Economically, Repurchase Transactions and Buy/Sell Back Transactions are pretty much identical.
Historically, it was possible to distinguish Buy/Sell Backs from Repurchase Transactions on the basis that Buy/Sell Backs were UNDOCUMENTED transactions whereas Repurchase Transactions were DOCUMENTED. However, given that Buy/Sell Backs can be transacted under the Global Master Repurchase Agreement, this distinction does not really hold true anymore.
To the extent that there remains any distinction between a Repurchase Transaction and a Buy/Sell Back, these days, it probably lies in a combination of the following factors:
- Firstly, the sale and repurchase legs of a Buy/Sell Back are considered to be SEPARATE transactions, whereas the sale and repurchase legs of a Repurchase Transaction are considered to be part of the SAME transaction. This makes the analysis of the effectiveness of netting slightly less certain with respect to Buy/Sell Backs.
- Secondly, there can be differences in the way in which the two types of transaction are margined (with Buy/Sell Backs being more likely to be either ‘repriced’ or ‘adjusted’).