Instruments and Participants

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