Module 4 · Chapter 12
Close-out: the Number
When a swap ends early, its future payments become one net sum. This chapter shows how that sum is built, how to check the bank's figure by its dates, and how to dispute it.
In this chapter
- What goes into the one sum that replaces an ended swap
- How to find errors in the bank's statement by reading its dates
- How to dispute the figure, pay the right part and close the file
12.1What a close-out does
When a party designates an Early Termination Date, the swap stops on that day. Its future payments are replaced by one sum. That sum is what the swap is worth on the day, adjusted for anything already owed.
On Atlas's swap, the bank worked the sum out and sent a statement. Two lines of that statement were wrong. You could find both by reading dates, without valuing anything.
Key point
A designation turns a value into a debt with a due date. Check the dates on the statement before you check its total.
Also in this chapter
- The designation and Atlas's collateral
- What the Close-out Amount measures
- One net sum, and when it is due
- Reading the statement by its dates
- Disputing the statement and paying the undisputed part
- The revised statement and the interest
- What ends, and what carries on
- If rates had risen instead
- Your job
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