IRS Maturity Dates Can Be Customized in OTC Contracts

Summary

The document addresses whether an interest rate swap must mature on a standard tenor or can end on a date chosen by its counterparties. Its answer is that an OTC swap is bilaterally negotiated, so the parties can agree to a nonstandard maturity date, including a date that does not fall on a familiar tenor such as a whole number of years.

The practical qualification is that standard maturities are the most actively traded. Common tenors therefore tend to have greater market activity, while a bespoke date can be agreed when the trade requires it. The response is a concise statement of contractual flexibility and market practice, not a detailed account of ISDA documentation, date-adjustment rules, payment schedules, or valuation effects. Those details may depend on the terms and conventions specified for a particular trade.

Key ideas

• OTC interest rate swaps can be negotiated with a maturity date chosen by the counterparties.
• A swap maturity does not have to match a standard tenor.
• Standard maturities tend to be the most actively traded.
• The answer does not explain the detailed documentation and date-adjustment conventions for a particular swap.

Tags

# ISDA Convention for definition of IRS maturities


# ISDA Convention for definition of IRS maturities












Could someone indicate me what is the ISDA convention for IRS maturity dates ?

I mean, when two counterparties enter in a new IRS, is the maturity date to be defined in the contract totally free (ex: maturity date in 3 years, 8 months and 9 days) or should the maturity be a common tenor like 1M, 3M, 1Y, 10Y...

I assume it will be generally a common tenor to match payments schedule but is it also possible to define a totally free maturity date in an IRS agreement ?

Thank you

## Answer by dm63 (score 1, accepted)

https://quant.stackexchange.com/a/39637

Two counterparties can agree any date they choose as the maturity date. IRS, being bilateral over the counter derivatives, are completely customizable. Having said that, on any given day the most heavily traded IRS are those with a standard maturity such as 2yr, 5yr, 10yr.

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