DEFINITION of 'Swap Bank'

A financial institution that acts as an intermediary for interest and currency swaps. The function of these intermediaries is to find counterparties for those who want to participate in swap agreements. The swap bank typically earns a slight premium for facilitating the swap.


Generally speaking, companies do not directly approach other companies in an attempt to create swap agreements. Instead, swap banks coordinate the swap agreements for companies. In most cases, companies don't even know the identities of their swap counterparties.

  1. Forward Swap

    A forward swap is an agreement between two parties to exchange ...
  2. Foreign Currency Swap

    A foreign currency swap is an agreement to exchange currency ...
  3. Swap Dealer

    A swap dealer is an individual who acts as the counterparty in ...
  4. Zero Basis Risk Swap - ZEBRA

    A swap agreement between a municipality and a financial intermediary. ...
  5. Swap Spread

    A swap spread is the difference between the fixed component of ...
  6. Swap

    A swap is a derivative contract through which two parties exchange ...
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  1. What would motivate an entity to enter into a swap agreement?

    Learn why parties enter into swap agreements to hedge their risks, and understand how the different legs of a swap agreement ... Read Answer >>
  2. Can bond traders trade on interest rate swaps?

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  3. Who is the counterparty of a derivative?

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  4. What are some risks a company takes when entering a currency swap?

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  5. What are interest rate swaps on the OTC market?

    Learn about interest rate swaps and how they are traded over the counter, and understand the impact of Dodd-Frank on swaps ... Read Answer >>
  6. What are the Securities and Exchange Commission regulations regarding swaps?

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