An interest rate swap in which two floating rate instruments are exchanged. In other words, the two streams of floating rates in different money markets are exchanged to mitigate unfavorable interest rate fluctuations. In marked contrast to standard interest rate swaps (fixed for floating, or vice versa), the two notional amounts are exchanged at the beginning of the swap and eventually exchanged back at maturity. A basis swap may, for example, involve exchanging Euro LIBOR for US dollar LIBOR.

It is also referred to as a basis rate swap or a floating-for-floating swap.