Gilt-Edged Market

A sell/buy-back is a spot sale and forward repurchase of bonds transacted simultan-

eously, and the repo rate is not explicit, but is implied in the forward price. Any coupon

payments during the term are paid to the seller. But this is done through incorporation into

the forward price, so the seller will not receive it immediately, but on termination. This is a

disadvantage when compared to classic repo. However, there will be compensation payable

if a coupon is not handed over straight away, usually at the repo rate implied in the sell/

buy-back. As sell/buy-backs are not subject to a legal agreement in most cases, in effect the

seller has no legal ...