First of all, swap transaction integrates foreign exchange market, securities market, short-term money market and long-term capital market, which is not only an innovative tool for financing, but also can be applied to financial management.

Secondly, swaps can meet the requirements of traders for non-standardized transactions and are widely used.

Third, the use of swap hedging can save the daily management of positions required by other financial derivatives, which is convenient to use and the risk transfer is faster. Fourth, the term of swap transactions is flexible, and the length is arbitrary, up to several decades.

Finally, the emergence of swap warehouse makes banks become the main body of swaps, so the liquidity of swap market is strong.

2. Disadvantages of swap transactions

Swap trading itself also has many risks. Credit risk is the main risk faced by swap transactions, and it is also the risk that the swap parties and intermediaries cannot perform the contract for various reasons. In addition, because the swap period is usually as long as several years, there is still the risk of interest rate swap for both buyers and sellers.