Renesource Capital

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A
Abandonment	Allowing an option to expire unexercised. Also, withdrawal from a cancellable forward contract to purchase securities.
Accrued interest	The amount of interest accumulated between the most recent payment and the sale of fixed-interest security. For most bonds, accrued interest must be added to the purchase price, but that amount will be recovered by the purchaser in the next interest payment.
Action	French for “share”.
Action de jouissance	Share which grants the right to participate in the net profit of the company without conferring ownership rights. French/ Belgian term.
Action ordianire	French for “ordinary share”.
Action privilégée	French for “preference share”.
Actuals	The physical or cash commodity, as distinguished from futures contracts.
After hours dealing	On the London Stock Exchange, dealings done after the MQP. Such dealings are treated as dealings done on the following business day. On SEAQ, the MQP is 0830-1630 and on SEAQ International 0930-1600.
After market	See Secondary market.
Agency order	An order that a broker/dealer executes for the account of a customer with another Professional or retail investor and for which a commission is typically charged. (See Pricipal orders)
Aktie	German for “share”
A la criée	See Auction market. A la criée i san auction system where dealings are conducted by open-outcry.
All or none (AON)	A condition that the full amount of an order to buy or sell is executed at an agreed price; a lesser amount is unacceptable.
Allotment letter	See Renouncable documents.
American Depositary Receipt (ADR)	A receipt or certificate issued by a US bank that represents a specific number of shares of foreign-based corporations held by a US banking institution in the country of origin on behalf of an investor in the US.
American option	An option which may be exercised at any time prior to expiration.
Amtlicher Handel	The official trade section of German stock exchanges.
Arbitrage	The simultaneous purchase on one Exchange and sale on another of the same or equivalent financial instruments in order to benefit from price or currency differentials.
Arbitrageurs	Those looking for arbitrage opportunities.
Asian option	Asian options are based on an average price of a commodity over a period of time, rather than on a single price taken at the end of a period. Asian options are currently available only OTC.
Ask price	The price at which a seller has offered to sell a security or commodity.
At best order	An order submitted to the order book with a specified size which may execute, either in part or in its entirety, against eligible orders at the price of those orders with any unexecuted portion being rejected from the book.
At-the-market	See Market order.
Auction market	A system in which financial instruments are bought and sellers competing via open-outcry with other buyers and sellers for the best price. Authorised share capital: The maximum number of shares that company can issue, as specified in the firm’s articles of incorporation.
Avoir fiscal	A tax credit (on dividends) payable to French holders of French securities. in most cases, foreign holders are granted the avoir fiscal in accordance with tax agreements between france and their own country.
Azion	Italian for share
Azione ordinaria	Ordinary share on Italian stock exchanges.
Azione privilegiata	Preference share on Italian stock exchanges.
Azione risparmiro	Savings share on Italian stock exchanges normally issued in bearer form and enjoying privileged rights on the distribution of profits. Holders of these shares have no right to vote in shareholder meetings.
B
Backwardation	On futures markets, a market where a commodity is in shortage, causing near contract months to sell at a Premium and distant contract months to sell at discount.
Ballon maturity	The last bonds of an issue maturing in a substantially larger amount than those of earlier maturities.
Bargain	A transaction dealt through the London Stock Exchange which is a contract to buy or sell an agreed quantity of stock at an agreed price.
Basis	The difference between the cash price and futures price.
Basis grade	The grade of a commodity used as the standard of the futures contract.
Basis point (bps)	1% of 1%.
Basis price	The price expressed in terms of yield to maturity or annual rate group of securities.
Basket	The purchase of sale of equity securities, which comprise a pre-defined group of securities.
Bear	An investor who believes that prices are going to fall.
Bear market	A prolonged period of generally falling prices.
Bearer security	A security whose owner is not registred on the books of the issuer.
Bed-and-breakfest deal	Selling shares one day and buying them back the next, for tax purposes at the end of the true shareholder.
Best ask	The lowest quoted offer of all competing Market Markers to buy a particular stock at any given time.
Best bid	The highest quoted offer of all competing Market Markers to sell a particular stock at any given time.
Best execution	The obligation of Market Markers, broker/dealers, and others to execute customer orders at the best price available at the time the trade is entered.
