Reverse a swap(redirected from Reverses a Swap)
Reverse a swap
Reverse a Swap
To engage in a swap in which the legs are the same as a previous swap, but are held by different parties. For example, suppose two counterparties swap bond A and bond B. The party that receives bond A (who is the same party that gave away bond B) may reverse the swap by giving away bond A and receiving bond B back. One usually reverses a swap if there are tax advantages associated with it, or if the new position is not as profitable as previously thought.