When a financial institution acts as a broker to an interest rate swap, it simply arranges a swap between two parties.
A broker is someone who buys and sells things on behalf of others. They are the middlemen between two parties. A broker is an individual or a firm who executes buy and sell orders for an investor for a commission or fee.
Usually financial institution acts as a broker to an interest rate swap. An interest rate swap is an agreement between two parties in order to exchange one stream of interest payments for another, over a set period of time.
Hence, financial institution simply arranges an interest rate swap between two parties.
To learn more about a broker here:
https://brainly.com/question/14455739
#SPJ4
