![]() | This is an archive of past discussions. Do not edit the contents of this page. If you wish to start a new discussion or revive an old one, please do so on the current talk page. |
Why is the abbreviation for repurchase agreement repo?
What are the legal statuses regarding entitlement (legel owner, coupon & dividend payments) during a repo?
The seller of the bond retains the right to the coupon (or dividend) during the life of the Repo. The coupon will be paid to the whoever owns the bond during the Repo but this must be paid on to the seller.
Correct on the above. Operationally, the owner of the bond during the Repo period "manufactures" a similar payment to the Repo seller. This is true in classic repo transactions. As repo transactions are true sale/repurchase transactions, legal title transfer is effected at the start leg of the transaction, and at the maturing leg. — BernardChin 12:43, 6 October 2006 (UTC)
Why is it so damn hard to find someone that knows about them and with whom you can invest in repos? You'd think private banking and ivestment baning reps would know about a USD 5 trill. market. -- Kimonandreou 18:28, 12 January 2006 (UTC)
Repos are generally about lending or borrowing large amounts of money i.e. not something for the private investors. Even if acting as an intermediary and making profits on the spread between reversing and repoing the spreads are tight so you need a lot of capital to start with, not to mention settlement facilities etc.
If you happen to hold very large quantities of high quality bonds and want to raise cash more cheaply than unsecured lending, I'm sure you can find an investment bank that would be interested in talking to you.
Practically, it is a question of scale and efficiency when trade amounts are small.
Retail repos exist in countries such as Taiwan and Korea. You would naturally expect
retail repo rates to be wider (bid/ask) then institutional levels. (Practitioner) —
BernardChin
12:29, 6 October 2006 (UTC)
What are the key issues to consider when structuring a Repo using convertible bonds as the underlying security?
These days, repo markets have advanced and collateral types include convertible bonds, asset-backed securities, structured-notes, regular liquid government bonds, and equities. You just have to address the increased risks given the liquidity of the collateral. — BernardChin 12:32, 6 October 2006 (UTC)
What does this sentence mean?
Securities Lending While general motivation of Repo is the borrowing or lending of cash, is securities lending the motivation is to temporarily obtain the security for other purposes, such as covering short positions or for use in complex financial structure. Securities are generally lent out for a fee. Securities lending trades are governed by different types of legal agreements to Repos.
Economically, Repos or SecuritiesLending can accomplish purposes as funding or securities-covering. Legally, the transactions are similar with title transfers. However, they are legally governed by different master agreements. — BernardChin 12:40, 6 October 2006 (UTC)
Is repo a transaction of capital market? Or is it only a transaction of money market?
Arguably both. Textbook authors usually focus on capital *or* money market. Repos straddle both markets. Those who argue for money market tend to be cash-focused. Those who argue for capital market tend to be security-focused. — BernardChin 12:35, 6 October 2006 (UTC)
Is there any particular advantage in trading repos with a short maturity e.g. overnight compared to say 6 months? What market conditions would a longer contract benefit over a shorter one? Euanbeer 09:33, 22 September 2006 (UTC)
Depends what risk/return you want. Longer term repos lock you into term interest rate risk, versus say overnight interest rate risk. Operationally, if you do overnight repos, you have to do them (roll them) again the next day, and this can get tedious. Consequently, the market also has a OPEN repo, in addition to overnight and term repos. — BernardChin 12:39, 6 October 2006 (UTC)
Is it true that the repo rate is higher than the treasury yield, but lower than fed funds rate? Is this true in general, or does this apply only to the US? Finnancier ( talk) 12:11, 16 December 2007 (UTC)
Are open repos really traded or is it only a theoretical concept? If they are reallly traded, how does it work exactly? Who decides when the repo should end (the borrower or the lender)? Is the repurchase price agreed upon beforehand? Does the borrower make regular interest payments during the loan period?
yes, they are booked in high volume. They are typically re-rated daily to account for market movement and so have far smaller interest rate risk exposure. Eventually the trade is 'closed' out at which point closing cash is calculated using the series of rates applied throuout the trade.
