What is the main function of a 'swap dealer'?

The main function of a swap dealer is to engage in trading swaps and act as a market maker. Swap dealers play a critical role in the financial markets by providing liquidity and facilitating the transfer of risk between parties through derivative contracts, specifically swaps.

Swaps are agreements between two parties to exchange cash flows or other financial instruments, and they can be tailored to meet various needs of market participants, such as hedging against interest rate fluctuations or currency risks. By acting as a market maker, the swap dealer ensures there are buy and sell orders available, which helps maintain a fluid and efficient market for these financial instruments.

This role is vital because it not only supports the functioning of the swap market but also enables other market participants to manage their exposure to different risks effectively. Thus, the confirmation that the swap dealer engages in trading swaps and serves as a market maker accurately captures the essence of their primary responsibilities in commodity regulation and the broader financial landscape.