Introduction to SWAP
- - Swap means exchange and Swap transaction is a transaction, where the currency is converted into a specific currency during the contract period and exchanged back to the original currency by the contractor on the maturity date. From the settlement date, the date that is closer to now present is Near Leg and the one far from now is Far Leg The Customer who has a sufficient Won currency liquidity but is short on Foreign currency liquidity, or vice versa, is benefited from this Swap transaction.
Types of Swap
- Product Swap: In case when the target of Swap transaction is products, such as Oil, Metal, Corns and etc
- Financial Swap: In case when the target of Swap transaction is financial assets, such as FX, Interest rate, etc.
- - FX Swap : A sort of FX trade where the both of buying or selling Spot transaction and buying or selling Forward transaction are made simultaneously
- - Interest Rate Swap, IRS: Bilateral agreement between the concerned two parties to exchange interest payments to the nominal principal amount in the same currency over a specific period of time.
- - Currency Swap, CRS: Bilateral agreement between the concerned two parties to exchange interest payments to the notional principal amount in different currencies over a specific period of time and to exchange the principal of two currencies agreed in the contract, at the maturity date.
