Series 27: Repurchase Agreements

Repurchase Agreements

A repurchase agreement is a short-term contract to sell a security and buy it back later at a set price, usually the next day. For the party on the other end, it is a reverse repurchase agreement. A reverse repurchase agreement is a contract to buy a security now and sell it later at a set price.

In the case of a reverse repurchase agreement, the deduction as a non-allowable asset equals the reverse repurchase agreement deficit. A reverse repurchase agreement deficit is the difference between the securities’ contractual resale price and their market