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Hara-Kiri Swap

What is 'Hara-Kiri Swap'

An interest rate or cross-currency swap devoid of any profit margin for the originator. The term gets its name from Japanese banks' and securities houses' 1980s strategy of offerings very low rates in order to obtain business. In Japan, hara-kiri is a form of slow ritual suicide; the swaps were dubbed hara-kiri because they turned out to be a form of financial suicide for the institutions that offered them.

Explaining 'Hara-Kiri Swap'

Although hara-kiri swaps provide no intrinsic benefits to the parties that offer them, there are a variety of extrinsic benefits to consider. For example, the practice often involves USD/JPY cross-currency swaps, which have typically been attached to new issues with the aim of obtaining a leading underwriting position.


Further Reading


three, having been established in 1969, although on a base of 100 on 31 July 1964. The index is an arithmetic and weighted in-dex of 33 stocks, which together …
link.springer.com [PDF]
… 2. Japan--Foreign economic relations--Canada … toward greater capital-market involvement are handicapped both by Japanese Ministry of Finance regulations precluding … activities in the Tokyo market, particularly toward equity sales, private placements, and swap arrangements …

Foreign Firms in Japan's Securitites Industry in the 1980s and Post-Bubble EconomyForeign Firms in Japan's Securitites Industry in the 1980s and Post-Bubble Economy
link.springer.com [PDF]
… 2. Japan--Foreign economic relations--Canada … toward greater capital-market involvement are handicapped both by Japanese Ministry of Finance regulations precluding … activities in the Tokyo market, particularly toward equity sales, private placements, and swap arrangements …

Governance in a low-trust environment: The difficulties of fiscal adjustment in HungaryGovernance in a low-trust environment: The difficulties of fiscal adjustment in Hungary
www.tandfonline.com [PDF]
… 2. Japan--Foreign economic relations--Canada … toward greater capital-market involvement are handicapped both by Japanese Ministry of Finance regulations precluding … activities in the Tokyo market, particularly toward equity sales, private placements, and swap arrangements …

Tax-Driven Regulatory Drag: European Financial Centers in the 1990sTax-Driven Regulatory Drag: European Financial Centers in the 1990s
books.google.com [PDF]
… 2. Japan--Foreign economic relations--Canada … toward greater capital-market involvement are handicapped both by Japanese Ministry of Finance regulations precluding … activities in the Tokyo market, particularly toward equity sales, private placements, and swap arrangements …



Q&A About Hara-Kiri Swap


How many people died in this incident?

Two people died in this incident.

What does hara kiri have to do with interest rates and currency swaps?

They were called hara kiri because they turned out to be financial suicide for the institutions that offered them.

Who are the two main characters in this article?

The two main characters in this article are Kato and Yuki.

What is a Hara-Kiri Swap?

A Hara-Kiri swap is an interest rate or cross-currency swap devoid of any profit margin for the originator.

Who are the parties involved in a Hara-Kiri swap?

The parties involved in a Hara-Kiri swap are typically Japanese banks and securities houses.

How much money did they get for killing themselves ?

They got $100,000 for killing themselves .

When did it take place ?

It took place on December 16, 1991 .

What was their job ?

Their job was to sell life insurance policies .

What does hara kiri mean?

It means ritual suicide, but it was also used as a financial suicide strategy by Japanese banks and securities houses because they lost money on them.

Why did they commit suicide ?

They committed suicide because they were fired from their jobs .

Where did it take place?

It took place at a bank.

What does the title of the article mean?

It means suicide swap.

Why do some institutions offer these swaps?

These swaps were offered to obtain new business.

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