What does Bond Market Association (BMA) Swap mean?
A swap on interest rate on bonds. Two parties enter into an arrangement to exchange fixed interest rate for a floating interest rate on a debt obligation. It is essentially an exchange of cash flow variation.
In a Bond Market Association (BMA) Swap, the floating rate is based on the bond market swap index.
Futures Knowledge Explains Bond Market Association (BMA) Swap
Bond Market Association is an international trade association of 200 brokers, dealers, securities firms and banks that underwrite, trade, and sell debt securities. BMA maintains the bond market swap index which is used in interest rate swap and so such a swap is known as a Bond Market Association (BMA) Swap. The two parties swap a fixed interest rate for the floating interest rate on bonds.