In June 2014, the FASB released the 2014-11 Accounting Standards Update (ASU), Transfers and Servicing (theme 860): pension transactions to maturity, pension financing and disclosures. The revised rules require companies to deduct securities repurchase transactions (TMRs) as guaranteed obligations. An RTM is a pension contract by which the securities are due on the same day the pension contract ends. Prior to the update, the FASB made a distinction between a TMR and a pension contract in which the securities had not yet expired upon their return to the original portion. Under the previous rules for the TMR agreements, the cedant was not considered to have effective control over the transferred assets, as he would not recover the assets until they expired. Under these conditions, the RTM agreements were considered outright sales (KPMG Defining Issues, “FASB proposes New Accounting Guidance for Repos,” January 2013, No. 13-6). The obligation to repurchase the securities was not accounted for, so the underlying risk was not on the balance sheet. Under the new rules, the FASB has decided that, although the securities are not returned to the original party due to the maturity of the security, obtaining liquidity at the time of liquidation is essentially the same as receiving the securities. Secure credit accounting is therefore considered appropriate (Ernst and Young, “FASB Changes Accounting for certain Repurchase Agreements and Requires New Disclosures,” Technical Line, No. 2014-12, June 19, 2014).

Deposits are traditionally used as a form of secured loan and have been treated as such tax-wise. However, modern repurchase agreements often allow the lender to sell the collateral provided as collateral and replace an identical guarantee when buying back. [14] In this way, the lender will act as a borrower of securities, and the repurchase agreement can be used to take a short position in the guarantee, as could a securities loan be used. [15] The accounting methods used for these pension transactions are described in the following sections. The cash paid on the initial sale of securities and the money paid at the time of the repurchase depend on the value and type of security associated with the pension. In the case of a loan. B, both values must take into account the own price and the value of the interest accrued on the loan. An open pension contract (also called on demand) works in the same way as an appointment period, except that the trader and counterparty accept the transaction without setting the due date. On the contrary, trade can be terminated by both parties by notifying the other party before an agreed daily period. If an open deposit is not completed, it is automatically crushed every day.

Interest is paid monthly and the interest rate is reassessed by mutual agreement at regular intervals. The interest rate on an open pension is generally close to the federal rate. An open repo is used to invest cash or finance assets if the parties do not know how long it will take them. But almost all open contracts are concluded in one to two years. With respect to securities lending, it is a matter of obtaining the guarantee temporarily for other purposes, for example. B for short positions or for use in complex financial structures. Securities are generally borrowed for a royalty, and securities borrowing transactions are subject to other types of legal agreements than deposits. There are mechanisms built into the possibility of buyback agreements to reduce this risk.