Beta	A measurement of the relationship between the risk of an individual stock or stock portfolio and the risk of the overall market. The beta is a measure of the sensitivity of an investment’s return to market movements. A diversified portfolio of high beta stocks is more risky than a diversified portfolio of low beta stocks.
Bid/ask spread	The difference between the price at which a Market Marker is willing to buy a security (bid), and the price at which the firm is willing to sell it (ask). The spread narrows or widens according to the supply and demand for the security being traded.
Bid price	The price at which a buyer has offered to purchase a security or commodity.
Big Board	A popular term for the New York Stock Exchange.
Big figure	A market expression for the part of the price which is the least significant in terms of quotation movement.
Black-Scholes model	An option pricing formula initially derived by Fisher Black and Myron Scholes for securities options and later refined by Black for options on futures.
Block	A large amount of shares, normally 10,000 shares or more.
Block trade	The purchase or sale of stock in large quantity, normally 10,000 shares or more.
Block volume	The aggregate volume of trades of 10,000 shares or more.
Blue chips	Shares with the highest status and quality as invesments. Blue-chip stocks are normally relatively high-priced stocks with a long record of dividend payments.
Bonus issue	See Capitalisation issue.
Book transfer	The transfer of title to a buyer without a physical movement of the product.
Book value	Common shareholder’s equity on a per share basis. It is calculated by subtracting liabilities from assets and dividing the result by the number of outstanding shares of stock. The book value is not necessarily the same as the market value.
Borsa	Italian stock exchange.
Bourse	French for 'stock exchange'. The word Bourse is thought to originate from the town of Burges in Belgium. In the early 13th century, merchants from the main commercial centres, particularly from Genoa and Venice, used to gather in front of the house of the Van der Buerse family in Bruges.
Briefkurs	The asked (offered price) on German and Swiss stock exchanges.
Broker	An agent, often a member of a stock exchange firm, who executes public orders to buy and sell securities and commodities. For this service a commission is usually charged. Brokers are agents working on commission and not principals or agents on their own account.
Broker-dealer	See Dealer.
Buldge	A rapid price advance.
Bull	An investor who believes that prices are going to rise.
Bull market	A prolonged period of generally rising prices.
Bull spread	An option position composed of both long and short options of the same type, either calls or puts, designed to be profitable in declining market. An option with a lower strike price is bought and one with a higher strike price is sold.
Bulldogs	Sterling bonds issued in the UK by foreign institutions.
Butterfly spread	(i) A futures butterfly spread trade in which multiple futures moths are traded simultaneously at a differential. The trade basically consists of 2 futures spread transactions with either 3 or 4 different futures months at one differential. (ii) An options butterfly spread is a spread trade in simultaneously at a differential. The trade basically consists of 2 options-spread transactions with either 3 or 4 different options months and strikes are one differential.
Buyer/taker	The Purchaser of an option, whether a call or put option. The buyer may also be referred to as the option holder. Option buyers receive the right, but not the obligation, to enter a futures/securities market position.
Buy-side trader	An individual, such as a pension or mutual fund portfolio manager, who affects trades for an institutional investor.
By-products	Products generated from the same raw materials.
C
Cabinet trade	A trade that allows options traders to liquidate deep out-of-the- money options by trading the option at a price equal to one-half tick.
Cable	A term used in the foreign-exchange market for the US dollar/British pound rate.
Calendar spread	Buying (selling) the calendar spread involves the simultaneous purchase (sale) of contract(s) in a near delivery month and the sale (purchase) of an equal number of contract(s) in a far delivery month of the same futures contract.
Call	A period of trading.
Call option	A call option confers the right but not the obligation to buy stock, shares of futures at a specified price within a predetermined time period. The buyer (taker) pays the seller (grantor) a Premium for this.
Cap	An agreement with a counterparty that sets an upper limit to interest rates for the cap buyer for a stated time period.
Capital market	The market for medium- and long-term securities.
Capitalisation	See Market capitalisation.
Capitalisation issue	The process whereby money from a company’s reserves is converted into issued capital, which is then distributed to shareholders as new shares, in proportion to their original holdings. Also known as a bonus or scrip issue.
Carry	The interest cost of financing securities held.
Cash and carry	An arbitrage transaction involving the simultaneous purchase of a cash commodity with borrowed money and the sale of the appropriate futures contract.
Cash market	The market in the actual financial instrument on which a futures or options contract is based.
