Interest Rate Swaps: Origin

The market primarily consist of financial

institutions and corporations who use the swap
market to hedge more efficiently their liabilities
and assets.
Many institutions create synthetic fixed- or
floating-rate assets or liabilities with better rates
than the rates obtained on direct liabilities and
assets.

Interest Rate Swaps: Definition

Definition:
A swap is an exchange of cash flows, CFs.
It is a legal arrangement between two parties to
exchange specific payments.