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Derivatives | R

Reverse Swap

A swap agreement which is identical to an existing swap, but with opposite parties. In other words, under a reverse swap, the floating rate payer becomes the fixed rate payer under an already established swap, while the fixed rate payer becomes the floating rate payer. This has the effect of eliminating net obligations of the two counterparties with respect to the original swap.

The reverse swap is alternatively called a back-to-back swap.

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