swap on eq futures/options: client motive

Q1: why would anyone want to enter a swap contract on an option/futures (such a complex structure) rather than trading the option/futures directly?

Q2: why would anyone want to use swap on an offshore stock rather than trading it directly?

More fundamentally,

Q3: why would anyone want to use swap on domestic stock?

A1: I believe one important motivation is restrictions/regulation.  A trading shop needs a lot of approvals, licenses, capital, disclosures … to trade on a given futures/options exchange. I guess there might be disclosure and statuary reporting requirements.  If the shop can’t or doesn’t want to bother with the regulations, they can achieve the same exposure via a swap contract.

This is esp. relevant in cross-border trading. Many regulators restrict access by offshore traders, as a way to protect the local market and local investors.

A3: One possible reason is transparency, disclosure and reporting. I guess many shops don’t want to disclose their positions in, say, AAPL. The swap contract can help them conceal their position.

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