swaps and otc derivatives
Educational articles in this subcategory.
Valuation Adjustments: CVA, DVA, FVA
# Valuation Adjustments: CVA, DVA, FVA Valuation adjustments (XVAs) modify derivative fair values to reflect counterparty credit risk and funding...
Total Return Swaps for Equity Exposure
# Total Return Swaps for Equity Exposure A total return swap (TRS) transfers the total economic performance of a reference asset—including price ...
Terminating or Novating Swap Positions
# Terminating or Novating Swap Positions Swap positions can be closed through termination (mutual agreement to end the trade) or novation (transf...
Swap Execution Facilities (SEFs)
# Swap Execution Facilities (SEFs) Swap Execution Facilities (SEFs) are CFTC-regulated trading platforms for over-the-counter derivatives. Create...
Setting Up Hedge Documentation
# Setting Up Hedge Documentation Proper hedge documentation ensures legal enforceability, enables hedge accounting, and establishes operational c...
Plain-Vanilla Interest Rate Swaps Mechanics
# Plain-Vanilla Interest Rate Swaps Mechanics A plain-vanilla interest rate swap is an agreement between two parties to exchange fixed-rate inter...
ISDA Master Agreement Overview
# ISDA Master Agreement Overview The ISDA Master Agreement is the foundational legal document for over-the-counter derivatives transactions. Publ...
Initial Margin vs. Variation Margin in OTC Trades
# Initial Margin vs. Variation Margin in OTC Trades Initial margin (IM) and variation margin (VM) serve different purposes in managing counterpar...
Hedging Fixed Income Portfolios with Swaps
# Hedging Fixed Income Portfolios with Swaps Interest rate swaps are the primary tool for managing duration and curve exposure in fixed income po...
Glossary: Swap Market Terms
# Glossary: Swap Market Terms This glossary provides concise definitions of swap market terms used throughout the Swaps and OTC Derivatives serie...
Equity Swap Use Cases for Hedge Funds
# Equity Swap Use Cases for Hedge Funds Equity swaps provide hedge funds with flexible, capital-efficient exposure to stocks and indices. Beyond ...
Dodd-Frank and EMIR Reporting Requirements
# Dodd-Frank and EMIR Reporting Requirements Dodd-Frank (US) and EMIR (EU) require comprehensive reporting of OTC derivatives to trade repositori...
Cross-Currency Swaps and Basis Risk
# Cross-Currency Swaps and Basis Risk A cross-currency swap exchanges both principal and interest payments in one currency for principal and inte...
Credit Support Annex and Collateral Terms
# Credit Support Annex and Collateral Terms The Credit Support Annex (CSA) is an annex to the ISDA Master Agreement that governs collateral excha...
Credit Default Swaps Contracts
# Credit Default Swaps Contracts A credit default swap (CDS) is a derivative contract that transfers credit risk from a protection buyer to a pro...
Counterparty Risk Monitoring
# Counterparty Risk Monitoring Counterparty risk monitoring tracks credit exposure to OTC derivatives counterparties, identifies deteriorating cr...
Compression and Portfolio Tear-Ups
# Compression and Portfolio Tear-Ups Compression and tear-up services reduce the gross notional outstanding of OTC derivatives portfolios by term...
Commodity Swaps for Producers and Consumers
# Commodity Swaps for Producers and Consumers Commodity swaps allow producers and consumers to exchange floating commodity prices for fixed price...
Cleared vs. Bilateral Swap Structures
# Cleared vs. Bilateral Swap Structures Cleared swaps use a central counterparty (CCP) to guarantee performance, while bilateral swaps remain dir...
Accounting Treatment for Hedging Swaps
# Accounting Treatment for Hedging Swaps Hedge accounting allows derivatives gains and losses to be matched with the hedged item in the income st...