—Preceding unsigned comment added by 99.231.76.148 ( talk) 02:21, 22 November 2008 (UTC)
I updated text, previously it stated buy/sell backs are not marked to market and tracked for margin. This isn't strictly correct, they are typically tracked along with repo. They do have slightly increased risk to to the lessened legal standing in the absence of a legal agreement. If the liquidators come in, they will retrieve lost collateral for trades covered by agreements first.
I propose that Repo_105 be merged into Repurchase agreement. The content in the Repo 105 article can easily be explained in the context of repurchase agreement. From there, may be add a paragraph on accounting scandals using these agreements. Drybittermelon ( talk) 06:15, 8 December 2010 (UTC)
Can this be added to this article: http://dealbook.nytimes.com/2011/11/03/as-regulators-pressed-changes-corzine-pushed-back-and-won/ ? Ottawahitech ( talk) 19:20, 4 November 2011 (UTC)
What does the P&L calculation for a repo look like? Is the collaterial always bought back at the same price it was sold?
For open repos, can either the buy or seller initiate the unwinding of the position? Floyd2012 ( talk) 18:44, 27 June 2012 (UTC)
Overall, this is a well-written, informative article that helped me quickly brush up on a few aspects of the repo market that I’d become rusty on.
But in Section 1 (“Structure and terminology”), the last sentence of the 2nd paragraph needs to be explained more fully: “…a key aspect of repos is that they are legally recognised as a single transaction (important in the event of counterparty insolvency) and not as a disposal and a repurchase for tax purposes.”
Most of us readers aren’t specialists in either repos, bankruptcy law, or the tax code, so this sentence is virtually impossible to understand as written. (As an economist, I’m already basically familiar with repos, but I don’t understand that sentence at all.)
As I said above, this is a good article. It seems to merit better than “C class” and deserves to be nominated for a higher status (after a thorough review by a WP copyediting specialist, which I’m not qualified to do). -- Jackftwist ( talk) 18:38, 2 October 2012 (UTC)
![]() | This is an archive of past discussions. Do not edit the contents of this page. If you wish to start a new discussion or revive an old one, please do so on the current talk page. |
Why is the abbreviation for repurchase agreement repo?
What are the legal statuses regarding entitlement (legel owner, coupon & dividend payments) during a repo?
The seller of the bond retains the right to the coupon (or dividend) during the life of the Repo. The coupon will be paid to the whoever owns the bond during the Repo but this must be paid on to the seller.
Correct on the above. Operationally, the owner of the bond during the Repo period "manufactures" a similar payment to the Repo seller. This is true in classic repo transactions. As repo transactions are true sale/repurchase transactions, legal title transfer is effected at the start leg of the transaction, and at the maturing leg. — BernardChin 12:43, 6 October 2006 (UTC)
Why is it so damn hard to find someone that knows about them and with whom you can invest in repos? You'd think private banking and ivestment baning reps would know about a USD 5 trill. market. -- Kimonandreou 18:28, 12 January 2006 (UTC)
Repos are generally about lending or borrowing large amounts of money i.e. not something for the private investors. Even if acting as an intermediary and making profits on the spread between reversing and repoing the spreads are tight so you need a lot of capital to start with, not to mention settlement facilities etc.
If you happen to hold very large quantities of high quality bonds and want to raise cash more cheaply than unsecured lending, I'm sure you can find an investment bank that would be interested in talking to you.
Practically, it is a question of scale and efficiency when trade amounts are small.
Retail repos exist in countries such as Taiwan and Korea. You would naturally expect
retail repo rates to be wider (bid/ask) then institutional levels. (Practitioner) —
BernardChin
12:29, 6 October 2006 (UTC)
What are the key issues to consider when structuring a Repo using convertible bonds as the underlying security?
These days, repo markets have advanced and collateral types include convertible bonds, asset-backed securities, structured-notes, regular liquid government bonds, and equities. You just have to address the increased risks given the liquidity of the collateral. — BernardChin 12:32, 6 October 2006 (UTC)
What does this sentence mean?
