A swap dealer is a broker who negotiates deals involving credit default swaps. Someone wishing to become a swap dealer must hold certain necessary securities licenses and have some prior sales experience. Swaps work similarly to insurance contracts as premiums and payouts are based on complex calculations; therefore, anyone hoping to become a swap dealer must have a good grasp of mathematics.
Securities trading is heavily regulated in many countries and brokers are typically required to go through a licensing or certification process before seeking employment with investment firms. This process may involve classroom based lectures although some people prepare for the test by studying the materials by themselves. Having learned the material, prospective traders must successfully pass an examination that covers topics such as ethics, securities laws and practical matters such as the operating hours of national exchanges. In some areas, brokers are required to pass a series of different examinations each of which focuses on a certain type of trading activity or security. Those wishing to become a swap dealer must usually complete the relevant training and pass all necessary examinations to become licensed.
Swap transactions are more complex than trades involving stocks or other types of securities since a number of different factors can impact the value of one of these contracts. Consequently, most firms require new recruits to spend some time trading less complex instruments before dealing in swaps. An individual wishing to become a swap dealer may have to work as a desk trader buying and selling stocks or bonds on behalf of institutions or individuals before transitioning into one of these roles. Some traders even start working as bankers to gain some insight into the financial market before taking on roles that are oriented around trading.
In many countries, anyone can take a securities licensing course regardless of that individual's academic or professional credentials. While these licenses are a prerequisite for a swap dealer job, many firms prefer to hire people who have completed degree courses in finance or similar topics. Major brokerage firms sometimes send recruiters to college campuses and attempt to head hunt the postgraduate students who have the best grade point averages in topics such as mathematics.
Aside from academic and professional credentials, anyone wishing to become a swap dealer must have certain attributes. Securities traders have to aggressively promote their products and contracts in a crowded market place and people employed in these roles often work long hours in high stress environments. Therefore, prospective dealers should have good interpersonal, negotiating and time management skills.
