repurchase agreementrepurchase agreement
repurchase agreement - Investment & Finance Definition
Often called a repo. An agreement in which a securities holder sells the securities to an investor with an agreement to repurchase them at a fixed price on a fixed date. In effect, the buyer of the securities is lending the seller money. Dealers typically use this arrangement to finance their positions. Used in the context of the Federal Reserve, however, a repo refers to a situation in which the Fed lends money and increases the reserves of banks. Typically, this is done in an overnight transaction, but there are term repos that last for different time periods.