Buy and Sell back

$50.00 / year

SFT, is best understood in comparison to the Repo. That is indeed, how the SFTR defines it: in contrast to a repo. All SFTs, have an opening leg, and a closing leg. In the repo, the cash is given as a loan, in the opening leg, in exchange for collateral. In the opening leg, of a buy and sell-back, the lender buys securities, paying cash to the borrower. Thus, the borrower receives a cash inflow, which meets its borrowing requirement. From an asset flow perspective, the economic impact of the opening leg, is identical in the two types of SFTs. In the closing leg of a repo, the loan is repaid, and the collateral is released.


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