Rediscounting refers to the process where a financial institution holding a bill endorses and transfers the bill rights to another financial institution before the bill’s maturity date. The buyer deducts a certain interest and pays the agreed amount to the bill holder. Outright rediscounting is a transaction in which the seller transfers an unexpired, discounted bill to the buyer. Rediscounting can be divided into two types based on the transaction method: repurchase rediscounting and outright rediscounting.

　　 Repurchase Rediscounting: Divided into pledge repurchase and outright repurchase.

　　A pledge repurchase (repo) refers to a financing transaction in which the repo party pledges a bill to the reverse repo party to obtain funds. Both parties agree that on a specified future date, the repo party will return the funds to the reverse repo party at an agreed amount, and the reverse repo party will return the original pledged bill to the repo party.

　　An outright repurchase refers to a transaction in which the repo party sells a bill to the reverse repo party with an agreement that, on a specified future date, the repo party will buy back the bill from the reverse repo party at an agreed-upon price.

　　 Outright Rediscounting: refers to a transaction in which the seller transfers an unexpired, already-discounted bill to the buyer.