ABSTRACT
Forward Rate Agreement (FRA) markets are over-the-counter markets and so are found in all major financial centers. They were first traded in London around 1983. Market makers in FRAs provide users with an alternative method of hedging risks associated with movements in interest rates. FRAs effectively replaced forward/forward deposits because they overcame the inefficiencies of that product, which are explained later in this Chapter. They are also similar in effect to interest rate futures but perhaps more flexible in terms of the currencies and periods available.
