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Does sombody know exactly if a TRS is always breakable ? Or if breaking the TRS position is an option in the term-sheet. I need an accurate response.

Thank you !

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  • $\begingroup$ In practice, a client can get out of any TRS anytime. Don't recognize P&L with the assumption that a TRS won't be terminated. $\endgroup$ – Dimitri Vulis Feb 17 at 22:28
  • $\begingroup$ In my experience, when I used to trade equity TRS' with sizeable notional (eg on MSCI World), the term sheet does specify whether it is breakable or not. Reason being that if you hedge or offset the TRS to something else, especially for sizeable notionals, you don't want to be caught by surprise and have to unwind your hedge suddenly, especially not in a volatile market. Hence there can be a break-fee. Maybe things have changed though. $\endgroup$ – Frido Rolloos Feb 18 at 7:21
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TRS are OTC. You can set any terms that both parties accept. That includes rate, tenor, break rights. Etc etc etc

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  • $\begingroup$ Agreed. Confirm should state any contractual break rights , if they exist. Otherwise , transaction can be unwound at dealer unwind price. $\endgroup$ – dm63 Mar 21 at 4:32

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