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Mark-to-Market Swap
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Any swap that is settled by payment of the instrument's net value to the creditor counterparty on a periodic schedule (daily, monthly) or whenever the net value exceeds an agreed threshold amount. Bilateral marks to market are most common; but, payments only when the counterparty with the lower credit rating is the debtor also occur. Too frequent marks to market may risk classification of a swap as an illegal off-exchange futures contract in the United States.
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