Floating Price

Swaps are a kind of contract that allows one party to trade the proceeds from an investment it holds with the proceeds from an investment held by some other party. You don't trade the assets. You just trade the money they generate.

A typical swap usually involves one party that has a fixed-rate security (like a bond) and another that has a floating-rate security. The fixed-rate people want to take on a little more risk, so they have a chance at a bigger pay day. Meanwhile, the floating-rate people perceive their own risk as already too high. They want the security of the fixed-rate payments. So they work out a swap.

The term "floating price" refers to the floating side of this arrangement. When the swap is set up, the value of the transaction’s floating leg isn’t known. It will move around based on market forces. Thus, floating price.