Interest rate swaps are over the counter or OTC instruments. While this allows for full customization, a key benefit, it also means that all trade details and key features must be agreed upon between counterparties at the time of the trade. Although the ISDA, International Swaps and Derivatives Association, master agreement provides a legal framework for many of the non pricing relevant details, several features directly impact pricing and must be discussed before the trade is finalized. To facilitate negotiations, market participants have created standardized terminology for interest rate swaps. Let's review some important examples. The notional value refers to the amount used to calculate the interest payments on both legs of the swap. It's important to note that this value is not exchanged at inception. It's only used as the basis for determining the actual interest cash flows. Payments frequency. This term refers to how often interest payments are made on either leg of the swap. Common payment frequencies might be quarterly, semi-annual, or annual. Both parties must agree on how frequently these payments will be exchanged. The reset frequency refers to how often the floating interest rate is reset. For example, in a swap tied to an overnight RFR or risk-free rate like SOFR, the rate is reset daily. This frequency affects how often the floating rate adjusts to reflect current market conditions. The maturity date is the final date on which payments will be made after which the contract terminates. It marks the end of the swap agreement and an end to interest payments on both legs. Netting is typically not agreed upon on a trade by trade basis, but rather is part of the broader master agreement such as the ISDA agreements. Payments netting means that opposing cash flows due on the same day are offset against one another so that only the net amount is paid by one party. This reduces operational complexity and more importantly helps minimize counterparty risk by lowering the total amount of cash that needs to be exchanged.