A swap that has additional or more complicated features as to a vanilla swap (standard swap). Exotic swaps are designed to meet specific needs of the counterparties.

Examples of exotic swaps are basis swaps, (in which the parties exchange floating rate payments linked to two different indexes), callable swaps (which give the fixed rate payer the option to terminate the contract before maturity date), amortizing swaps (where the swap’s notional amount decreases over it lifespan), etc.

Other types of exotic swaps include puttable swaps, rate capped swaps, forward swaps, extendible swaps, etc.

Exotic swaps are also known as non-standard swaps.