April 22, 2024

– Short-term (overnight) borrowing through sale and repurchase of securities
– The sale of a security combined with an agreement to repurchase the same security at a higher price at a future date
– Securities are not considered a sale for tax purposes, but considered as collateral
– Money market funds significant player in repos
– Also used by broker-dealers, hedge funds and other institutional investors
– More than $1 trillion worth of overnight repo transactions collateralized with US government debt occurring every day

Links:
Wikipedia – Repurchase agreement
Why the Repo Market Is Such a Big Deal—and Why Its $400 Billion Bailout Is So Unnerving
Repo and Reverse Repo Agreements