Specifically, in a repo the security-buying party "B" acts as a lender of cash, whereas the seller "A" is acting as a borrower of cash, using the security as collateral; in a reverse repo, security purchaser ("A") is the lender of cash and ("B") is the borrower of cash. A repo is economically similar to a secured loan, with the buyer (effectively the lender or investor) receiving securities for collateral to protect himself against default by the seller. The party who initially sells the securities is effectively the borrower. Many types of institutional investors engage in repo transactions, including mutual funds and hedge funds. Almost any security may be employed in a repo, though highly liquid securities are preferred as they are more easily disposed of in the event of a default and, more importantly, they can be easily obtained in the open market where the buyer has created a short position in the repo security by a reverse repo and market sale; by the same token, non liquid securities are discouraged.