dealer of using the repo market for borrowing on a short-term basis is that the rate is lower than the cost of bank financ- ing for reasons explained shortly. From the customers perspective (i.e., the lender), the repo market offers an attractive yield on a short-term secured transaction that is highly liquid.   Reverse Repo and Market Jargon In the illustration presented above, the dealer is using the repo market to obtain financing for a long position. Dealers can also use the repo market to cover a short position. For example, suppose a government dealer established a short position in the 30-year Treasury bond one week ago and must now cover the position-namely, deliver the securi- ties. The dealer accomplishes this task by engaging in a reverse repo. In a reverse repo, the dealer agrees to buy securities at a specified price with a commitment to sell them back at a later date for another speci- fied price.4In this case, the dealer is making collateralized loan to its customer. The customer is lending securities and borrowing funds obtained from the collateralized loan to create leverage. There is a great deal of Wall Street jargon surrounding repo transac- tions. In order to decipher the terminology, remember that one party is lending money and accepting a security as collateral for the loan; the other party is borrowing money and providing collateral to borrow the money. By convention, whether the transaction is called a repo or a reverse repo is determined by viewing the transaction from the dealers perspective. If the dealer is borrowing money from a customer and pro- viding securities as collateral, the transaction is called a repo. If the dealer is borrowing securities (which serve as collateral) and lends money to a customer, the transaction is called a reverse repo. When someone lends securities in order to receive cash (i.e., borrow money), that party is said to be "reversing out" securities. Correspond-     4Ofcourse,thedealereventuallywouldhavetobuythe30-yearbondsinthemarket in order to cover its short position.     ingly, a party that lends money with the security as collateral for the loan is said to be "reversing in" securities. The expressions "to repo securities" and "to do repo" are also com- monly used. The former means that someone is going to finance securities using the securities as collateral; the latter means that the party is going to invest in a repo as a money market instrument. Lastly, the expressions "selling collateral" and "buying collateral"