Hedging Swaps

Dealers at commercial banks do most of the market making that is done in the interest rate swap and currency swap markets. In addition to making markets to their customers, these traders will also make prices to other financial institutions in the wholesale or interbank market, often in transactions facilitated by interbank brokers. In any given day, the dealer at the bank may engage in several transactions or several dozen transactions, all of which are added to his general position. The combination of all of the different swaps and bond trades and futures trades that the dealer has conducted constitutes a portfolio.

Provided by: The Financial Pipeline Topic: Software Date Added: Sep 2003 Format: HTML

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