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Development of Swaps Market

Development of Swaps Market. Int. Options. Secondary Mkt. Conclusion. History. Types of Swap. Role. Agenda. History of Swaps and Swaps Population Role of Intermediary Types of Swaps and Swaps Variation Interest Rate Options Secondary Market for Swaps Conclusion Q&A. Int. Options.

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Development of Swaps Market

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  1. Development of Swaps Market Duangporn Wattanasukchai

  2. Int. Options Secondary Mkt Conclusion History Types of Swap Role Agenda • History of Swaps and Swaps Population • Role of Intermediary • Types of Swaps and Swaps Variation • Interest Rate Options • Secondary Market for Swaps • Conclusion • Q&A Duangporn Wattanasukchai

  3. Int. Options Secondary Mkt Conclusion History Types of Swap Role History of Swaps 1972 1982 • The world’s monetary leaders suspended the Bretton Woods agreement in 1971 • The Chicago Mercantile Exchange introduced foreign currency futures contracts in 1972 • Salomon Brothers brokered the first currency swap in 1981. • Interest rate swaps first developed in late 1981 • Sallie Mae engaging in the first contract in 1982 • Establishment of the International Swaps and Derivatives Association (ISDA) and ISDA associated with most swaps as master agreements since 1985 1971 1981 1985 Duangporn Wattanasukchai

  4. Int. Options Secondary Mkt Conclusion History Types of Swap Role Swaps Population Trillions of dollars outstanding in swap agreements Duangporn Wattanasukchai

  5. Int. Options Secondary Mkt Conclusion History Types of Swap Role Role of Intermediary • Commercial banks and investment banks are intermediary in an interest rate swap. • Early, being as brokers and taking the opposite side of a swap. • Later, acting as dealers Duangporn Wattanasukchai

  6. Int. Options Secondary Mkt Conclusion History Types of Swap Role Types of Swaps • Interest Rate Swaps • Foreign Currency Swaps • Circus Swaps Duangporn Wattanasukchai

  7. Int. Options Secondary Mkt Conclusion History Types of Swap Role Swap Variations • Deferred Swap • Floating for Floating Swap • Amortizing Swap • Accreting Swap Duangporn Wattanasukchai

  8. Int. Options Secondary Mkt Conclusion History Types of Swap Role Interest Rate Options • Interest Rate Cap • Interest Rate Floor • Interest Rate Collar • Swaption Duangporn Wattanasukchai

  9. Int. Options Secondary Mkt Conclusion History Types of Swap Role Secondary Market for Swaps • Mirror Swap (Swap Reversal) • Swap Sale (Swap Assignment) • Swap Buy Back Duangporn Wattanasukchai

  10. Int. Options Secondary Mkt Conclusion History Types of Swap Role Conclusion • Swaps are one of three broad types of derivatives. • There are 2 major types of swaps. • The market outstanding of swaps is around $2 trillions. • ISDA is a master agreement for swap. • There are 3 ways for getting out of swaps. Duangporn Wattanasukchai

  11. Q&A Duangporn Wattanasukchai

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