Regulatory, Accounting and Legal Issues
Some institutions may operate in a regulatory regime that makes participation in the market difficult or impossible. This may be because of local market restrictions or because of the nature of the institution. However, even if repo, per se, may be prohibited, it is likely that the same commercial end may be achieved via a different structure (buy/sell back, loan vs cash etc).
Accounting and tax issues are dependent on the counterparty's jurisdiction and we therefore recommend that all parties who want to enter the repo business liaise with their legal and accounting departments before doing so. We would like to emphasize that depending on your jurisdiction several tax benefits may arise from doing repo.
As for legal issues, counterparties should be aware of the range of different documentations governing the different types of repo transactions. See Legal Issues.