Cash settlement	Final disposition of open positions on the last trading day of a contract month. Occurs in markets where there is no actual delivery.
Certificate of deposit (CD)	A negotiable certificate issued by a commercial banks evidence of a deposit with that bank which states the maturity value, maturity rate and interest rate payable. CDs vary in size with maturities ranging from a few weeks to several years. CDs may normally be redeemed before maturity only by sale on the secondary market but may also be redeemed back to the issuing bank through payment of a penalty.
CFTC	The US Federal regulatory agency for futures traded on commodity markets.
CIBOR	The rate at which the blanks lend the Danish krone on an unsecured basis. The rate is calculated daily by the Denmark’s National bank (the Danish Central Bank), based on rules set out by the Danish Banker’s Association.
Circuit breaker	A procedure that temporarily halts trading on all U.S. stock markets for one hour when the Dow Jones Industrial Average falls 250 points or more within a trading day. The pause is designed to allow time for the markets to absorb the news that precipitated the decline. Should the average fall another 150 points within the same day, trading would again be halted, this time for two hours.
Clean price	The price of a bond not including the accrued-interest element.
Clearing	The process of matching, registering and guaranteeing transactions.
Clearing house	An exchange-associated, usually independent organisation through which all contracts are made, offset and delivered.
Clearing member	A member firm of a clearing house.
Close out	A transaction which leaves the trade with a zero net commitment to the market. A purchase if the initial transaction was a sale and vice versa.
Closing range	The high and low prices at which transactions took place at the end of the day’s trading session.
Collar	A combination of a cap and a floor. A collar sets a band within which interest rates will apply (e.g. 10.5-13.75%), for a given period.
Collateralised Mortgage Obligations (CMO)	CMSs package the mortgage payment stream from a portfolio of mortgages into several series of debt instruments which are prioritised in basic CMOs, each series must be repaid in full before any principal payments can be made to the holders of the next series.
Commission	The free that broker may charge clients for dealing on their behalf.
Commission des Operérations de bourse (COB)	The French securities-market watchdog. The COB holds the status of an autonomous administrative body.
Cocert party	A group acting together in a takeover situation. Each member of the group (which acts in secret) buys a percentage of shares to avoid no longer being able hide behind nominee status.
Confirmation	the process immediately following a transaction whereby the traders confirm the details of the trade.
Conseil des Bourses de Valeurs (CBV)	The French Stock Exchange Council which is the supervisory and regulatory authority of the French securities markets.
Consideration	On the London Stock Exchange the money value of a transaction (number of shares multiplied by the price).
Consolidated tape	The combined tapes of the New York and American stock exchanges. Network a covers New York Stock Exchange-listed securities, identifying the market where the trade takes place. Network B does the same for American Stock Exchange securities and securities listed on US regional exchanges.
Contango	(i) On the London Stock Exchange a mechanism for detailing settlement of a bargain until the next account day. This mechanism is used when the selling party in unable to deliver the stock for the appropriate account day. The selling party pays an interest Premium to the buyer to cover the extended settlement period. On futures markets, a market in which distant months sell at a Premium over near months. (ii) In futures markets a situation in which prices are progressively higher in the succeeding delivery months than in the nearest delivery month.
Contante price	Italian bond market cash price.
Contract	An agreement to buy or sell a specified amount of a particular commodity or option for a specified month in the future. See Futures contract.
Contract expiration date	The date on which a commodity must be delivered to fulfil the terms of the contract. For options, the last day on which the option holder can exercise his right to buy the date specified.
Contract month	The month in which a futures contract matures or becomes deliverable if not liquidated or traded out before the date specified.
Contract note	On the London Stock Exchange, on the day on which a bargain takes place a member firm must send to the client a contract note detailing the transaction, to include full title of the stock, price, consideration, commission and stamp duty (if applicable).
Contract size	For futures contracts, the quantity to be delivered.
Conversion Premium	The amount by which the price of a convertible bond exceeds the market price of the underlying stock.
Conversion price	The par value of a convertible security dividend by the number of shares into which it may be exchanged.
Conversion ratio	The number of shares for which a convertible security may be exchanged.
Convertible security	Bond or preferred stock that may be converted into another security at the holder’s option.
Corporate bond	A long-term interest-bearing debt instrument that requires the issuer to pay the purchaser a specified sum of money, usually at specific intervals, and to repay the principal amount of the loan at maturity.
