What is a swap dealer?

Swap dealers make markets for swaps. Swaps are derivative contracts that allow financial instruments to be swapped between two parties - usually financial institutions.

Where have you heard about swap dealers?

Swap dealers were in the news at the end of 2016 when they backed a new service to bring standards to this kind of bilateral trading. Called SwapAgent, it will launch in 2017.

What you need to know about swap dealers.

Swap dealers work for businesses or financial institutions. Their fee is called a spread because it represents the difference between the trade's wholesale price and retail price.

Most swaps involve cash flows. The most common type of swaps are interest rate swaps. Swap arrangements aren't actively traded on the markets.

However, swap trades are often done if a trader deals with instruments with different value dates. For example, some arbitrageurs trade on instruments with TOM and TOD value dates. So to net their positions they use swap called 'overnight'.

Find out more about swap dealers.

Learn about the swap transactions that swap dealers are involved in. See our definition of swap transactions.