The repo (repurchase agreement) facility allows a public body, the Public Debt Fund (CDP) to lend Primary Dealers French government securities that are difficult to obtain on the market in exchange for other French securities of equivalent value. These loans are temporary and yield interest. The French government provides securities to the Fund. Under terms of the Budget Act, the government may issue securities directly to the Fund. The more you apply for a security, the lower the repo rates with which it will be dealt. Sometimes it can even be negative interest rates for occasionally rare securities. The gains of securities lenders are derived from the reallocation of money received as collateral at the money market rate. In practice: what sources are expected? How can I add my sources? The securities lender is therefore the borrower of the cash and, before it, its counterparty is the lender of the borrowers of the securities. The so-called specific market represents a small part of the volume, but a significant portion of the margins released by rest periods. The legal framework is generally the same, although there has been a standard securities lending contract in France since the mid-1990s that has never really succeeded.
In this market segment, there is a virtual reversal of traditional roles in the wholesale market: investment banks generally try to borrow securities in order to guarantee their positions on an ad hoc basis, facing the structural holders of asset portfolios, i.e. insurers and collective management companies. In the euro area, the Repo replaced the old national legal forms of securities refinancing very quickly in 1999 and follows almost universally the framework agreement drawn up by ISMA. In order to ensure greater security of transactions, securities are generally revalued at regular intervals, in addition to the eventual discount applied, and margin calls allow the amount actually lent to market fluctuations to be adapted.