Correlation coefficient	A measure of the closeness of the relationship between 2 variables.
Cote Officielle	The market on the Paris Stock Exchange where securities of the largest French issuers (public or private) are traded.
Coupon	(i) On bearer stocks, the detachable part of the certificate exchangeable for dividends. (ii) Denotes the rate of interest on a fixed-interest security.
Coupon Value	The annual rate of interest of a bond.
Cours	On Belgian and French exchanges, the market price of a share
Covariance	A measure of the co movement between 2 variables.
Cover	That total net profit a company has available for distribution as dividend, dividend by the amount actually paid gives the number of times that the dividend is covered.
Crack spread	A hedge used in the energy futures market to offset the risk of buying (or selling) crude oil with an opposite transaction in the refined products that may be derived from it.
Crore	A Crore equates to 10 million (10,000,000).
Cross rates	Rates between 2 currencies, neither of which is the US dollars.
Cross-trade	A cross-trade transaction is a transaction where either the buy-broker and the sell-broker are the same, or the buy-broker and the sell broker belong to the same firm.
Crossed market	The situation which exists when a broker’s bid is higher than the lowest offer of another broker.
Crush	The meal and oil products resulting from processing soybeans.
Crush margin	The spread between soybeans and soybean products, created by buying Soya bean futures and selling Soya bean oil and Soya bean meal futures.
Crush spread	The spread between Soya beans and Soya bean products created by buying Soya bean futures and selling Soya bean oil and Soya bean meal futures.
Cum	Latin for ‘with’ (used in the abbreviations cum cap, cum div, cum rights, etc), to indicate that the buyer of a security is entitled to participate in the forthcoming capitalisation issue, dividend or rights issue. See also ex.
Cum all	A stock trading with the right to all supplementary advantages attached to the share.
Cum capitalisation	The purchaser of stock which is cum capitalisation is entitled to receive an issue odd new shares made fully paid by the capitalisation of reserves and given free of charge in proportion to his or her existing holdings.
Cum dividend	The purchaser of a stock which is cum dividend is entitled to receive the declared dividend.
Cum period	A period during which a buyer of securities is entitled to the dividend regardless of a new issue of stock in direct proportion to his or her existing holdings.
Cum rights	the purchaser of a stock trading cum rights is entitled to buy shares of a new issue of stock in direct proportion to his or her existing holdings.
Current delivery month	The most current calendar month in which a futures contract comes to maturity and becomes deliverable. Also known as the spot month.
CUSIP code	the CUSIP numbering system is the standard method for identifying securities throughout the US financial industry. The CUSIP number is a 9-digit alphanumeric number which is permanently allocated to each issue and identifying that single issue and no other issue. CUSIP numbers are also assigned to most Canadian securities. (Exceptions being issues of purely domestic interest such as municipal debt securities. Such securities are issued CUSIP compatible codes by the Canadian Depository for Securities Ltd).
Customer margin	Within the futures industry, financial guarantees required of both buyers and sellers of futures contracts and sellers of options contracts to ensure fulfilling of contract obligations. FCMs are responsible for overseeing customer margin accounts. Margins are determined on the basis of market risk and contract value. Also referred to as performance – bond margin. Financial safeguards to ensure that on their customers’ open futures and options contracts. Clearing margins are distinct from customer margins that individual buyers and sellers of futures and options contracts are required to deposit with brokers.
D
Daily Official list	The London Stock Exchange’s daily official list is the list of listed securities and the prices of transactions published each day.
Day order	Placed for execution, if possible, during only one trading session. If the order cannot be executed that day, it is automatically cancelled.
Day trader	Speculators who take positions in commodities which are then liquated prior to the close of the same trading day.
Dealer	An individual or firm acting as principal, rather than as an agent, in the purchase and/or sale of securities. Dealers trade for their own account and risk.
Debenture	A non-secured loan raised by a company, paying a fixed-rate of interest.
Declaration date	The latest day or time by which the buyer of an option must indicate to the seller his intention to exercise the option.
Default	the non-performance of a stated obligation.
Deferred shares	Stocks whose dividends are not paid until the expiration of a stated date, or until a specified event, such as the company’s profitability reaching a certain level, has taken place.
