A type of repo (repurchase agreement) in which the interest rate is variable- i.e., it it changes (floats) in accordance with change in an auction rate, over the term of the transaction. The auction process is managed by a monetary authority on a frequent basis (bi-monthly) as part of the monetary policy review in a given country.

Repo rate = underlying index rate ± spread

Variable rate repos usually depend on monitoring and recording of the movement in floating rate indexes (e.g., overnight index, tom/next index, LIBOR or EURIBOR) or any other alternative benchmark rates, usually over extended periods of time.

Examples of variable rate repos include: OI variable rate repo, tom/next-indexed repos, and term-rate-indexed repos.

Variable rate repos are also known as floating-rate repos.