For a Corporate Treasurer, When Would an OTC Swap Be Preferred over a Standardized Future? ⎊ Path

For a Corporate Treasurer, When Would an OTC Swap Be Preferred over a Standardized Future?

A corporate treasurer would prefer an OTC swap when they need to hedge a very specific, non-standard risk, such as a long-term interest rate exposure or a highly customized foreign exchange exposure. Since swaps are customizable, they can precisely match the company's unique cash flow schedule and risk profile, which a standardized futures contract cannot.

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How Does the Legal Documentation Differ between Standardized and Customized Derivatives?

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Glossar

OTC Swap

Structure ⎊ An OTC swap, within cryptocurrency and derivatives markets, represents a privately negotiated contract to exchange cash flows or assets, bypassing traditional exchange listing.

Standardized Futures Contract

Contract ⎊ A standardized futures contract within cryptocurrency, options trading, and financial derivatives represents a legally binding agreement to buy or sell a specific digital asset at a predetermined price and date.