(FINANCE) department of a securities firm that specializes in repurchase agreements. A repurchase agreement is a type of short-term loan in which a borrower sells a security (like a share of stock) and agrees to buy the same security back in a few days.
From the point of view of the counterparty buying/re-selling the stock, this deal is known as a reverse-repo. Reverse-repos are useful to brokerages because they allow the brokerage to short the stock.
From the point of view of the counterparty buying/re-selling the stock, this deal is known as a reverse-repo. Reverse-repos are useful to brokerages because they allow the brokerage to short the stock.
Through a repo desk, the bank can finance short-term borrowings on behalf of itself and its clients. The repo desk makes money by charging interest on typically very short term loans - 1 to 5 days.
by Abu Yahya September 27, 2010