A repo leg that involves the transfer back of the cash amount that was initially borrowed, plus interest (accumulated on that amount), against collateral assets (securities). A term leg is the second leg of a repo (repurchase agreement, RP) that is carried out in order to conclude the transaction.
A repo can be perceived as a contract for the sale of a security (the collateral)- the first leg (i.e., the front leg)- subject to a simultaneously concluded forward agreement for the repurchase of the collateral or a similar security at an agreed date or on demand- the second leg (term leg).
The term leg is also known as a return leg.
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