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Forward Swap

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Forward Swap
An agreement between two investors to swap assets, interest rates, or almost anything else on a set date in the future. A forward swap exists in order to provide investors with flexibility in accomplishing their investment goals; for example, the counterparties may wish to use a swap to hedge their risk, but are willing to accept the risk for the first year of an investment. A forward swap can consist of more than one swap: for example, the counterparties can agree to swap interest rates beginning in six months and then to swap different interest rates a year after that.


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It will offer broker services for trading of sukuks (Islamic equivalent of bonds), inter-bank money market transactions by murabaha (commodity-based Islamic finance); credit default swaps (CDS) and global currency products such as foreign exchange and forward swaps.
With a forward swap, an issuer would agree to issue floating rate bonds on the call date of the outstanding bonds to be refunded, and then swap the floating payments for fixed payments based on interest rates that are available at the time the transaction is executed.
It is not a forward swap in the sense of a having a deferred starting date, rather it contains a sequence of forward fixed rates for future exchanges.
 
 
 
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