Pledged repurchase does not transfer the ownership of the bond, and the bond always belongs to the pledgor during the pledge period, and there is no need for buyout repurchase. Because buyout repurchase transfers ownership, the buyer of bonds can buy and sell bonds freely, as long as the same amount of bonds is returned to the bond seller at the expiration of the repurchase period.
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The essential characteristics of acquisition and repurchase
From the essential characteristics of buyout repurchase, after a buyout repurchase transaction is settled, the repurchased bonds are still owned by the right repurchase party, and the accrued interest of bonds during the repurchase period is actually obtained by the right repurchase party. After the repurchase expires, the repurchase actually returns the initial principal and accrued interest during the repurchase period to the reverse repurchase party (regardless of the interest paid for repurchasing bonds during the repurchase period, the actual result is the same), and the repurchased bonds actually play the role of collateral during the repurchase period.
Therefore, in the realistic economic sense, buyout repurchase has the nature of pledged loans, and "pledge" is to buy back bonds. However, it is worth noting that although buyout repurchase can be regarded as a special pledged loan, its legal relationship is not the same as the pledge in China's Guarantee Law.
This is consistent with the repurchase transactions in mature foreign markets. In foreign repurchase, the "bought" bonds are used as collateral for the repurchase party to obtain loans. The ownership of this "collateral"-repurchased bonds has been transferred. During the repurchase period, the reverse repurchase party has the complete legal right to repurchase bonds and can dispose of the repurchased bonds at will, which is the biggest difference between the repurchase transaction and the general bond pledge loan.
Although pledged securities (pledges) are also used by lenders to prevent the default risk of general pledged loans, it is necessary to obtain the complete legal rights of pledged securities through judicial procedures, which will be inefficient, costly and possibly uncertain.
On the contrary, in repurchase, the repurchased bonds belong to the reverse repurchase party from the beginning, and the reverse repurchase party can prevent the default risk more conveniently and efficiently. It can be seen that although the buyout repurchase transaction belongs to the pledged loan in the economic sense, from the legal point of view, China's guarantee law should not be applied and it is not bound by "pledge guarantee".
Baidu encyclopedia-pledged repo
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