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Over the past forty years, the market for rates instruments used to support rate profile optimization has grown to over $464 trillion (Source: BIS, May 2020 ) and spans an array of instruments including:
Fixed for floating rate interest rate swaps (“vanilla swaps”)
Fixed for fixed rate (eg basis swaps)
Interest only and principal only swaps
Overnight interest swaps
Contracts for difference and maturity swaps
Structured products based on underlying cash flows (eg strips, etc)
Caps, floors, collars and other agreements limiting the extent to which market rate changes can impact a borrowing relationship
The participants in these markets include:
Corporate treasury desks and funding desks
Institutional investors and asset managers
Speculators and proprietary trading functions
Brokers and other market makers
Liquidity management functions of banks and other large financial institutions
Risk management functions
Insurance companies