Delivery	The settlement of a futures contract by receipt or tender of a financial instrument.
Delivery month	The calendar month in which a futures contract comes to maturity and becomes deliverable.
Delivery points	Those locations designated by futures exchanges at which stocks of a commodity represented by a futures contract may be delivered in fulfillment the contract.
Delta	The change in the value of the option premium relative to the instantaneous change in the value of the underlying instrument, expressed as a coefficient.
Déport	A discount on carrying over a position on a French equity from one settlement period to text.
Depository trust company	In the US, a central securities repository, owned by banks and brokerage houses, where stock and bond certificates are exchanged.
Depreciation	The reduction in the book or market value of an asset.
Depth of market	S measure of how much a price has to move in order to execute larger than normal transactions. The smaller the price movement and the larger the transaction, the deeper the market.
Derivatives	Financial instruments or arrangements that derive their value from some underlying stock, bond, commodity or other asset. Futures, swaps, some forwards, options and warrants, and certain mortgage-backed securities are the most common derivative forms.
Differentials	Price differences between classes, grades, and delivery locations of various stocks stocks of the same commodity.
Dilution	The diminution in the proportion of income to which each share is entitled.
Dirty prices	Bond prices which include the accrued interest.
Discount	When the market price of a newly issued security is lower than issue price.
Discount factor	The present value of one unit of currency received at a stated future date.
Discount rate	The rate used to calculate the present value of future cash flows.
Discounted cash flow	Future cash flows multiplied by discount factors to obtain the present value.
Distribution date	See Payment date.
Dividend	The distribution of (post-tax) earnings to shareholders declared by the board of directors of a corporation to be paid per share to the shareholders. Dividends are usually paid in cash, but can be paid in stock or by means of stock and cash.
Down tick	The sales of a security at a price lower the previous one.
Dual-currency bond	A bond with the interest paid in one currency and the principal paid in another.
Durante price	Fluctuation price established during trading sessions other than the official opening and closing dealings on Italian exchanges.
Duration	A measurement of the change in the value of an instrument in response to a change in interest rates. It is the primary basis for comparing the effect of interest rate changes on prices of fixed-income instruments.
E
Earnings per share	The total net profit of a company per share.
Efficient market	A market in which security prices reflect information instantaneously.
Electronic communication network (ECN)	Any electronic system that widely disseminates to third parties orders entered by an exchange Market Maker or OTC market Maker, and permits such orders to be executed against in whole or in part. ECN is the term used in financial circles for a type of computer system that facilitates trading of financial products outside of stock exchanges. The primary products that are traded on ECNs are CFDs and FOREX.
Equity	The ordinary shares of companies. The ownership interest in a company of holders of its common and preferred stock.
Equity warrant bonds	See Subscription warrant.
ETFs	See Exchange traded founds.
Eurobonds	A long-term loan issued in a currency other than that of the country or market in which it is issued. There is no withholding tax applied to interest payment. Eurobonds are internationally underwritten and available in bearer form. They are cleared through Cedel and Euroclear and are traded cross border.
Eurodollars	us dollars deposited in a bank (US or non-US) located outside the US.
Eurodollar strips	Strips of Eurodollars are the co-ordinated purchase or sale of a series of futures contracts with successive expiration dates. The object is to lock in a yield for a period or term equal to the length of the strip.
European option	An option that can be exercised only on its expiration date rather than before that date.
Ex	the opposite of cum, and used to indicate that the buyer is not entitled to participate in whatever forthcoming event is specified (ex cap, ex dividend, ex rights, etc).
Ex all	The sale of a security without dividends, rights, warrants or other supplementary privileges associated with that security.
Ex capitalization	A stock or share sold without the right to the capitalization issue which has been announced.
Ex date	The date, for a benefit event (e.g. a dividend) used to determine whether the buyer or seller of the security is entitled to the benefit. The ex date divides the cum period from the ex period. Bargains dealt prior to the ex date (during the cum period) are dealt with the benefit attached, unless stated to the contrary as a bargain condition. Bargains dealt after ex date (during the ex period) are dealt without the benefit attached. Unless stated to the contrary by a bargain condition.
Ex dividend	A stock or share sold without the right to the recently declared dividend which is about to be paid deducted from the price.
Ex-dividend date	The date on which a stock goes ex dividend. After this date the right to receive a current dividend will not automatically transfer from the seller of the stock to the buyer.
