When a swap bank serves as a broker:
A)The swap bank stands willing to accept either side of a swap.
B)The swap bank matches counterparties but does not assume any risk of the swap.
C)The swap bank receives a commission for matching buyers and sellers.
D)None of the above

Question

Quizplus · Accepted Answer

When a swap bank serves as a broker, it matches counterparties for a swap transaction but does not assume any risk related to the swap. The swap bank acts as an intermediary and receives a commission for matching buyers and sellers. Therefore, option B is the correct choice. Option A is incorrect because if the swap bank accepts one side of the swap, it becomes a principal and assumes a risk related to the transaction. Option C is partially correct because the swap bank does receive a commission, but it also matches counterparties. Therefore, option B is the most appropriate choice.

When a Swap Bank Serves as a Broker