Mar 012019
 

Also called a Cancellable Swap. The buyer of a Callable Swap earns the right to terminate the swap on specified dates in the future, usually on each settlement day. A Callable Swap is essentially a combination of a swap and a Bermudan swaption. The swaption premium is built into the fixed or floating rate so a Cancellable Swap has no upfront cost. The holder of the option simply receives a lower rate. A Cancellable Swap is suitable for users who wish to enter into a swap but do not want to be locked into it in case rate movements make it unfavourable. A Cancellable Swap enables them to cancel the deal and negotiate more favourable terms when rates change

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