What do we mean by reverse repos?
Xiaobian today to introduce it to you!
Reverse repo is a transaction in which the issuer of funds integrates the financial funds into the issuer, collects the securities as collateral, recovers the principal and interest in the future, and terminates the securities mortgage.
The central bank reverse repo is a transaction behavior in which China purchases securities from primary dealers with an agreement to sell the securities to primary dealers at a specified date in the future. The reverse repo is an operation in which the central bank releases liquidity into the market, while the direct repo is an operation in which the central bank withdraws liquidity from the market.
The simple explanation is that the transaction of actively lending funds and obtaining bond pledge is called reverse repo transaction. At this time, the central bank plays the role of investor, which is the lender of the bond pledge and the loan fund.
Investors or financial institutions can also conduct reverse repo transactions in the interbank bond market.
In the trading interface, select “sell”, input the code (such as 204001), the financing price is the annual interest rate, the minimum quantity is 1000(sheets), representing 100,000 yuan, every 100,000 yuan increase, click on the margin order (the maximum melting shown above is not meaningful).
In case of a one-day repurchase, funds are available but not desirable for the next trading day (T+1 day) and desirable for T+2 day.
Can mean to be able to buy any security;
Redeemable means it can be transferred to a bank account.
Note: The rule for repo transactions is “one transaction, two settlements”.
When you lend out funds through reverse repos, the maturing funds are automatically returned to your account without having to do anything in the meantime.
In the case of a 1 day repurchase, the funds appear available that night, but the funds are actually returned to your account on the night of T+1 (we will analyze the trading rules in depth later).