REPO Repurchase Agreements

Overview:

Introduction:

Repurchase Agreements (REPOs) are short-term financial instruments used for borrowing and lending funds through the sale and repurchase of securities. They play a critical role in maintaining liquidity in financial markets while offering low-risk investment opportunities. This training program equips participants with a clear knowledge on REPO mechanisms, their applications in financial markets, and strategies to manage risks and optimize returns in REPO transactions.

Program Objectives:

By the end of this program, participants will be able to:

• Analyze the fundamentals and structure of REPOs in financial markets.

• Utilize pricing and valuation techniques for REPO transactions.

• Identify and manage risks associated with REPO operations.

• Evaluate legal and regulatory frameworks governing REPO markets.

• Explore advanced technologies and trends influencing REPO markets.

Targeted Audience:

• Treasury and finance professionals.

• Investment bankers and portfolio managers.

• Risk management and compliance officers.

• Financial market analysts.

• Professionals involved in money market operations.

Program Outline:

Unit 1:

Fundamentals of Repurchase Agreements (REPOs):

• Definition and structure of REPOs in financial markets.

• Key terms: haircut, margin, collateral, and settlement.

• Types of REPOs: classic, sell/buy-back, and tri-party.

• Differences between REPOs and other short-term financing instruments.

• Historical development and importance in global financial systems.

Unit 2:

Pricing, Valuation, and Market Applications:

• Principles of REPO pricing and yield calculations.

• Valuation of collateral and its role in determining REPO terms.

• REPOs for liquidity management and arbitrage.

• Key activities for the use of REPOs in monetary policy implementation by central banks.

Unit 3:

Risk Management in REPO Transactions:

• Tools for identifying risks: counterparty, market, and operational risks.

• Managing collateral: eligibility, valuation, and substitution.

• Strategies for minimizing settlement and liquidity risks.

• Role of margin calls and haircuts in mitigating financial exposure.

Unit 4:

Legal, Regulatory, and Compliance Frameworks:

• Master agreements: GMRA and their provisions.

• Overview of global and regional REPO market regulations.

• Compliance with Basel III guidelines on liquidity and leverage.

• Addressing anti-money laundering (AML) and counter-terrorism financing (CTF) risks in REPOs.

• Adapting to evolving regulatory changes and their market implications.

Unit 5

 Advanced Techniques and Market Trends:

• Exploring electronic platforms and automation in REPO trading.

• The role of REPOs in managing systemic risk and financial stability.

• Innovations in collateral management technologies.

• Impact of economic policies on REPO markets.

• Future trends: sustainability-linked REPOs and green finance integration.