Repurchase agreement
A repurchase agreement is a contract by which the owner of an asset (the repo seller) sells it to the repurchase for a limited period of time. The time of return can be agreed in advance or determined later. Usually at least one of the two contractual partners is a credit institution .
If the traded asset is a security , one speaks of a securities repurchase agreement .
In economic terms, a repurchase agreement is similar to a short-term loan secured by the asset that the borrower grants to the lender. Also, central banks act as a lender, awarded on repurchase loans to commercial banks for their funding if they ( open market operations ).
species
Real repurchase agreement
In a real repurchase agreement , the buyer is obliged to sell back the asset. At the same time, the lender has a repurchase obligation. From the lender's point of view, the real repurchase agreement is similar to an unconditional forward deal (see futures contract ).
A repurchase agreement is a short-term financial instrument that is also a real repurchase agreement.
Fake repurchase agreement
In the case of a bogus repurchase agreement , the borrower is entitled, but not obliged, to sell back the asset. The lender remains obliged to buy back if the borrower offers the asset. The spurious repurchase agreement is thus similar to a put option with the borrower as buyer and the seller as writer of the option.
Accounting
In Germany, the Commercial Code (HGB) stipulates in Section 340b that, in the case of a genuine repurchase agreement, the seller must continue to show the assets transferred to the buyer in his balance sheet and must also show a liability to the buyer in the amount received from the buyer. The transferee may not show the transferred asset in his balance sheet; he has to show a claim against the lender in the amount of the amount reimbursed for the transfer.
In the case of a fake repurchase agreement, on the other hand, the borrower has to show the transferred asset in his balance sheet.
See also
Individual evidence
- ↑ a b c Commercial Code Section 340b repurchase agreements. In: dejure.org. Retrieved January 15, 2019 .