-99-
attempting to hedge some or all of the market risk taken in the
transaction. The trader usually hedged its swaps with other
swaps as well as with futures and Government securities such as
Treasury securities. In some cases, the trader decided to leave
a position unhedged for a period of time or did not enter into a
specific hedging transaction. In those cases, the transaction
was already adequately balanced, in whole or in part, by other
transactions in the trader’s portfolio or was entered into to
balance the existing portfolio.
3. Marketers
a. Function
FNBC’s marketers were the individuals who on behalf of FNBC
negotiated and entered into swaps with nondealer end users. In
order to effect these transactions, FNBC’s marketers dealt
directly with the nondealer end users, but only after checking
with a trader as to the potential pricing of the transaction.
The marketers were assigned groups of customers (e.g., financial
institutions) and were responsible for locating nondealer
customers that wanted to enter into swaps. The marketers
promoted FNBC’s swaps business to its end-user customers and
educated potential clients on the products FNBC offered and how
the products could help the clients.
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