Imported from previous forum
In FIX, is the buy-side of a REPO buying cash or buying the collateral? TIA!
[ original email was from John Harris - john.harris@bondmart.com ]
Well, people don’t generally use the phrase “the buy-side of the repo,” at least not in my experience.
The easiest way to keep repo straight is to think in terms of the direction of the collateral movement.
On the start leg of the repo, the buyer of the collateral is the supplier of cash; the seller of the collateral is the recipient of the cash. Commonly, the buyer of the collateral has excess cash and is looking for a secure, overnight or term investment. The seller of the collateral is looking for overnight or term financing of a securities position.
On the end leg of the repo, the collateral moves back to its original seller, against payment of cash.
You will also hear the terms “repo” and “reverse repo,” but these really just confuse the issue, because you have to ask, “From whose perspective?”
Just keep straight whether you are buying or selling collateral on the start leg of the repo and you won’t go wrong.
Best,
John
In FIX, is the buy-side of a REPO buying cash or buying the
collateral? TIA!