Editing Equity swap (section)

{{Short description|Type of financial derivative contract}}
{{For|the corporate finance term|Stock swap}}
{{More citations needed|date=November 2024}}
An '''equity swap''' is a financial derivative contract (a [[swap (finance)|swap]]) where a set of future cash flows are agreed to be exchanged between two counterparties at set dates in the future.<ref>{{Cite web |title=Equity Swap Contract |url=https://corporatefinanceinstitute.com/resources/derivatives/equity-swap-contract/ |access-date=2024-11-13 |website=Corporate Finance Institute |language=en-US}}</ref> The two cash flows are usually referred to as "legs" of the swap; one of these "legs" is usually pegged to a floating rate such as [[LIBOR]]. This leg is also commonly referred to as the "floating leg". The other leg of the swap is based on the performance of either a share of [[stock]] or a [[stock market index]]. This leg is commonly referred to as the "equity leg". Most equity swaps involve a floating leg vs. an equity leg, although some exist with two equity legs.

An equity swap involves a [[notional amount|notional principal]], a specified duration and predetermined payment intervals. 

Equity swaps are typically traded by [[delta one]] trading desks.