What does HaraKiri Swap mean?
Hara-kiri is a Japanese word which means "suicide". HaraKiri Swap is a swap that offers no profit for the offering party. As the originator of this type of swap is normally expected to end up in a financial loss or a very small profit, it is named Hari- Kari swap.
Futures Knowledge Explains HaraKiri Swap
A broker provides interest swap or exchange swap as hara-kiri swaps just to improve upon his clientele base. It does not have a spread. The originator offers such a low interest rate or exchange rate that it is virtually not possible to make a profit. The broker expects to make profits from the client in some other transactions in future.