The word “Swap” appears in the media a number of times. Some commodity funds use Swap to implement its investment in commodity prices. Exchange Traded Funds (ETFs) like db x-trackers and Lyxor uses swap as well. The most famous usage of the word “swap” is AIG which incurred huge losses writing credit default swap (CDS). AIG could have collapsed if the US government did not bail it out. In the local scene, the Lehman Minibond also implemented some kind of “swap.” The value of these minibonds are now almost worthless. There has been some political push to have derivatives like swap to be regulated in the US. Surprisingly, derivatives like swap is not regulated! So what exactly are swaps? I wrote a short article on this. …. Read more (login required, clients only)