While a pension purchase contract involves a sale of assets, it is considered a loan for tax and accounting purposes. The buy-back contract, or “repo,” the market is an opaque but important part of the financial system, which has recently attracted increasing attention. On average, $2 trillion to $4 trillion in pension transactions are traded every day — guaranteed short-term loans. But how does the pension market work, and what about it? This is the “eligible security profile” that allows the purchaser to take the risk of defining his appetite for risk with respect to the collateral he is willing to hold for his money. For example, a more reluctant pension buyer may only hold “current” government bonds as collateral. In the event of liquidation of the pension seller, the guarantee is highly liquid, so that the pension buyer can quickly sell the security. A less reluctant pensioner may be willing to take bonds or shares as collateral without investment degree bonds or shares, which may be less liquid and which, in the event of a pension seller`s default, may experience higher price volatility, making it more difficult for the pension buyer to sell the guarantees and recover his money. Tripartite agents are able to offer sophisticated collateral filters that allow the repo buyer to create these “legitimate collateral profiles” capable of generating systemic collateral pools reflecting the buyer`s appetite for risk.  For the buyer, a repot is a way to invest cash for an appropriate period (other investments generally limit durations). It is short-term and safer as a guaranteed investment, since the investor receives guarantees. The liquidity of the deposit market is good and interest rates are competitive for investors.
Money funds are big buyers of retirement transactions. The main difference between a term and an open repo is between the sale and repurchase of the securities. 1) The dependence of the tripartite reshuttering market on intra-day credit granted by clearing banks comes in three forms: specified delivery, tripartie and deposit (the “seller” party holding the guarantee for the duration of the renu trapping period). The third form (Hold-in-custody) is quite rare, especially in development-oriented markets, due in part to the risk that the seller may intervene before the transaction is completed and that the buyer will not be able to recover the guarantees issued as collateral for the transaction. The first form – the indicated delivery – requires the delivery of a predetermined loan at the beginning and maturity of the contract. Tri-Party is essentially a form of trading basket and allows a wider range of instruments in the basket or pool. In the case of a tripartite repurchase transaction, a third-party agent or bank is placed between the “seller” and the buyer. The third party retains control of the securities that are the subject of the agreement and processes payments made by the “seller” to the buyer. In the case of a repurchase transaction, the Desk acquires cash, agency or mortgage-backed securities (MbS) from a counterparty, subject to a subsequent resale agreement. It is economically akin to a loan secured by securities with a value greater than the loan, in order to protect the desk from market and credit risks. Reseat operations temporarily increase the amount of reserve balances in the banking system. After the 2008 financial crisis, investors focused on a certain type of repo, known as Repo 105.