Securities Lending While general motivation of Repo is the borrowing or lending of cash, is securities lending the motivation is to temporarily obtain the security for other purposes, such as covering short positions or for use in complex financial structure. Securities are generally lent out for a fee. Securities lending trades are governed by different types of legal agreements to Repos.
Economically, Repos or SecuritiesLending can accomplish purposes as funding or securities-covering. Legally, the transactions are similar with title transfers. However, they are legally governed by different master agreements. — BernardChin 12:40, 6 October 2006 (UTC)
Is repo a transaction of capital market? Or is it only a transaction of money market?
Arguably both. Textbook authors usually focus on capital *or* money market. Repos straddle both markets. Those who argue for money market tend to be cash-focused. Those who argue for capital market tend to be security-focused. — BernardChin 12:35, 6 October 2006 (UTC)
Is there any particular advantage in trading repos with a short maturity e.g. overnight compared to say 6 months? What market conditions would a longer contract benefit over a shorter one? Euanbeer 09:33, 22 September 2006 (UTC)
Depends what risk/return you want. Longer term repos lock you into term interest rate risk, versus say overnight interest rate risk. Operationally, if you do overnight repos, you have to do them (roll them) again the next day, and this can get tedious. Consequently, the market also has a OPEN repo, in addition to overnight and term repos. — BernardChin 12:39, 6 October 2006 (UTC)
Is it true that the repo rate is higher than the treasury yield, but lower than fed funds rate? Is this true in general, or does this apply only to the US? Finnancier ( talk) 12:11, 16 December 2007 (UTC)
Are open repos really traded or is it only a theoretical concept? If they are reallly traded, how does it work exactly? Who decides when the repo should end (the borrower or the lender)? Is the repurchase price agreed upon beforehand? Does the borrower make regular interest payments during the loan period?
yes, they are booked in high volume. They are typically re-rated daily to account for market movement and so have far smaller interest rate risk exposure. Eventually the trade is 'closed' out at which point closing cash is calculated using the series of rates applied throuout the trade.
—Preceding unsigned comment added by 99.231.76.148 ( talk) 02:21, 22 November 2008 (UTC)
I updated text, previously it stated buy/sell backs are not marked to market and tracked for margin. This isn't strictly correct, they are typically tracked along with repo. They do have slightly increased risk to to the lessened legal standing in the absence of a legal agreement. If the liquidators come in, they will retrieve lost collateral for trades covered by agreements first.
I propose that Repo_105 be merged into Repurchase agreement. The content in the Repo 105 article can easily be explained in the context of repurchase agreement. From there, may be add a paragraph on accounting scandals using these agreements. Drybittermelon ( talk) 06:15, 8 December 2010 (UTC)
Can this be added to this article: http://dealbook.nytimes.com/2011/11/03/as-regulators-pressed-changes-corzine-pushed-back-and-won/ ? Ottawahitech ( talk) 19:20, 4 November 2011 (UTC)
What does the P&L calculation for a repo look like? Is the collaterial always bought back at the same price it was sold?
For open repos, can either the buy or seller initiate the unwinding of the position? Floyd2012 ( talk) 18:44, 27 June 2012 (UTC)
Overall, this is a well-written, informative article that helped me quickly brush up on a few aspects of the repo market that I’d become rusty on.
But in Section 1 (“Structure and terminology”), the last sentence of the 2nd paragraph needs to be explained more fully: “…a key aspect of repos is that they are legally recognised as a single transaction (important in the event of counterparty insolvency) and not as a disposal and a repurchase for tax purposes.”
Most of us readers aren’t specialists in either repos, bankruptcy law, or the tax code, so this sentence is virtually impossible to understand as written. (As an economist, I’m already basically familiar with repos, but I don’t understand that sentence at all.)
As I said above, this is a good article. It seems to merit better than “C class” and deserves to be nominated for a higher status (after a thorough review by a WP copyediting specialist, which I’m not qualified to do). -- Jackftwist ( talk) 18:38, 2 October 2012 (UTC)