A repo (repurchase agreement) that is repriced on a daily (or even intraday) basis to reflect changes in current market prices, and recalculate the lender’s exposure. Marking to market (MTM) is conducted to ensure that the cash received matches the daily market value of the securities sold in the repo transaction. Margin calls can be initiated between the buyer and the seller, depending on the outcome of daily repricing.

Mark-to-market margining allows repo buyers to request additional cash or placement of more securities from the seller.