Ex rights	Stock sold without the right to participate in an offer of securities to existing shareholders by a company in proportion to their existing holdings.
Ex warrants	Stock sold with the buyer no longer entitled to the warrants formerly attached to the stock.
Exchange of futures for cash	A transaction in which the buyer of a cash commodity transfers to the seller a corresponding amount of long futures contracts, or receives from the seller a corresponding amount of short futures, at a price difference mutually agreed upon. In this way, the opposite hedges in futures of both parties are closed out simultaneously.
Exchange of futures for physicals	A futures contract provision involving an agreement for delivery of a physical product that does not necessarily conform to contract specifications in all terms from one market participant to another, and a concomitant assumption of equal and opposite futures positions by the same participants at the time of the agreement. Exchange traded funds (ETFs): Collective in investment vehicles which track indices – they can allow low cost exposure to the performance of an index as quickly and efficiently as the most liquid stocks.
EFP (EFS)	Exchange of Futures for Physical (Swap). An EFP (EFS) is the exchange of an OTC physical (swap) position for a future on the Exchange.
Exercise	The use of the right to purchase the underlying instrument by the holder of a call, or to sell the underlying instrument by the holder of a put. Upon exercise of an option on a futures contract, an option seller will be assigned (at the exercise price) a futures position opposite to the position acquired by the option seller will be required to deliver shares at the exercise price (in the case of a call option) or purchase shares at the exercise price (in the case of a put option). Exercise of an option on an equity-index contract, either a call or a put, results in a cash settlement based on the difference between the exercise price and the index at the time of exercise.
Exercise notice	The formal notification that the holder of a call (or put) option wishes to buy (or sell) the underlying security at the exercise price.
Exercise price	See Strike price.
Exercise value	For a call option, this is the amount by which the strike price is below the underlying investment; for a put option, it is the amount by which the strike price s above the underlying investment.
Exotic option	Any of a wide variety of options with unusual underlying, strike price calculations, strike price determinations, payoff mechanisms or expiration conditions.
Expiration date	(i) Options – last date after which the option can no longer be exercised. (ii) Bonds – the date on which a bond matures.
Expiration month	The month in which an option expires. extraMark: The London Stock Exchange market for innovative investment companies and products, dedicated to providing investors with special investment opportunities.
Extrinsic value	See Time value.
F
Face value	See Par value.
Fair value	An option value derived from a mathematical option valuation model.
Fannie Mae	Securities issued by the Federal National Mortgage Association (FNMA) of the US.
Fast market	Rapid movement in a market caused by strong interest by buyers and/or sellers. In such circumstances price levels may be omitted and bid and offer quotations may occur too rapidly to be fully reported.
Fill or kill order	An order submitted to the order book with a specified size and at the member firm, a specified limit price which either executes in its entirety against eligible orders at the price of those orders or is rejected in full from the order book.
Final dividend	The dividend paid by a company at the end of its financial year, recommended by the directors, but authorised by the shareholders at the company’s Annual General Meeting.
Financial future	A futures contract based on a financial instrument.
Firm quote	A market-marker’s quote which is a price which he/she is committed to deal.
First notice day	The 1^st day on which notices of intention to deliver actual commodities against futures market positions can be received.
Fixed-interest-security	A security or bond which offers an annual guaranteed interest payment. There is usually a fixed date at which the bond is redeemed.
Floor	An agreement with a counterparty that sets a lower limit to interest rates for the floor buyer for a stated time period.
Floatation	The occasion on which a company’s shares are offered on the market for the 1^st time.
Forward rate agreement (FRA)	An agreement to borrow or lend at specified future date at an interest rate that is fixed today. The borrowing and lending id purely national as the contract allows the purchaser to fix interest costs for a specific future period.
Fourth market	The direct trading of securities between institutional investors without the use of brokers or dealers.
Freimakler	Independent dealers admitted to trade on German stock exchanges by the board of governors of the individual exchange. Freimakler participate in stock exchange dealings as intermediaries. They do not conclude business directly with buyers or sellers of securities. Freimakler, unlike Kursmakler, are not subject to any legal restriction with regard to the execution of business on their own account. The main area of trading of Freimakler is trading in the securities on other markets than the official trade. They may, however, also deal in officially listed securities.
Freiverkher	The free market section of German stock exchanges.
