The setting of an interest rate for a predetermined future period.
For example, the periodic re-setting of the interest rate on a floating rate loan.
The legitimate setting of any market price or rate, for a standard period, often a day.
- "Deutsche Bundesbank ensures liquidity of [German] government securities by making a market at the exchange... At the stock exchange, there is a regular price fixing per day for less liquid bond issues and continuous trading for more liquid issues."
- The Treasurer's Wiki, Germany
The use of derivative instruments such as Forward rate agreements (FRAs) for hedging purposes, to effectively fix a hedged rate.
A fixing instrument (or fixing derivative) is one which hedges an exposure by effectively fixing a hedged rate for it.
Contrasted with an insurance-type instrument, such as an option.
Price fixing is an agreement or collusion to manipulate a market for the advantage of those participating in the agreement, usually harming other market participants.
This is illegal in almost all jurisdictions and markets.