Syndicate
Operations of Doubles
The operations of doubles, also called “repos”, are done above all by the investors that try to have a better management of their resources when investing exceeding money during a relatively short period. The operations of doubles take place when at the same time a cash operation and an opposite term operation coincide.
With the operation of doubles you make a contract in which the cash vendor compromises to acquire the same securities at a determined term and a t a prefixed price. The agreed interests corresponding to the days of duration of the operation is included in the price. Seen from the purchaser perspective, in an operation of doubles, he is compromised to resell to the same person the same securities at a determined term and at a prefixed price.
The operations of doubles can be done with a variety of goals, among them the most common are the following:
a shareholder not interested in selling, but that has a temporary need for funds may be attracted to the idea of selling his securities with the compromise of re-buying them in a prefixed term and price. In this case, the operation of doubles permits to obtain a loan in exchange for the securities.
To an investor that has a surplus of funds during a very short period of time even inferior to that of the week, maybe interested in profiting by buying securities with the compromise they will be re-bought at a prefixed term and price. in this way, you can profit with the exceeds at a minimum risk.
To dispose of the votes of a shareholders meeting. In this case, if the purchaser is interested in disposing of more votes in the next shareholders meeting, but does not want to keep the shares afterwards, he can do a cash buying operation and of term sale; so, here the operation of doubles consists, in fact of a loan of securities.
A different type of operation is that of the arbitrage, which consists in buying securities in a determined market and to simultaneously sell them in another market, in order to profit from the existing differences in prices between the two marked at a determined moment. The arbiters are people that are professionally dedicated to the arbitrages.