What Does Repurchase Agreement (Repo) Mean?
A short-term borrowing instrument for dealers in government securities. The dealer sells the government securities to investors, usually on an overnight basis, and buys them back the next day. For the sellers, who agree to repurchase the securities in the future, it is a repo; for the party on the other end of the transaction (buying the securities and agreeing to sell them in the future), it is a reverse repurchase agreement. Investopedia explains Repurchase Agreement (Repo) Repos are classified as money market instruments. They are used to raise short-term capital. Related Terms: • Commercial Paper • Debt • Liquidity • Money Market • U.S.
