It stands for fully funded swap; a swap in which the investor “fully” pays an upfront amount (funding) in return for the total return of a reference asset. Cash (monetary assets) to the value of the swap, on creation, is transferred to the swap counterparty.

In an exchange traded product (ETP) context, fully funded swap involves full transfer of the cash received from investors on creation of the securities (products) by an issuer to the swap counterparties. In the specific context of credit swaps (CDSs), a super senior swap entails the transfer of risk from the originator to the counterparty only with all junior classes have been fully exhausted. In such a swap, the originator writes the junior to the super senior swap with a special purpose vehicle (SPV), which (i.e., the swap) is fully funded by the investor (own equity), by means of a subscription to the underlying debt securities (CLNs) used as collateral at the disposal of the SPV.