Author name: Sagar Parekh

Remember the childhood days when we used to trade Pokémon and WWE cards with one another? We unknowingly entered into a derivative contract called swaps. Swaps, introduced in late 1980s are relatively new derivative instrument. But it’s expandability and simplicity makes it one of the most frequently traded derivative in international markets. It also had a significant role to play in the Global Financial Crisis of 2008. Due to its increasing popularity and increasing global trade, Swaps has hundreds of trillions of dollars in the notional amount outstanding as on today. Read this article to know more about swaps and how it works.