A financing arrangement used primarily in the government securities markets whereby a dealer or other holder of government securities sells the securities to a lender and agrees to repurchase them at an agreed future date at an agreed price which will provide the lender with an extremely low risk return.
Such a transaction is called a repo when viewed from the perspective of the supplier of the securities (the party acquiring funds) and a reverse repo or matched sale-purchase agreement when described from the point of view of the supplier of funds.
