Difference check

Difference check

The difference in interest payments that is paid to a swap counterparty to close out a deal.

Difference Check

A check that one counterparty in a swap gives to another at the end of the swap agreement. For example, in an interest rate swap, the counterparties swap two different interest rates calculated over the same nominal value. In order to make things easier, the counterparty who owes more writes a check for the difference between the two interest rates, instead of both counterparties writing checks for the whole amount owed to the other.