Hello, everyone.
Just in case you need to refresh your memories on the meaning of terms used in the shadow banking sector, I've uploaded a few links that should help clarify any doubts.
Regards.
Tom.
Money Market: Repos
Repo is short for repurchase agreement. Those who deal in government securities use repos as a form of overnight borrowing. A dealer or other holder of government securities (usually T-bills) sells the securities to a lender and agrees to repurchase them at an agreed future date at an agreed price. They are usually very short-term, from overnight to 30 days or more. This short-term maturity and government backing means repos provide lenders with extremely low risk.
Repos are popular because they can virtually eliminate credit problems. Unfortunately, a number of significant losses over the years from fraudulent dealers suggest that lenders in this market have not always checked their collateralization closely enough.
There are also variations on standard repos:
- Reverse Repo - The reverse repo is the complete opposite of a repo. In this case,
a dealer buys government securities from an investor and then sells them
back at a later date for a higher price
- Term Repo - exactly the same as a repo except the term of
the loan is greater than 30 days.
Read more: Money Market: Repos | Investopedia http://www.investopedia.com/university/moneymarket/moneymarket7.asp#ixzz476mgeIn3
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14. What is the difference between repo and securities
lending?
What is
'Securitization'
http://www.investopedia.com/terms/s/securitization.asp
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