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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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