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The Repo and Securities Lending Market

Wall Street Mechanics — The Insider Curriculum • Beginner Investing • 7 min

Beneath the visible stock and bond markets lies a vast, mostly invisible wholesale market. Most individual investors never interact with it. Yet, the financial system relies on it every day: the repo market. A repo, or repurchase agreement, is a short-term transaction. One party sells a security, usually a U.S. Treasury bond, agreeing to buy it back later at a slightly higher price. This functions as a short-term,…

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