General TradingR

Repo (RP)

A repurchase agreement in which one party sells securities to another with an agreement to repurchase them at a higher price on a specified future date. Repos are used for short-term borrowing and are a key tool in central bank monetary operations.

Example

“A bank needing overnight cash sells $100 million in Treasury bonds to the Fed through a repo, agreeing to buy them back the next day at a slightly higher price that reflects the overnight interest cost.”