A REPO transaction is a bilateral transaction of sale (purchase) of bonds (the first part of REPO) with commitment to repurchase (sell) bonds of the same issue in the same amount (the second part of REPO) at the time and at the price specified in the terms of the transaction.

REPO transactions are concluded in the mode of negotiation deals, that is, on the basis of orders with specified parties ("addressed" orders).

Both Dealers and Investors can participate in REPO transactions. The time of REPO does not exceed 180 days.

REPO transactions can be concluded with settlement code Sn for the first part, in which case the first part of the REPO transaction is executed on the n-th work day after its registration in the trading system.

The existing procedure of REPO transactions in bonds gives participants the following additional possibilities:

• using margin calls for the purpose of keeping the balance between the value of the coverage and the amount of obligations in the REPO transaction;
• discounting the value of the coverage when concluding REPO transactions;
• the blocking of coverage until the execution of the second part of the REPO transaction;
• early execution of the second parts of REPO transactions;
• offset of reciprocal claims (netting) in REPO transactions;
• reference to the Basic conditions.

In the case of non-execution of the second part of the REPO transactions with blocking of coverage, the MICEX sells the coverage at an auction and uses the proceeds to execute the obligations of the Primary seller before the Primary buyer in the REPO transaction. The MICEX returns the excess of the proceeds over the amount of obligations to the Primary seller. Auctions are of the Dutch type, which means that that orders are satisfied at the stop out price.

REPO vs Bank of Russia

Direct REPO against the Bank of Russia follow the procedure of inter-dealer REPO. The Bank of Russia acts as the buyer of bonds in the first part of the REPO transaction and as the seller of bonds in the second part of the REPO transaction.

Only those Dealers - credit institutions - are admitted to direct REPO transactions against the Bank of Russia, which have concluded appropriate agreements with the Bank of Russia. In this case, Dealers can act on their own behalf and at their own expense or on their own behalf and at the expense and on the instructions of credit institutions - Investors.

Transactions can be concluded in the form of REPO auction and/or in the form of trading to conclude direct REPO transactions on the terms of fixed REPO rate, established by the Bank of Russia and/or in the form of trading to conclude direct REPO transactions on the terms of market rates, which are not lower than the minimal REPO rate (REPO sessions).

The terms and the time of REPO auctions and REPO sessions are established by the Bank of Russia and are brought to the notice of Dealers daily through the trading system before the start of direct REPO transactions. American-type REPO auctions are held regularly (see the schedule of REPO auctions in the "Trading Schedule" section). Direct REPO transactions are concluded with all those Dealers, admitted to the REPO auction, whose REPO rates, specified in REPO orders, are not lower than the stop out REPO rate established by the Bank of Russia, in specified volumes and at the specified rate. Partial satisfaction of REPO Orders is not allowed.

Direct REPO transactions against the Bank of Russia are concluded with blocking of coverage.

Dealers and Investors, concluding direct REPO transactions, can carry out transactions within the limit established by the Bank of Russia for each participant. The Bank of Russia establishes the limit on direct REPO separately for direct REPO transactions carried out by the Dealer at his own expense and for each Investor, served by the Dealer, at whose expense and on whose instructions the Dealer carries out direct REPO transactions.

In the course of trading in the trading system, control is exercised over the Dealer's observance of the limit of direct REPO by means of dynamic re-calculation of the current value of the limit of direct REPO. The current value of the limit of direct REPO is calculated in the following order, established by the Bank of Russia:

1. The limit of direct REPO, established by the Bank of Russia for a Dealer, is decreased by:
   • the total amount of obligations for the second parts of direct REPO transactions based on REPO orders / REPO conformations submitted to conclude direct REPO transactions with settlement code Т0, which were not withdrawn or satisfied at the moment of calcultaion;
   • the total amount of obligations for the second parts of direct REPO transactions based on orders-instructions to executе the first part of the direct REPO transaction with settlement code Sn, which were not withdrawn or executed at the moment of calcultaion;
   • the total amount of obligations for the second parts of direct REPO transactions with settlement code Т0 concluded on the given trading day at the moment of calcultaion;
   • the total amount of obligations for the second parts of direct REPO transactions with settlement code Sn, the first parts of which were executed on the given trading day at the moment of calcultaion;
2. The limit of direct REPO, established by the Bank of Russia for a Dealer, is increased by the total amount of obligations for the second parts of direct REPO transactions executed on the given trading day at the moment of calcultaion.

Information on the limits of direct REPO, established by the Bank of Russia, is brought to the notice of the Dealer through the trading system. When concluding direct REPO transactions with settlement code Sn, the Dealer controls the value of his limit of direct REPO on the date of execution of the first part of this direct REPO transaction to avoid the non-execution of obligations before the Bank of Russia when executing the first part of the given direct REPO transaction.

A Dealer controls the observance of the limits of direct REPO established by the Bank of Russia for this Dealer's Investors.

Early execution of the second parts of direct REPO against the Bank of Russia is possible. Provided there is consent to early execution of the second part of a direct REPO against the Bank of Russia, the Bank of Russia enters an order-instruction to execute the second part of the REPO in response to an appropriate order-instruction from the Dealer. When the second part of a direct REPO against the Bank of Russia is executed ahead of time on the day of execution of the first part of this transaction, the cost of repurchase is equal to the cost of purchase of bonds, which are coverage in this REPO transaction ("interest-free REPO").

The Bank of Russia's sale of bonds from its own portfolio with repurchase commitment (reverse REPO vs Bank of Russia)

The Bank of Russia's sale of bonds with repurchase commitment implies the Bank of Russia's sale of bonds at an auction and the subsequent repurchase of these bonds by the Bank of Russia at fixed prices on a specified date on the basis of irrevocable public offer.

The Bank of Russia carries out these transactions regularly. Essentially, they are reverse REPO transactions against the Bank of Russia. Only credit institutions can participate in these transactions.

The auctions are of the American type. Different settlement codes are possible (T0, Sn).

Before the date of repurchase of the bonds by the Bank of Russia, the yield and the duration of these bonds are calculated as the yield and the duration to repurchase.

Deposit transactions

Deposit transactions enable credit institution to place a deposit in the Bank of Russia at an auction (American or Dutch auctions) or on standard terms at fixed interest rates. The Bank of Russia determines the terms of deposit auctions and deposit transactions at fixed interest rates on standard terms: the times of deposits, the dates and times of transactions, the minimal amounts of deposits, the methods of auctions, the share of noncompetitive orders at the auction, etc.

• Description of transactions
• Placement of bonds
• Transactions in the secondary market
• Transactions in the money market
• Other transactions