Front month	The nearest month from settlement of a futures or options contract.
Fully paid	Applied to new issues, when the total amount payable in relation to the new shares has been paid to the company.
Fungibles	Instrument that are equivalent, substitutable and interchangeable in law.
Furthest month	The month that is furthest away from settlement of a futures or options contract.
Futures contract	A contract traded on a futures exchange which requires the delivery of a specified quality and quantity of a commodity, currency or financial instrument in a specified future month, if not liquidated before that contract matures.
G
Gamma	The rate at which a delta (qv) changes over time.
Gearing	A company’s debts expressed as a percentage of its equity capital.
Geldkurs	The bid price on German and Swiss exchanges.
Genussscheine	Dividend right certificate (German and Swiss stock exchanges). Security incorporating the right to participate in the net profit and the net profit and the liquidation proceeds of a company as well as the right to subscribe to new shares in the case of a rights issue. However, the holder has no membership rights; in particular he cannot attend shareholder meetings. The dividend-right certificate may be in bearer or registered form.
Geregelter Market	The regulated market section of the German stock exchanges.
Gilt-edged	(i) in the UK, used to describe loans issued on behalf of the government to fund its spending. Longs are gilts with a redemption date between greater than 15 years. Mediums are those with a redemption date between 5 and 15 years. Shorts are those with a redemption date within 5 years. (ii) In the US, top quality stocks issued by corporations with a known record for profit and of paying dividends over the years. In the US, the term also refers to high-quality bonds.
Ginnie mae	Securities issued by the Government National Mortgage Association (GNMA) of the US.
Going long	The purchase of a stock or commodity for investment speculation.
Going short	The selling of a stock or commodity not owned by the seller.
Greenmail	The situation by which a large block of stock is held by an unfriendly company, which forces the target company to repurchase the stock at a substantial premium to prevent a takeover.
Green shoe	A provision in an underwriting agreement that if there is an exceptional public demand, an issuer will authorize additional shares of distribution by the syndicate.
Grey market	The market in a new issue prior to formal offering.
Gross	Before deduction of tax.
Grossing-up	Calculating a gross or pre-tax rate of interest or dividend by adding a national amount of tax to the net, or post-tax amount received.
H
Handel Ondersteunend Systeen (HOS) Hedge	The purchase or sale of options or futures contracts as a temporary substitute for a transaction to be made at a later date. Usually it involves opposite positions in the cash or futures or options market.
Hedge ratio	For futures the number of contracts required to hedge one contract’s value of the underlying asset. For options see Delta.
Historical volatility	The annualized standard deviation of percentage changes in futures prices over a specific period. It is an indication of past volatility in the marketplace.
Hoekman	Each officially quoted security trading on the Amsterdam Stock Exchange is assigned to a hoek where this security is traded. In a hoek at last 2 hoekmen compete in trading the security in which they are allowed to execute orders. Based on orders received from banks and brokers, a price is determined by the hoekmen. All hoekmen in the same security must agree on that price.
Horizontal spread	A calendar or time spread.
Hors-côte	The market on the Paris Stock Exchange where issues not traded on the official list or 2^nd market is traded.
Holder	The person who buys an option contract to open a position.
I
Implied volatility	A measurement of the markets expected price range of the underlying commodity futures based on the market-traded option premiums.
In-the-money	A call option is in-the-money if the price of the underlying instrument id higher than the exercise/strike price. A put option is in-the-money if the price of the underlying instrument is below the exercise/strike price. See also Out-of-the-money.
Indexed bond	A bond whose payments are linked by an index (such as a consumer-price index).
Index-linked gilt	A gilt, the interest and capital of which change in line with the retail Price index.
Indicative quote	A market-marker’s price which is not firm.
Inhaberaktien	Swiss or German bearer shares.
Initial margin	The margin required to secure a new futures or options position.
Initial public offering (IPO)	A company’s first sale of stock to the public. Companies making an IPO are seeking outside equity capital and a public market for their stock.
Insider dealing	The purchase or sale of shares by someone who possesses ‘inside’ information about the company; information on the company’s performance and prospects which has not yet been made available to the market as a whole, and which, if available, might affect the share price.
Institutional investor	A bank, mutual fund, pension fund, or other corporate entity that trades securities in large volumes.
