Price swap

Another common over-the-counter (OTC) derivative is known as a price swap. Here someone holding an electric supply asset (either generation or a contract to buy electricity) or a gas supply asset (production or a contract to buy gas) subject to market price risk may "swap" the price risk to a financial services company and instead receive a fixed price.

OTC derivatives can be extremely varied, and the products offered can differ widely. Margins and transaction costs are often high since the financial services company will want to be compensated for taking on the price risk.