What Is Securities Purchased Under Resale Agreements

In 2008, attention was drawn to a form known as Repo 105 after the collapse of Lehman, as it was claimed that Repo 105s was used as an accounting trick to hide the deterioration in Lehman`s financial health. Another controversial form of the buyback order is “internal repurchase agreement,” which was first known in 2005. In 2011, it was suggested that repos used to fund risky transactions in European government bonds may have been the mechanism by which MF Global risked several hundred million dollars of client funds before its bankruptcy in October 2011. Much of the collateral for repo would have been obtained through the re-collateralization of other client securities.