Treasury or treasury bonds, corporate and treasury bonds, government bonds and equities can all be used as “guarantees” in a repurchase transaction. However, unlike a secured loan, the right to securities is transferred from the seller to the buyer. Coupons (interest payable to the owner of the securities) that mature while the pension buyer owns the securities are usually passed directly on the seller of securities. This may seem counter-intuitive, given that the legal ownership of the guarantees during the pension agreement belongs to the purchaser. Rather, the agreement could provide that the buyer will receive the coupon, with the money to be paid in the event of a buyback being adjusted as compensation, although this is rather typical of the sale/buyback. A pension purchase contract, also known as repo, PR or Surrender and Repurchase Agreement, is a form of short-term borrowing, mainly in government bonds. The distributor sells the underlying guarantee to investors and, by mutual agreement between the two parties, buys it back shortly thereafter, usually the next day, at a slightly higher price. To determine the actual costs and benefits of a pension transaction, the buyer or seller who wishes to participate in the transaction must take into account three different calculations: there are three main types of pension transactions. For the party that sells security and agrees to buy it back in the future, it is a repo; for the party at the other end of the transaction, the purchase of the warranty and the consent to sell in the future, it is a reverse buyback contract. If interest rates are positive, the pf redemption price should be higher than the original PN selling price.
From the seller`s point of view, we are talking about repo: sale followed by withdrawal, from the buyer`s point of view, we are talking about reverse repo: purchase followed by resale. A sale/buy-back is the cash sale and pre-line repurchase of a security. These are two separate pure elements of the cash market, one for settlement in advance. The futures price is set against the spot price in order to obtain a market return. The basic motivation of Sell/Buybacks is generally the same as in the case of a conventional repo (i.e. the attempt to take advantage of the lower financing rates generally available for secured loans, unlike unsecured loans). The profitability of the transaction is also similar, with interest on the money borrowed from the sale/purchase being implicitly included in the difference between the sale price and the purchase price. The term REPO is a contraction of the “sales and retirement contract.” It relates to a transaction in which two parties agree simultaneously on two transactions: a sale of securities for cash, followed by a forward redemption at a pre-agreed date and price. This transaction is called a retirement transaction. 2) The liquidity payable when the guarantee is repurchased, despite regulatory changes over the past decade, systemic risks remain for the pension space.