what is a reverse repurchase agreement rrp 
a reverse repurchase agreement rrp or reverse repo is the sale of securities with the agreement to repurchase them at a higher price at a specific future date a reverse repo refers to the seller side of a repurchase agreement rp or repo these transactions which often occur between two banks are essentially collateralized loans the difference between the original purchase price and the buyback price along with the timing of the transaction often overnight equates to interest paid by the seller to the buyer the reverse repo is the final step in the repurchase agreement closing the contract 