Total return swap

[2] High-cost borrowers who seek financing and leverage, such as hedge funds, are natural receivers in Total Return Swaps.

The United States District Court rejected this argument and enjoined TCI from further violations of Section 13(d) Securities Exchange Act and the SEC-Rule promulgated thereunder.

[4] Total return swaps are also very common in many structured finance transactions such as collateralized debt obligations (CDOs).

CDO Issuers often enter TRS agreements as protection seller in order to leverage the returns for the structure's debt investors.

The CDO gains the interest receivable on the reference asset(s) over the period while the counterparty mitigates their credit risk.