Repurchase Agreements repo

A repurchase agreement, also known as a repo, is the sale of securities together with an agreement for the Bank to buy back the securities at a later date.

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What you need to know

An agreement is reached when there is a commitment by the seller or dealer to buy a security from the purchaser or customer at a specified price at a specified future date. When this agreement is made from the customer’s perspective, it is referred to as a Reverse Repo. We assist in such transactions to facilitate trade. It is essential to remember that it is an agreement between a seller and a purchaser and is used as a hedge to offset price fluctuations. This is the ideal investment for short—term excess funds as it yields a higher interest rate than other secure investment options or conventional Bank deposits. Also Repurchase agreements provide liquidity and yield advantages.

  • A repurchase agreement or Repo is an agreement of a simultaneous sale and purchase of security. Repurchase agreements should be backed by security, generally government securities.
  • Repo deposits are a money market instrument and could be of varied tenures. Hence this sort of instrument is widely used to invest short term and medium term funds.
  • The amount invested is not restricted and will be up to the discretion of the customers involved.
  • Interest is paid on maturity.

Some key features of Repurchase agreements are:

  • Liquidity – Repos provides you the ability to invest cash overnight, making them a critical component in the effort to manage liquidity.

Eligibility to apply for Treasury Bills:

Corporate Bodies incorporated in Sri Lanka which maintains a Savings or Current Account at any Bank can purchase REPOs.

Terms & conditions

Product information and terms & conditions are subject to change from time to time. Therefore, it is advisable to contact us for the latest information and prevailing terms & conditions.

Information for foreign clients Information for local clients

 

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