Total Return Swap

A Total Return Swap (TRS) is a bilateral financial contract in which one party, the total return receiver, receives the total return of a specified underlying asset or index—including both income and capital gains/losses—in exchange for paying a fixed or floating rate to the other party, the total return payer. This derivative allows one party to gain economic exposure to an asset, such as a portfolio of U.S. Treasury securities or a tokenized Real-World Asset (RWA), without owning the asset itself, effectively separating the credit risk from the market risk.