Ready forward or Repos or Buyback deal is a transaction in which two parties agree to sell and repurchase the same security. Under such an arrangement, the seller sells specified securities with an agreement to repurchase the same at a mutually decided future date and a price. Similarly, the buyer purchases the securities with an agreement to resell the same to the seller on an agreed date in future at a prefixed price. For the purchaser of the security, it becomes a Reverse Repo deal. In simple terms, it is recognised as a buy back arrangement. In a standard ready forward transaction when a bank sells its securities to a buyer it simultaneously enters into a contract with him (the buyer) to repurchase them on a predetermined date and price in the future. Both sale and repurchase prices of securities are determined prior to entering into the deal. In return for the securities, the bank receives cash from the buyer of the securities. As the inflow of cash from the ready forward transaction is used to meet temporary cash requirement, such a transaction in essence is a short term cash management technique.

The discount rate at which a central bank repurchases government securities from the commercial banks, depending on the level of money supply it decides to maintainin the country's monetary system. To temporarily expandthe money supply, the central bank decreases repo rates (so that bankscan swaptheir holdings of government securitiesfor cash). To contractthe money supply it increasesthe repo rates. Alternatively, the central bank decides on a desired level of money supply and letsthe market determinethe appropriaterepo rate. Repo is short for repossession.

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