Municipalities can now invest in the government repurchase market at the touch of a button with the Ernst Cash Reserve Repo Program.

Ernst & Co., a member of the New York Stock Exchange, said last week its new system will allow small- to mid-sized institutions like municipalities and schools to invest in repurchase agreements using a personal computer.

In a repurchase agreement, an institution agrees to purchase government securities and sell them back within a specified period of time, often the next day. In effect, the institution is lending its money and the securities serve as collateral.

Joseph D'Agostino, manager of institutional cash management at Ernst, said smaller institutions can get "competitive money market rates" by using the Ernst desktop program for repurchase transactions.

Ernst is offering its on-line system free of charge. An institution that wants to use the Ernst program needs a personal computer and a modem, and Ernst will supply the software.

The Ernst program is convenient for municipalities because it allows them to invest specific purpose accounts separately, D'Agostino said. The system also permits institutions to invest odd sums.

"What they do is clear out their bank accounts," he said. "They can invest every penny."

The Ernst system will post dally rates every morning, and customers who decide to invest funds that day will just key in the amount.

Using the on-line program, Ernst acts as a middleman between the customers and the custodian bank, the Bank of New York. The Ernst program will provide customers with confirmations of their trades during the afternoon.

D'Agostino estimated customers will use the new system to do $200 million to $300 million of repurchase trades daily within six months, with the average customer investing $5 million to $6 million.

William Behrens, Ernst's chief executive officer, estimated the firm's start-up costs for the program were "more than $100,000 and less than $150.000."

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