The Repo Market: What It Is, and Why Everyone Is Talking About It Again

Traders are scrambling to discern what caused an unexpected rate spike in a vital but murky part of the financial system—the market for repurchase agreements, known as repo. What is the repo market? A repo is when one party lends out cash in exchange for a roughly equivalent value of securities, often Treasury notes. This market exists to allow companies that own lots of securities but are short on cash to cheaply borrow money. And it allows parties with lots of cash to earn a small return while taking little risk, because…


Source link

Leave a Reply

Your email address will not be published. Required fields are marked *

error: Content is protected !!