Bank One Corporation - Page 14

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          the spreads which FNBC factored into its traders’ bid and ask               
          quotes were constrained by competition.  On most transactions,              
          particularly those with other financial institutions and large              
          corporations, the customer obtained quotes from many different              
          dealers, and FNBC was unlikely to get the business if another               
          dealer offered better terms.  Where FNBC dealt with an end user             
          on a transaction that was particularly customized, or where the             
          customer was not likely to obtain prices from other sources,                
          FNBC’s marketers sometimes sought to realize additional profit on           
          the transaction by quoting a larger spread.  FNBC’s marketers               
          usually were not able to get a larger spread from FNBC’s end                
          users.  In the rare cases where they were able to get a larger              
          spread, it was in the nature of a fee for the cost of explaining            
          swaps to the customer or for other services.                                
               F.  Buyouts                                                            
               FNBC’s interest rate swaps were easily terminated during the           
          relevant years by way of buyouts.  FNBC regularly and                       
          continuously sought to, and did, buy out swap transactions in               
          which it was a party.                                                       
               Both end users and dealers came to FNBC to buy out their               
          swaps with FNBC.  FNBC’s traders and marketers were asked to (and           
          did) quote prices for early termination of swaps by way of                  
          buyouts.  FNBC marketed its swaps to customers as financial                 
          instruments that could be easily bought out or terminated at                






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Last modified: May 25, 2011