Swap Dealer


DEFINITION of 'Swap Dealer'

An individual who acts as the counterparty in a swap agreement for a fee called a spread. Swap dealers are the market makers for the swap market. The spread represents the difference between the wholesale price for trades and the retail price. Because swap arrangements aren't actively traded, swap dealers allow brokers to standardize swap contracts to some extent.


Historically, swaps have been traded in the over-the-counter market, mainly between firms and financial institutions, in largely unregulated transactions. In 2011, the SEC proposed requiring security-based swap dealers and participants to register with the commission, as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The swap market would be overseen by the SEC and the CFTC. Swap dealers would have to change their business models and more trades would occur via exchange-like mechanisms. The Wall Street Journal stated that the proposed regulations would increase competition among swap dealers and decrease their profits, increase market liquidity and make trading more efficient for customers.

  1. Swap

    A derivative contract through which two parties exchange financial ...
  2. Market-Maker Spread

    The difference between the price at which a market maker is willing ...
  3. Broker-Dealer

    A person or firm in the business of buying and selling securities, ...
  4. Market Maker

    A broker-dealer firm that accepts the risk of holding a certain ...
  5. Price Swap Derivative

    A derivative transaction in which one party guarantees a fixed ...
  6. Swap Spread

    1. The difference between the negotiated and fixed rate of a ...
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