REPURCHASE AGREEMENT (REPO) and REVERSE REPURCHASE AGREEMENT (REVERSE REPO)
Repo is a securities sale contract accompanied by securities repurchase after a certain period of time, at fixed price.
Reverse repo is a purchase securities contract accompanied by securities resale after a certain period of time, at a fixed price.
Customer is a party who sells bonds and receives an amount fund as agreed, then after a certain period of time is required to repurchase the bonds that have been sold in an agreed price.
Benefits
- As an alternative solution to meet the liquidity needs of for Companies.
- As a financing alternative with more competitive cost compared to conventional financing.
- As an alternative to investing in short-term fund with relatively safe risk as there is credit risk mitigation by switching from unsecured borrowing and lending transactions to secured borrowing and lending transactions.
- The interest rate follows the interbank money market interest rate and is calculated using a simple interest calculation.
- Transactions are advised and uncommitted in the form of single transaction mechanism (loans with collateral).