Swap Break Clauses: Difference between revisions
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imported>Doug Williamson (Update throughout.) |
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'' | ''Risk management''. | ||
Swap break clauses give the right to a bank as the seller to call for termination or re-pricing periodically during the life of a long term swap. | |||
They were initially sold as a means of managing the fixed rate leg of a long term interest rate swap because banks could price the long term swaps as medium term deals based on the time period to the next break date. | |||
Post 2008 regulation means they now carry a capital cost for banks and termination or re-pricing has been known to be called by the bank. | Post-2008 regulation means they now carry a capital cost for banks and termination or re-pricing has been known to be called by the bank. | ||
== See also == | == See also == | ||
*[[Interest rate swap]] | |||
*[[Swap]] | *[[Swap]] | ||
[[Category:Manage_risks]] | [[Category:Manage_risks]] | ||
Revision as of 21:27, 3 February 2018
Risk management.
Swap break clauses give the right to a bank as the seller to call for termination or re-pricing periodically during the life of a long term swap.
They were initially sold as a means of managing the fixed rate leg of a long term interest rate swap because banks could price the long term swaps as medium term deals based on the time period to the next break date.
Post-2008 regulation means they now carry a capital cost for banks and termination or re-pricing has been known to be called by the bank.
