and then agrees to purchase the same or similar securities after a contract judgment of conviction at a given price. The dealings involved in repos contains elements of two the sale/purchase of securities and the trading operations involved in notes mart borrow and lending. Repo operations atomic number 18 collateralized short-term lending. The basis of contract are specified as the repo rate, representing the gold merchandise borrowing/lending rate. As in the case of other instruments, repos booster the equilibrium between assume and supply of short-term funds. Internationally, the repurchase agreement (repo) is a diverse and perhaps the most popular money market inst rument. If the above diagram is considered from the buyers perspective, i.e. from Bs perspective, it lead be termed a uprise repo. So, a reverse repo is a mirror image of a repo. Hence, whether a feat is a reverse repo or a repo transaction is determined by who has initiated the transaction.

Purpose The seller in the transaction can earn immediate cash in the short-term, without liquidating his or her position in the security. The buyer of the firm pass on cook an avenue to deploy his/her surplus funds. Governments use repurchase agreements to workout tell of interest rates and liquidity in t he money market. These agreements are used t! o inject/absorb liquidity in the market by the RBI. Operational Aspects Size of the Loan. The size of the loanword is trenchant by the party that initiates the agreement. For example, if a borrower initiates the agreement, he/she allow for subside the size of the agreement. Selection of Security. The RBI announces the nature of instruments that will be eligible for...If you want to get a expert essay, order it on our website: BestEssayCheap.com

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