Understanding the Repo Market


This is a one-day introductory course catering for delegates who are new to the business of repurchase agreements (repos).  The course aims to explain how repos are constructed and applied across different market conditions, whilst demystifying associated jargon and terminology.  As a way of introduction, the course includes a brief overview of the underlying bond and money market operations.

The course studies the applications of repos for risk management, speculation and arbitrage purposes.  Particular emphasis is placed on the relationship between the repo market and derivatives such as swaps, options and exchange traded bond futures.


-   Hedge Fund Managers and Staff
-   Equity Finance Operators
-   Fund Managers
-   Brokers, especially those involved in Fixed Income
-   Market Makers in Fixed Income, Derivatives etc
-   Settlement and Back Office Staff
-   Custodians
-   Institutional Salesmen
-   IT and Systems Executives involved in systems for Repos

In order for delegates to gain as much benefit from the course as possible, prior appreciation of the concept of 'time value of money' and basic bond and money market fundamentals would be useful, as well as a basic understanding of derivatives products including swaps, options and futures.  However, this is not an absolute requirement.


Money Market Overview

This brief section provides an overview of the money market, its products and conventions for calculating interest rates.  This is useful when studying certain aspects of the repo market.

-   Explanation of the Money Markets

-   Calculating Interest

-   Conventions in the Market

-   Cash Deposits, T-bills, Bills of Exchange, CD's, CP

Bond Market Overview

The following section provides an overview of the important concepts of the bond market, which are relevant to the understanding of the repo market.

-   Definition of Bond Types

-   Coupon and Accrued Interest

-   Calculating a Bond Price/Yield

-   Yield to Maturity and Spot Yield Curve

Derivatives Overview

This section covers a brief overview of the key concepts relating to derivatives contracts, which are commonly applied in the trading of repos.

-   Definition of Bond Futures

-   Explanation of Interest Rate Swaps

-   Types of Options

Repo Market

This section provides an explanation of the different types of repos that can be traded and how they are priced and settled on a bilateral or tri-party basis.

Market Development and History - GMRA

-   Definition of Repo Types and Legal Agreement

-   Classic Repo / Sell

-   Buy Back / Collateral Lending

-   Cross Currency Repos

-   Comparison of Repo Types

-   Quoting a Repo Price

-   Hold in Custody

-   General Collateral v Special

-   Haircuts and Types of Margin Settlement

-   Bilateral and Tri-Party Settlement

-   LCH Margining Arrangements

Applications of Repos

The following section concludes with a study of the different user types and uses of repos to provide an understanding of the interrelationships that exist across different markets.

-   Bond Dealers and Market Makers

-   Investors

-   Fund Managers

-   Corporate Treasurers

-   Futures and Options Traders

-   Swap Dealers

-   Central Bank Operations

Todays Date:

Duration 1 day
Available as an in-house course

Investment Education PLC
45 Old Hall Road, Manchester M7 4JF, United Kingdom
Tel:+44 (0)161 832 3800
Email: mail@investmentEducation.net
Registered in England Number 2129160
VAT Registered Number GB 480 2112 85

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