The Snake Keeper Blog

In other words, these are relatively safe operations, since they are guaranteed loans, a third of which is usually used as a custodian bank. While a retirement transaction involves a sale of assets, it is treated as a loan for tax and accounting purposes. A Buy/Sell Back is the equivalent of a “reverse repo”. Treasury or government bills, corporate and treasury/government bonds, and shares can all be used as “collateral” in a repo transaction. However, unlike a secured loan, the right to securities passes from the seller to the buyer. Coupons (interest to be paid to the owner of the securities) due while the buyer in repo holds the securities are usually directly passed on to the seller in repo. This may seem counterintuitive, since the legal ownership of the security rights during the repo contract belongs to the buyer….