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An open repo (also known as on demand, terminable on demand or open-ended repo) is a repurchase transaction that is agreed without fixing the maturity date. Instead, the repo can be terminated on any business day in the future by either party, provided they give notice within an agreed period of time. Open repo is used to invest cash or finance assets where the parties are not sure how long they will need to do so.

Until an open repo is terminated, it automatically runs from one day to the next, offering the convenience of not having to negotiate and settle daily roll-overs. Interest accrues daily but is not compounded (ie interest is not earned each day on interest accrued over previous days). Where parties have open repos outstanding between themselves over extended periods, accumulated interest is typically paid off in aggregate every month. The initial repo rate on an open transaction should, in theory, be slightly below the overnight repo rate given the lower operational cost, but it will not subsequently change until the parties agree to re-set the rate or the rate has been linked to an interest rate index which is updated automatically.

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