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0 2. 7 3. 3 3. 5 Source: "The International OTC Derivatives Market at end-December 2004", BIS, , "OTC Derivatives Market Activity in the Second Half of 2006", BIS, Major Swap Individual [modify] A Major Swap Participant (MSP, or sometimes Swap Bank) is a generic term to describe a banks that facilitates swaps between counterparties.

A swap bank can be an international industrial bank, a financial investment bank, a merchant bank, or an independent operator. A swap bank acts as either a swap broker or swap dealership. As a broker, the swap bank matches counterparties but does not assume any threat of the swap. The swap broker receives a commission for this service.

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As a market maker, a swap bank wants to accept either side of a currency swap, and after that later on on-sell it, or match it with a counterparty. In this capability, the swap bank assumes a position in the swap and therefore presumes some dangers. The dealer capability is obviously more risky, and the swap bank would get a portion of the cash streams travelled through it to compensate it for bearing this threat.

These reasons appear simple and hard to argue with, specifically to the level that name acknowledgment is really important in raising funds in the worldwide bond market. Firms utilizing currency swaps have statistically greater levels of long-term foreign-denominated financial obligation than companies that utilize no currency derivatives. On Full Article , the main users of currency swaps are non-financial, worldwide companies with long-term foreign-currency funding needs.

Financing foreign-currency debt utilizing domestic currency and a currency swap is for that reason remarkable to financing directly with foreign-currency debt. The two main factors for switching rates of interest are to much better match maturities of assets and liabilities and/or to get an expense savings through the quality spread differential (QSD). Empirical proof suggests that the spread between AAA-rated business paper (drifting) and A-rated commercial is somewhat less than the spread in between AAA-rated five-year commitment (fixed) and an A-rated obligation of the very same tenor.