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Total return swap: Difference between revisions
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{{anat|eqderiv}} | |||
A total return swap, or '''[[TRS]]''' is a [[swap]] that pays a total return on an [[underlying security]] or {{eqderivprov|basket}} of securities. All returns, such as [[dividends]] and the results of [[corporate actions]], are included. An equity TRS includes all gains and losses equivalent to holding the underlying {{eqderivprov|share}} and no part of the return is excluded. | A total return swap, or '''[[TRS]]''' is a [[swap]] that pays a total return on an [[underlying security]] or {{eqderivprov|basket}} of securities. All returns, such as [[dividends]] and the results of [[corporate actions]], are included. An equity TRS includes all gains and losses equivalent to holding the underlying {{eqderivprov|share}} and no part of the return is excluded. | ||
{{ | Defined for the purposes of [[SFTR]] as follows: | ||
:''[[total return swap]] means a [[derivative]] contract as defined in point (7) of Article 2 of Regulation (EU) No 648/2012 in which one counterparty transfers the total economic performance, including income from interest and fees, gains and losses from price movements, and credit losses, of a reference obligation to another counterparty.'' | |||
A [[derivative contract]], in turn — and you’ll love this — is defined as per {{tag|MiFID}} as follows: | |||
:''{{derivativecontractdefinition}}'' | |||
In a nutshell this means [[option]]s, [[future]]s, [[swap]]s, [[forward rate agreement]]s and any other [[derivative contract]]s relatiing to | |||
*[[securities]], [[currency|currencies]], [[interest rate]]s or [[yield]]s, or other [[derivatives instrument]]s, [[Index - Equity Derivatives Provision|indices]] or financial measures | |||
*[[cash settled]] [[commodities]]; | |||
*exchange traded [[physically settled]] [[commodities]]; | |||
*physically settled commodities that otherwise have the characteristics of derivative contracts<ref>I mean Lord, give me strength.</ref> | |||
*[[credit derivatives]] | |||
*[[contracts for difference]] | |||
{{ref}} | |||