A swap which is basically created to offset or counter the interest rate or market risk of an earlier swap without closing off the position in that already existing swap. This has the effect of reversing the original swap, but with a new counterparty. However, the risk of the existing position cannot not be totally eliminated by the new offsetting position (this is known as a mismatch risk). For example, a bank might have an existing pay-floating interest rate swap (i.e., an open exposure to interest rates). The bank may choose to go on with the position or enter into an offsetting swap whereby it pays fixed and receives floating.