Swap Dealer

AAA

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.

INVESTOPEDIA EXPLAINS 'Swap Dealer'

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.

RELATED TERMS
  1. Market-Maker Spread

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

    A person or firm in the business of buying and selling securities, ...
  3. Spread

    1. The difference between the bid and the ask price of a security ...
  4. Swap Bank

    A financial institution that acts as an intermediary for interest ...
  5. Market Maker

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

    A derivative transaction in which one party guarantees a fixed ...
Related Articles
  1. Credit Default Swaps: What Happens In ...
    Insurance

    Credit Default Swaps: What Happens In ...

  2. Careers In The Derivatives Market
    Options & Futures

    Careers In The Derivatives Market

  3. The Barnyard Basics Of Derivatives
    Investing Basics

    The Barnyard Basics Of Derivatives

  4. A Guide To Real Estate Derivatives
    Bonds & Fixed Income

    A Guide To Real Estate Derivatives

comments powered by Disqus
Hot Definitions
  1. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  2. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  3. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  4. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  5. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  6. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
Trading Center