Interest Rate Swap

What is Interest Rate Swap?

Interest Rate Swap meaning A swap in which the two counterparties agree to exchange interest rate flows. Typically, one party agrees to pay a fixed rate on a specified series of payment dates and the other party pays a floating rate that may be based on LIBOR (London Interbank Offered Rate) on those payment dates. The interest rates are paid on a specified principal amount called the notional principal.

 

reference: U.S. COMMODITY FUTURES TRADING COMMISSION – CFTC Glossary

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