What does Constant Maturity Swap (CMS) mean?
A derivative with a payoff based on a swap rate of a specific maturity. The coupon frequency needs not match that of the underlying swap rate. The person who buys the swap is allowed to fix the duration of received flows on a swap.
It is a swap that is exposed to long term interest rate movement.
Futures Knowledge Explains Constant Maturity Swap (CMS)
Constant Maturity Swap is a special type of interest rate swap.Here interest rate on one leg is reset regularly. This is done with respect to market swap rather than LIBOR. The second leg of the swap may be fixed rate LIBOR. CMS swaps can be written for a single currency or cross currencies.