A swap is an agreement between two parties to exchange

sequences of cash flows for a set period of time.

Usually, at the time the contract is initiated, at
least one of these series of cash flows is determined by a
random or uncertain variable, such as an
interest rate,
foreign exchange rate,
equity price or commodity price
SWAP
Most swaps are traded over-the-counter (OTC), for the
counterparties. Some types of swaps are also exchanged on
futures markets such as the

Chicago Mercantile Exchange,
The largest U.S. futures market,
The Chicago Board Options Exchange,
Intercontinental Exchange and
Frankfurt-based Eurex AG.
SWAP MARKET
TYPES OF SWAPS
The five generic types of swaps, in order of their
quantitative importance, are:

Interest rate swaps
currency swaps,
credit swaps,
Commodity swaps and
Equity risk Swaps
The most common type of swap is a plain Vanilla interest rate swap. It
is the exchange of a fixed rate loan to a floating rate loan. The life of
the swap can range from 2 years to over 15 years. The reason for this
exchange is to take benefit from comparative advantage.

Some companies may have comparative advantage in fixed rate markets,
while other companies have a comparative advantage in floating rate
markets. When companies want to borrow, they look for cheap
borrowing,
Interest rate swaps
A currency swap involves exchanging principal and fixed rate interest
payments on a loan in one currency for principal and fixed rate interest
payments on an equal loan in another currency.

Just like interest rate swaps, the currency swaps are also motivated
by comparative advantage.

Currency swaps entail swapping both principal and interest between the
parties, with the cashflows in one direction being in a different currency than
those in the opposite direction.

It is also a very crucial uniform pattern in individuals and customers.
Currency swaps
A commodity swap is an agreement whereby a floating (or
market or spot) price is exchanged for a fixed price over a
specified period. The vast majority of commodity swaps
involve crude oil.
Commodity swaps
A credit default swap is a contract in which the buyer makes a
series of payments to the seller and, in exchange, receives a
payoff if an instrument, typically a bond or loan, goes
into default (fails to pay)., the credit event that triggers the
payoff can be a company undergoing

Restructuring
Bankruptcy or
even just having its credit rating downgraded.

credit swaps,
Equity risk swap, is a contract in which the buyer (pays a
premium to the seller for the option to transfer certain risks.
These can include any form of equity, management or legal
risk of the underlying (for example a company).
Through execution the equity holder(buyer) can transfer
shares, management responsibilities or else.
Equity risk swap