How the repo market works

The market for so-called repurchase agreements may seem like an obscure area of finance, but it plays a crucial role in allowing financial companies to secure short-term funding.

At its peak, it provided up to a third of the total funding for some banks – including Bear Stearns and Lehman Brothers.

Find out how the market for such agreements, which are known in the trade as repos, is supposed to work – and why it has failed to function as it is supposed to during the financial crisis.