Delete Surname Field in the Repurchase Agreement

Aug 6th, 2022
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How to Delete Surname Field in the Repurchase Agreement

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our central bank is in the market constantly and almost daily adjusting the amount of cash in the marketplace and as you might know cash is measured by monetary measurement called m1 m1 is the amount of cash in circulation and this is something that the Fed looks at monitors on almost a daily basis and the way they facilitate the fine-tuning of cash in the marketplace is in a product called repo which is well illustrated on one of the slides in your presentation here if we look at the repo slide what Im highlighting here is a traditional repo transaction now just to take a step back for a moment it is estimated that the repo market is the largest trading market in the world then on a daily basis there is approximately six trillion dollars a day trading in the repo market this market is huge and I would add then that most people outside our industry dont understand repo and it is critical to our industry so replicating briefly what you have on the slide in front of you all right let u

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In general, high-quality debt securities are used in a repurchase agreement. The securities function as collateral in a repurchase agreement. Examples may include government bonds, agency bonds, supranational bonds, corporate bonds, convertible bonds, and emerging market bonds.
A repurchase agreement is a contractual arrangement between two parties, where one party agrees to sell securities to another party at a specified price with a commitment to buy the securities back at a later date for another (usually higher) specified price.
For example: If Lehman owned a bond that was worth $105, it would sell it on the repo market for $100. (The 105 in Repo 105 refers to the fact that the assets were worth at least 105% of what Lehman was getting for them.)
An RRP is a liability on the Federal Reserves balance sheet, like reserves, currency in circulation and the Treasurys General Account. When RRP transactions are settled, the New York Feds triparty agent transfers the cash proceeds received from RRP counterparties to the New York Fed.
When valuing securities, the purchased securities are valued using their current market price plus accrued interest to compute their total value. The total value is then compared to the repo value multiplied by any margin percentage.
The payable under a repurchase agreement refers to the amount of the seller-borrowers obligation recognized for the future repurchase of the securities from the buyer-lender. In certain industries, the terminology is reversed; that is, entities in those industries refer to this type of agreement as a reverse repo.
A repurchase agreement, or repo, is the sale of a financial asset (well use securities as our asset for our discussion today) together with an agreement for the seller to repurchase the financial asset (buy back the securities) at a later date.
Repurchase agreements (RPs, or repos) and reverse repos are used for short-term lending and borrowing, often overnight, for banks looking to fulfill their reserve requirements. Central banks use repos and reverse repos to add and remove from the money supply via open market operations.
A repurchase agreement (repo) is a form of short-term borrowing for dealers in government securities. In the case of a repo, a dealer sells government securities to investors, usually on an overnight basis, and buys them back the following day at a slightly higher price.

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