What is a Repo?

What is a Repo?

In the first of this two-part series, Richard covers the basics of repurchase agreements - what they are, how they are structured and their economics and accounting.
Overview

Repurchase agreements or “repos” are simple transactions in which one party sells an asset and then commits to buying back the asset at a later date. Sellers take all the risk in a repo as to whether the market value of the sold asset will rise or fall during the term.

Key learning objectives:

  • Define a repo

  • Understand the economics of repos and the risk sellers take

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Summary
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Expert
Richard Comotto

Richard Comotto

Senior Visiting Fellow at the ICMA Centre at the University of Reading, consultant to the International Capital Market Association (ICMA) and its European Repo and Collateral Council (ERCC). Technical expert to the IMF, Asian Development Bank and Frontclear market development company on money market and repo market development in Asia and Africa.

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