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Total Return Swap
(redirected from Total Return Swaps)

   Also found in: Wikipedia 0.01 sec.
Total Return Swap
A swap in which the two legs are an interest rate, whether fixed or floating, and the return on a set asset. The second party owns the asset, which is usually a set of loans, bonds, or an equity index. The advantage to a total return swap for the payer of the interest rate is that it allows him/her to benefit from the ownership of the asset without owning it. However, if the asset falls in price over the life of the swap, the payer of the interest rate is required to compensate the owner of the asset for the amount the asset has lost.


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In the UK absolute funds are regulated by the FSA, have limits on gearing and utilise synthetic derivatives which can be used for long and short positions, such as contracts for difference, total return swaps, currency swaps, options, futures and credit default swaps.
Total Return Swaps in General A total return swap is a cash-settled bilateral contract, in which each party agrees to make certain payments to the other depending on the value and distribution performance of the underlying asset.
In addition to the 11,069,136 common shares disclosed in our most recent public filing, we also have added derivative exposure to Euronext through cash-settled total return swaps in respect of 4,484,592 notional shares.
 
 
 
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