In particular, Part B acts as a lender in a pension institution, while Seller A acts as a cash borrower and uses the guarantee as collateral; in an inverted repo (A) is the lender and (B) the borrower. A pension is economically similar to a secured loan, with the buyer (actually the lender or investor) obtaining guarantees to protect themselves from a seller`s default. The party that sells the securities at first is actually the borrower. Many types of institutional investors conduct repo transactions, including investment funds and hedge funds.  Almost all guarantees can be used in a repo, although highly liquidated securities are preferred, as they can be sold more easily in the event of default and, more importantly, they can easily be obtained on the open market, where the buyer has created a short position in the pension guarantee through an inverted repo and a sale in the market; at the same time, against liquid securities is not recommended. In its simplest form, a repurchase agreement is a secured loan that involves a contractual agreement between two parties, committing to sell a guarantee at a specified price, with the obligation to later repurchase the guarantee at another price. In essence, a repurchase agreement is similar to a short-term loan with interest against certain security. Both parties, the borrower and the lender, are able to meet their financing and guaranteed liquidity objectives. Many investment banks, such as Bear Stearns and Lehman Brothers, relied too much on cash from short-term deposits to finance their long-term investments. When too many lenders claimed their debts at the same time, it was like an old-fashioned bank race.
Pension credit risk is subject to many factors: retirement duration, liquidity of security, strength of the counterparties concerned, etc. Pension transactions are generally considered to be a reduction in credit risk. The biggest risk in a repo is that the seller does not maintain his contract by not repuring the securities he sold on the due date. In these cases, the purchaser of the guarantee can then liquidate the guarantee in an attempt to recover the money he originally paid. However, the reason this is an inherent risk is that the value of the warranty may have decreased since the first sale and therefore cannot leave the buyer with any choice but to maintain the security he never wanted to maintain in the long term, or to sell it for a loss. On the other hand, this transaction also poses a risk to the borrower; If the value of the guarantee increases beyond the agreed terms, the creditor cannot resell the guarantee. For traders of commercial enterprises, deposits are used to finance long positions, to access cheaper financing costs of other speculative investments and to cover short positions in securities. The financial institution that acquires the guarantee cannot sell it to another party unless the seller has not fulfilled its obligation to repurchase the guarantee. The transaction guarantee serves as a guarantee to the buyer until the seller can repay the buyer. Indeed, the sale of a security is not considered a real sale, but as a secured loan secured by an asset. Buyback contracts can be concluded between a large number of parties.
The Federal Reserve enters into pension contracts to regulate money supply and bank reserves. Individuals generally use these agreements to finance the purchase of bonds or other investments. Pension transactions are short-term assets with maturity terms called “rate,” “term” or “tenor.” As has already been said, the most common form of money buyback contracts is called the tripartite retirement market, which recently stood at about $1.7T1. These agreements use a third party – a deposit bank or clearing organization known as collateral agent – as an intermediary between the counterparties of a deal.