** Sources that imply the party doing reverse repo buys securities and sells them later: **
> The party engaging in reverse repo first buys the securities, which serve as collateral for the cash they’re sending to the other party, and then they ultimately receive a return on that cash when the transaction is unwound,
https://www.businessinsider.com/personal-finance/what-is-reverse-repo?IR=T
> The party doing the reverse repo contracts to buy a security at a particular price and to sell it back at a predetermined price and time.
Elton et al., “Modern Portfolio Theory and Investment Analysis” 9e, p. 13
**Sources that imply the party doing reverse repo sells securities and buys them later:**
> For the party originally selling the security (and agreeing to repurchase it in the future), it is a reverse repurchase agreement (RRP).
https://www.investopedia.com/ask/answers/041615/what-difference-between-repurchase-agreement-and-reverse-repurchase-agreement.asp
> A reverse repurchase agreement conducted by the Desk, also called a “reverse repo” or “RRP,” is a transaction in which the Desk sells a security to an eligible counterparty with an agreement to repurchase that same security at a specified price at a specific time in the future.
https://www.newyorkfed.org/markets/rrp_faq
What is going on?
In: 1
They are describing the same thing, just from two different perspectives.
For example:
1) A sales transaction is when a seller delivers a product to a buyer in exchange for cash.
2) A sales transaction is when a buyer delivers cash to a seller in exchange for product.
Both the above are equivalent. The RRP has 2 parties (ELI5) – so the description can be written with either party as the subject.
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