Vanilla

'Vanilla' is a description meaning that there are no additional non-standard features in a financial contract.

For example, a vanilla interest rate swap is a standardised agreement to exchange fixed for floating interest flows, calculated on a fixed notional principal amount over the life of the swap.

The term derives from ice cream, where vanilla ice cream was historically the commonest and cheapest variety.

Also known as Plain vanilla.

See also

• 101
• Bells and whistles
• Exotic
• Green curve
• Greenium
• Interest rate swap
• Notional principal