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Derivatives

  Derivatives   |   Terms
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  • August 11, 2020
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Partial Termination

A reduction in the notional principal of a derivative contract, like a swap. For example, a party to an interest rate swap with a $10 million notional principal may negotiate with the other party a reduction of 40% of its notional principal for the remaining fixing dates. This means the notional principal would be changed into $6 million from the effective date onwards. A partial termination may result in realized gain/loss that has to be accounted for in a given party’s books.

A partial termination may be caused by an early termination of the trade.


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