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When we talk of IR #Interest #Rate #Risks we must understand the markets in which this product operates, and the fundamental pricing, trading, and hedging dynamics of this financial #derivative asset class.
Banks normally use IR Derivatives and Structured Products for on and/or off-balance-sheet ALM Asset Liability Management and Immunization, Bond Risk Hedging, NII Risk Hedging, Arbitrage Opportunity Exploration using the treasury based fixed income desks, Rate Speculation, etc.
Of course, we have other financial market participants such as Pension Funds, Hedge Funds, Insurance Companies, and several other specialized asset management firms, that have strategies and asset allocation models, which use IR derivative for both Macro and Micro-hedging.
