Bank One Corporation - Page 193

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          movements.  Swaps dealers trade with both end-users and other               
          dealers.                                                                    
                         b.  Practice as to Swaps                                     
               Swaps dealers maintain a portfolio of swaps on their books             
          and usually attempt to maintain a neutral, hedged position in the           
          market.  Swaps dealers attempt to maintain a neutral, hedged                
          position either by:  (1) Serving as a counterparty to opposite              
          sides of two matching swaps or (2) managing the overall structure           
          of the portfolio so as to minimize the net exposure to interest             
          rate movements.                                                             
                         c.  Price Quotations                                         
               Prices in the interest rate swaps market are quoted in the             
          form of interest rates, and major swaps dealers (e.g., FNBC)                
          regularly quote the bid and ask prices at which they stand ready            
          to buy and sell plain vanilla interest rate swaps with standard             
          maturities of 1, 2, 3, 5, 7, and 10 years.  The bid price is the            
          fixed interest rate that the dealer is ready to pay in exchange             
          for a specified floating rate.  The ask price is the fixed                  
          interest rate that the dealer demands to receive in exchange for            
          paying a specified floating rate.  The ask rate is greater than             
          the bid rate, and the dealer’s profit when taking the opposite              
          sides on two identical swaps is the difference between the fixed            
          rate it receives and the fixed rate it pays.                                








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