Series 50: Important Facts About Swaps

Important Facts about Swaps

• • Payments can be made on a quarterly, semiannual, or annual basis, but they are made most commonly on a semi-annual basis.
• • The effective date is the date that interest payments begin to accrue, but the payment or settlement date is the date that payments are due.
• • Typically, the party that owes more pays the other party only the amount of the difference (net settlement basis).
• • There is no exchange of principal amounts.
• • Interest is calculated on a “notional principal,” which is simply the principal,