Reverse repo

The term refers to the transaction in which the capital issuer finances the funds to the fund-incorporating party, receives marketable securities as a pledge, and recovers the principal and interest in the future and discharges the pledge of marketable securities.

Revenue Formula

Turnover x Annual Yield x Repo Days/365 Days = Revenue

Positive Repo Definition:

Positive Repo is the party that mortgages out the bonds and obtains the funds for the incorporating party; while Reverse Repo is the party that accepts the bonds as a pledge to lend out the funds for the lending party.

Positive repo and reverse repo comparison:

Positive repo is now selling bonds to buy them back in the future, and reverse repo is now buying bonds to sell in the future.

Operating Procedure

In the trading interface, select "sell", enter the code (such as 204001), the financing price is the annualized interest rate, the number of the lowest is 1,000 (sheets), representing 100,000 yuan, every 100,000 yuan increment, click on the order of the financing on it (above the display of the maximum can be fused meaningless). If it is a one-day repurchase, the next trading day (T + 1 day) funds available but not desirable, T + 2 day desirable. Available means you can buy any security; withdrawable means you can transfer to your bank account.

Note: The rule of repo trading is "one transaction, two settlements". When you do the reverse repo lending funds, the maturity of the funds will automatically return to your account

People's Bank of China account, during the period do not have to do any operation. For example, 1 day repo, the funds on the evening of the day shows available, but in fact the funds T + 1 evening return to your account (we will do an in-depth analysis of the trading rules later).

T+1 day refers to the date of the transaction, so if you do a one-day forward repo on Friday, the funds will not be available until the following Monday, but in reality you are still only getting one day's annualized interest rate.

Note: Some brokers make funds available on T+2, which is obviously unreasonable.

7-day repo means 7 natural days, for example, if you do a 7-day repo on Monday, the funds will be available on the following Monday.

Main impact

1, the reverse repurchase volume itself has shown that the market shortage of funds. The central bank huge amount of reverse repurchase intended to ease the short-term liquidity constraints.

2, the reverse repo rate has become the market's new interest rate weathervane.

3, the term of the reverse repurchase alternating, so that the funds put more accurate.

4, the reverse repo ranked first among all types of liquidity tools.

5, the meaning of the central bank reverse repurchase is basically considered the reserve requirement rate downward microcosm, the gap lies in the amount of the size of the problem.