If you don't know the answers to five basic questions about your derivatives transactions, you risk leaving dollars on the table the next time you enter into a derivatives contract.

The Securities and Exchange Commission and the Commodity Futures Trading Commission are developing regulations aimed at transforming the $401 trillion derivatives market. But no amount of regulation is going to change the entire swaps market into the equivalent of a stock exchange, where any customer can buy or sell shares at a price shown on a screen.

In fact, the new rules will impose costs on dealers that may serve as an additional source of price opacity for many corporate customers. CFOs and treasurers need more than a passing knowledge of derivatives.

If you can answer the five questions below, you will go a long way toward a more level playing field between you and your derivatives dealer.

Is your bank's economic interest aligned with yours? Start here. The typical swap transaction presents real conflicts of interest. For this reason you should not rely solely on the bank for advice with respect to the hedge structure and pricing. Is the dealer pricing the loan competitively or as a loss leader to lock you into a very profitable derivatives transaction? Is your hedge requirement practical and necessary, or does it force you to execute a larger hedge than you would otherwise? Does it meet your goals? Or does it primarily serve the profitability goals of your bank?

Do you understand all the material terms of your swap transactions? Your dealer will always explain the terms, of course, but make sure you can identify and justify all the elements of the transaction you're entering into. Are you sure it is appropriately hedging the interest rate risk or currency risk of your company and not introducing new risks? Do you understand the events of default, termination events and their consequences? Are they fair to you? What if your dealer defaults?

Are you sure you're not being overcharged? Often there is more room to negotiate a price than your dealer indicates. The best approach to negotiation is knowing and understanding the components of pricing before you start. These include the midmarket price, bid-offer spreads, counterparty credit-risk costs, funding adjustments and the dealer's costs of complying with applicable regulations. You should always have a sense of how much the dealer is making and how. This is an area where you may want to check with third parties. You may even have a duty to your institution to get a second opinion.

Why do banks love terminations and amendments? The answer is simple: outsized profitability from a captive client. Before beginning work on a termination or amendment, be clear with the dealer on how the process would work. Consider execution alternatives to make the pricing process more competitive. In refinancing or M&A transactions, try to avoid leaving swap terminations for the last minute -- doing so only makes you more captive. When entering into new swaps, consider circumstances where you may wish to terminate or amend, and make provisions in the documents that govern how this will work. An ounce of prevention is worth more than a pound of cure.

How can you optimize your relationships with your swap dealers? Think big picture here. Your relationships with your banks are broad and hopefully ongoing. The goals of the relationship manager or banker may not be the same as that on the swap trading side of the firm. Use that when necessary. To be clear, banks should be rewarded for good service. But you should be in control, in the know and sure the dealer is being compensated fairly (not excessively). You want the swap dealer to pick up the phone the next time you call and be an advocate for increased swap lines if needed for future deals. Additionally, you may consider lining up a syndicate to give you more flexibility and scope.

Other questions will suggest themselves as you explore these. You have the right to expect your dealer to address your questions and concerns. You can also reach out to independent experts, who will offer a different and more objective perspective on derivative pricing, suitability, structure and terms.

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Joyce Frost, Frank Iacono and Chris Frost are the founding partners of Riverside Risk Advisors LLC, which negotiates, structures and executes a wide variety of fixed-income derivatives and structured products transactions.