Swap Dealer

A swap dealer is a financial institution or entity that acts as an intermediary in swap transactions, providing liquidity by entering into swap agreements with clients or other institutions. Swap dealers typically facilitate trades in interest rate swaps, currency swaps, and other derivative products. They manage risk by taking opposing positions in the market or hedging through other financial instruments. Swap dealers are regulated under financial laws such as Dodd-Frank in the U.S.

Example

A swap dealer enters into a currency swap with a multinational corporation, allowing the corporation to hedge its exposure to foreign exchange risk.