Repo premium may hold different meanings depending on context. In general, it denotes the additional amount a bank in a given country pays on repos collateralized with another country’s securities. For example, a bank based in Japan may be willing to pay a premium to borrow (on the basis of repo) from European banks or other market players or for repos with US treasury collateral.

In a different context, repo premium is the specialness of a repo (repurchase agreement). It is the difference between interest earned on a security posted as a loan’s collateral and the prevailing interest rate for loan collateral. More specifically, specialness measures the difference between the general collateral repo rate and the special collateral repo rate.

It reflects the ‘degree of specialness’ of the underlying security (e.g., a stock , a bond) used as collateral in the special repo. Positive specialness is seen as an indication of high market desirability or relatively limited supply of the stock collateral in the repo market.

It is also known as a repo specialness or a repo spread.