IRS Interest Rate Swaps

It is a financial transaction in which two counterparties agree to exchange streams of cash flows throughout the life of contract in which one party pays a fixed interest rate on a notional principal and the other pays a floating rate on the same sum, popularly known as floating to fixed or fixed to floating IRS.  IRC can also be floating to floating wherein either legs are floatings.

The basic purpose of IRS is to hedge the interest rate risk of constituents and enable them to structure the asset/liability profile best suited to their respective cash flows.