Corporates complain about transparency of unwinds

Corporate end-users complain the prices they receive on swap unwinds can vary massively – and claim they are not getting any transparency on the various components that make up the price. By Peter Madigan

Putting on a swap used to be pretty simple for corporate treasurers. If they needed to readjust their fixed-to-floating mix, they might have asked for several quotes from dealers – all would typically be around the same level and easy to replicate using a simple model. If they wanted to terminate an existing swap position, any dealer could step in with little economic impact on any party; there was an assumption of fungibility.

That assumption no longer holds water. Dealers have come to