Interest Rates
Interest rate swaps (IRS) are among the most flexible risk management products ever created. The international swaps market has grown rapidly in little more than 20-years. It is now made up of numerous participants, including banks and supra-, multi- and national corporations.
An IRS is a legally binding agreement between two counterparties to exchange regular cash flows on regular, pre-defined dates for a specified period. Generally, one payment is based on a fixed rate of interest and the return payment is based on a floating rate. The rates are applied to the notional amount, which does not change hands, making IRS extremely efficient from a credit perspective. ICAP has been at the forefront of the IRS market since its creation. Our Group chairman, Michael Spencer, set up Intercapital in May 1986 as a broking service to the then new IRS market.