Capital Briefs: FDIC Revamps Repurchase Agreement Rules

The Federal Deposit Insurance Corp. on Friday revised its guidelines for repurchase agreements.

The FDIC made several additions to the terms that should be spelled out in "repo" contracts. For instance, agreements should specify what types of collateral are acceptable, the rights and obligations of each party in case of default, and required disclosures for transactions in which the seller retains custody of the purchased securities.

The FDIC's revisions were initially recommended by the Federal Financial Institutions Examination Council on Feb. 11.

Repos are contracts to sell and subsequently repurchase securities at a specified date and price. Banks use repos to raise short- and medium-term funds.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER