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Overview of Repo
Under a repo transaction, customers can sell securities to UOB with a simultaneous agreement that UOB will repurchase the equivalent securities from the customer at a future date for a pre-determined price.
Product types include repo, reverse repo, and cross-currency repo.
Document(s) required:
- Global Master Repurchase Agreement (“GMRA”)
Risks involved:
- Market Risk
- Interest Rate Risk
- Credit Risk
Benefits
Access short-term funds with securities
Lower cost of funding
Transfer of securities reducing risk
Balance sheet relief
Quick execution and short turnaround
Flexible tenors for any liquidity needs
Repo and Reverse Repo
Rationale for Securities Seller
Entity selling security to the other party for cash before repurchasing the equivalent securities at a future date
- Gain access to short-term funding at a favourable rate
- Finance long securities position by using repos
- Cost of funding may be lowered depending on the quality of the securities
Frequently asked questions
What securities can be used in a repo transaction?
Generally, among the Asian market participants, the widely used securities in repo transactions are sovereign credit (e.g. U.S. Treasuries and Agencies, European Sovereigns, Asian Sovereigns) and investment grade corporate bonds.
For Malaysia market, the eligible securities are Malaysia Government Securities (MGS), Government Investment Issues (GII), Treasury Bills, BNM Notes and corporate bonds endorsed by BNM.
Additional information
Reverse Repo Illustration
Reverse Repo Illustration
Structure schematics
- At inception, UOB is the securities purchaser, Investor is the securities seller
- At maturity, UOB receives cash including interest while Investor repurchases the securities. For longer term Repos, interest may be paid quarterly or semi-annually.
*Haircut will be the percentage of additional securities required. Amount of haircut usually depends on the type of underlying securities.
This is only an illustration, it does not constitute an offer or an invitation to offer or a solicitation or recommendation to enter into or conclude any transaction. Please contact UOB for more information.
Global Markets Sales
Please contact us during office hours:
- Commercial Desk: +6 03 - 2613 8188
- Corporate & FIG Desk: +6 03 - 2776 9166
- Business Banking Desk: +6 03 - 2776 9188
24-hour UOB Call Centre
- Kuala Lumpur: +6 03 - 26128 121
- Penang: +6 04 - 2401 121
- Johor Bahru: +6 07 - 2881 121
- Kuching: +6 082 - 287 121
- Kota Kinabalu: +6 088 - 477 121
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