1. June 2, 2005Duangporn Wattanasukchai1 Development of Swaps Market

2. June 2, 2005Duangporn Wattanasukchai2 Agenda History of Swaps and Swaps Population Role of Intermediary Types of Swaps and Swaps Variation Interest Rate Options Secondary Market for Swaps Conclusion Q&A History Role Types of Swap Int. OptionsSecondary MktConclusion

3. June 2, 2005Duangporn Wattanasukchai3 History of Swaps The world’s monetary leaders suspended the Bretton Woods agreement in 1971 The Chicago Mercantile Exchange introduced foreign currency futures contracts in 1972 Salomon Brothers brokered the first currency swap in 1981. Interest rate swaps first developed in late 1981 Sallie Mae engaging in the first contract in 1982 Establishment of the International Swaps and Derivatives Association (ISDA) and ISDA associated with most swaps as master agreements since 1985 History Role Types of Swap Int. OptionsSecondary MktConclusion 1971 1972 1981 1982 1985

4. June 2, 2005Duangporn Wattanasukchai4 Swaps Population Trillions of dollars outstanding in swap agreements History Role Types of Swap Int. OptionsSecondary MktConclusion

5. June 2, 2005Duangporn Wattanasukchai5 Role of Intermediary Commercial banks and investment banks are intermediary in an interest rate swap. Early, being as brokers and taking the opposite side of a swap. Later, acting as dealers History Role Types of Swap Int. OptionsSecondary MktConclusion

6. June 2, 2005Duangporn Wattanasukchai6 Types of Swaps Interest Rate Swaps Foreign Currency Swaps Circus Swaps History Role Types of Swap Int. OptionsSecondary MktConclusion

7. June 2, 2005Duangporn Wattanasukchai7 Swap Variations Deferred Swap Floating for Floating Swap Amortizing Swap Accreting Swap History Role Types of Swap Int. OptionsSecondary MktConclusion

8. June 2, 2005Duangporn Wattanasukchai8 Interest Rate Options Interest Rate Cap Interest Rate Floor Interest Rate Collar Swaption History Role Types of Swap Int. OptionsSecondary MktConclusion

9. June 2, 2005Duangporn Wattanasukchai9 Secondary Market for Swaps Mirror Swap (Swap Reversal) Swap Sale (Swap Assignment) Swap Buy Back History Role Types of Swap Int. OptionsSecondary MktConclusion

10. June 2, 2005Duangporn Wattanasukchai10 Conclusion Swaps are one of three broad types of derivatives. There are 2 major types of swaps. The market outstanding of swaps is around $2 trillions. ISDA is a master agreement for swap. There are 3 ways for getting out of swaps. History Role Types of Swap Int. OptionsSecondary MktConclusion

11. June 2, 2005Duangporn Wattanasukchai11 Q&A