The repurchase contracts are concluded at the initiative of the New York Fed`s commercial counter (desk). The desk, at the request of the Federal Open Market Committee (FOMC), implements the monetary policy of the Federal Reserve system. While a pension purchase contract involves a sale of assets, it is considered a loan for tax and accounting purposes. A sale/buy-back is the cash sale and pre-line repurchase of a security. These are two separate pure elements of the cash market, one for settlement in advance. The futures price is set against the spot price in order to obtain a market return. The basic motivation of Sell/Buybacks is generally the same as in the case of a conventional repo (i.e. the attempt to take advantage of the lower financing rates generally available for secured loans, unlike unsecured loans). The profitability of the transaction is also similar, with interest on the money borrowed from the sale/purchase being implicitly included in the difference between the sale price and the purchase price. The parts of the repurchase and reverse-repurchase agreement are defined and agreed upon at the beginning of the agreement. Repo is a form of guaranteed loan. A basket of securities serves as an underlying guarantee for the loan. Securities law is transferred from the seller to the buyer and returns to the original owner after the contract is concluded.
The most commonly used guarantees in this market are U.S. Treasury bonds. However, government bonds, agency securities, mortgage-backed securities, corporate bonds or even shares can be used in a repurchase transaction. A buy/sell back is the equivalent of a “reverse repo.” A reverse repurchase agreement (RRP) is an act of buying securities with the intention of returning the same assets profitably in the future – to resell. This lawsuit is the opposite of the medal to the buyout contract. For the party that sells the guarantee with the agreement to buy it back, it is a buy-back contract. For the party that buys the guarantee and agrees to resell it, it is a reverse buyback contract. The reverse repo is the final step in the repurchase agreement for the conclusion of the contract. While conventional deposits are generally instruments that are sifted against credit risk, there are residual credit risks. Although this is essentially a guaranteed transaction, the seller may not buy back the securities sold on the due date. In other words, the pension seller does not fulfill his obligation.
Therefore, the buyer can keep the warranty and liquidate the guarantee to recover the borrowed money. However, security may have lost value since the beginning of the operation, as security is subject to market movements. To reduce this risk, deposits are often over-insured and subject to a daily market margin (i.e., if the guarantee ends in value, a margin call may be triggered to ask the borrower to reserve additional securities). Conversely, if the value of the guarantee increases, there is a credit risk to the borrower, since the lender is not allowed to resell it. If this is considered a risk, the borrower can negotiate a subsecured repot.  Under a pension agreement, the Federal Reserve (Fed) buys U.S. Treasury bonds, U.S. government securities or mortgage-backed securities from a primary trader who agrees to buy them back within one to seven days; an inverted deposit is the opposite. This is how the Fed describes these transactions from the perspective of the counterparty and not from its own point of view. A reverse pension contract, or “reverse pension,” is the purchase of securities with the agreement to sell them at a higher price at any given time.
For the party that sells the guarantee (and agrees to buy it back in the future), it is a buy-back (RP) or repo contract; for the other end of the transaction (purchase of security and consent to the sale in the future), it is a reverse repurchase agreement (RRP) or Reverse Repo.