+44(0)7903 92 98 95

In short, Repo is a very safe investment product for treasurers who want to expand their asset portfolio beyond short-term bank deposits and money funds, or what Oleg Williamson, EMEA treasury director of Parker Hannifin`s movement control technology company, calls “an old-fashioned investment policy.” In particular, Part B acts as a lender in a pension institution, while Seller A acts as a cash borrower and uses the guarantee as collateral; in an inverted repo (A) is the lender and (B) the borrower. A pension is economically similar to a secured loan, with the buyer (actually the lender or investor) obtaining guarantees to protect themselves from a seller`s default. The party that sells the securities at first is actually the borrower. Many types of institutional investors conduct repo transactions, including investment funds and hedge funds. [5] Almost all guarantees can be used in a repo, although highly liquidated securities are preferred, as they can be sold more easily in the event of default and, more importantly, they can easily be obtained on the open market, where the buyer has created a short position in the pension guarantee through an inverted repo and a sale in the market; at the same time, against liquid securities is not recommended. While fund providers are traditionally central banks, government institutions, commercial and supranational banks, triparty deposits are becoming increasingly attractive to buy-side clients such as companies, hedge funds and asset managers. They tend to prefer triparty-repos to more conventional money market instruments and bilateral deposits because of their unique risk-return combination, which combines a high level of security and additional return pick-ups. Clearstream acts as a neutral triparty agent for both parties and offers a full range of services ranging from opening the trade to concluding. Beginning in late 2008, the Fed and other regulators adopted new rules to address these and other concerns.

One consequence of these rules was to increase pressure on banks to maintain their safest assets, such as Treasuries. They are encouraged not to borrow them through boarding agreements. According to Bloomberg, the impact of the regulation was significant: at the end of 2008, the estimated value of the world securities borrowed was nearly $4 trillion. But since then, that number has been close to $2 trillion. In addition, the Fed has increasingly entered into pension agreements (or reverse buybacks) to compensate for temporary fluctuations in bank reserves. There are two types of repo maturities: the term and the open pension.