An introduction to repo and the Global Master Repurchase Agreement (GMRA)

Produced in partnership with Joseph Wren of Travers Smith and Jonathan Gilmour of Travers Smith

Practice notes

An introduction to repo and the Global Master Repurchase Agreement (GMRA)

Produced in partnership with Joseph Wren of Travers Smith and Jonathan Gilmour of Travers Smith

Practice notes

What is repo?

Repo is the market term for a ‘repurchase transaction’, which involves the sale of an asset by one party (the seller) to another party (the buyer) with a simultaneous agreement between the parties that the seller will repurchase the asset from the buyer at a future date for a specified price.

Any asset that is capable of being transferred from one person to another may be subject to repo. The most common types of asset that are repo’d are debt securities (bonds), equity securities (shares) and other financial assets such as loans and commodities. Commodity repos give rise to particular documentary, structural and legal issues which are not covered in this Practice Note. For information on commodity repos, see Practice Note: Commodity repo transactions and true sale considerations.

The principal payment and delivery obligations in a typical repo are set out in the diagram below:

Purchase Date:

Repurchase Date:

The main features of repo therefore are:

•
the assets

Joseph Wren

Travers Smith

Joseph is a partner in the finance department at Travers Smith, where he is part of the Derivatives & Structured Products Group. Joseph joined Travers Smith as a trainee in 2010 and became a partner in 2020.

He regularly acts for private equity and private credit funds, infrastructure and real estate funds, investment managers, asset managers, pension schemes and corporates. He also advises sell-side institutions such as banks and other financial institutions. Joseph is described by Legal 500 UK as "approachable, knowledgeable and commercial" and was recognised in the 2020 edition as a Rising Star. Joseph has also co-authored articles on the subject of derivatives and associated regulation for the Butterworths Journal of International Banking and Financial Law, International Financial Law Review and Private Equity News.

Jonathan Gilmour

Travers Smith

Jonathan specialises in derivatives and structured products from both a transactional and advisory standpoint. He is widely regarded by peers and clients as one of the leading specialists in his field. He counts among his clients some of the UK's largest and most sophisticated financial institutions, investment managers, private equity houses, challenger banks and occupational pension schemes. Jonathan regularly negotiates and advises on ISDA, GMRA and GMSLA documentation as well as the impact of related regulation including EMIR and SFTR. He also advises on the structure and documentation of bespoke transactions to hedge exposure to key market risks, including interest rate, inflation, FX and longevity; and advises on investment management, custody, clearing and collateral management arrangements, as well as pension scheme funding and risk transfer arrangements.

Jonathan's practice also includes advising clients on the inter-relationship between derivatives and ESG, sustainable finance, regulatory disclosure requirements and carbon trading.

Jurisdiction(s):

United Kingdom

Key definition:

Repurchase agreement definition

What does Repurchase agreement mean?

An agreement to sell securities, usually bonds, to another party and to buy them, usually after a few days, back at a specified date and price.

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