Interbank rates	The bid and offers rates at which international banks place deposits with each other.
Interdealer broker	A specialist broker who acts as an intermediary between market-makers who wish to buy or sell securities to improve their book positions, without revealing their identities to other market-makers.
Intercommodity spread	The purchase of a given delivery month on one futures market and the simultaneous sale of the same delivery month on a different futures market.
Interdelivery spread	The purchase of one delivery month of a given commodity futures contract and the simultaneous sale of another delivery month of the same commodity futures contract on the same exchange.
Intermarket spread	See intercommodity spread.
Intermarket spread	See Interdelivery spread.
Interim dividend	A dividend declared part of the way through a company’s financial year, authorized solely by the directors.
Intermediary	An institution acting between 2 or more other entities by assuming certain rights and obligations.
Internal rate of return	The discount rate at which an investment has zero net present value.
Intersettle	A sister company of the Swiss Securities clearing Corporation (SEGA). This has been set up for international settlement purposes.
Intrinsic value	The amount by which an option is in-the-money. The intrinsic value is the difference between the exercise/strike price and the price of the underlying security.
Inverse floater	A bond with a coupon rate structured to move in the opposite direction of interest rates.
Investment trust	A company whose sole business consists of buying, selling and holding shares.
IPO	See initial public offering.
ISIN code	The structure of the ISIN code is 2-digit alpha country code (ISO 3166) or XS for securities numbered by CEDEL or Euroclear; 9-digit alphanumeric code based on the national securities code or the common CEDEL/Euroclear code; a check digit computed according to the modulus 10 “double-add double”.
Issue price	The gross price placed on a new bond issue, expressed as a percentage of the principal amount.
Issuer	A corporation or governmental agency which borrows money through the sale of securities.
Issuing house	An organization, normally a merchant bank, that arranges the details of an issue of stocks or shares, and the necessary compliance with the London Stock Exchange regulations in connection with the listing of that issue.
Itayose	This is a method of trading employed on Japanese exchanges. Under the Itayose method, which is used in the case of opening trades and the like, all orders reaching the floor before the opening are treated as simultaneous orders, and in accordance with the principal of priority, each buy order is compared with sell orders till its quantity and price for the consummation of the transaction.
K
Kassakurs	On German stock exchanges, the official cash settlement price established once per day, for orders of the amount of less than 50 shares.
Kassenverein	German securities clearing and deposit bank.
Kerb trading	Trading that takes place after the market has closed. Informal trading period on the London Metal Exchange that takes place in the ring beginning at 1:15 p.m. GMT, and ending at 3:10 p.m.
Kursmakler	The function of the Kursmakler is to act as an Intermediary between persons admitted to deal on German stock exchanges and to fix official prices of those securities to which he/she is entrusted. The Kursmakler are subject to certain legal restrictions in the conclusion of business on their own account.
Kursmaklerkammer	A public body representing the Kursmakles of the German stock exchanges. The Kursmaklerkammer is responsible for the allocation of securities among the Kursmakler, for the control of the Settlement of prices and for the editing of the Official List.
L
Lakh	A Lakh equates to a hundred thousand.
Lapsed rights	Rights for which call payments have not been made by the acceptance date.
Last notice date	The final day on which notices of intent to deliver on futures contracts may be issued.
Last trading day	The day on which trading cases for an expiring contract.
Less liquid stocks	The London Stock Exchange has classified those of its listed and USM company shares that have a normal market size of 1,000 or less as liquid stocks.
Letter of renunction	On the London Stock Exchange this applies to a rights issue and is the form attached to an allotment letter which is completed should the original holder wish to pass his entitlement to someone else, or to renounce his rights absolutely.
Leverage	The ability to control large amounts of a financial asset with a comparatively small amount of capital.
LIBID	The rate charged by one bank to another for a deposit.
LIBOR	The rate charged by one bank to another for lending money.
Life of contract	The period between the beginning of trading in a particular future and the expiration of trading.
LIMEAN	The average of the LIBOR and LIBID rates.
Limit	The maximum price fluctuation permitted by an exchange from the previous session’s settlement price for a given contract.
Limit down	The maximum price decline from the previous trading day’s settlement price permitted in one trading session.
Limit move	A price that has advanced or declined the limit permitted during one trading session.
Limit order	An order to buy or sell a specified amount of a security at a specified price or better.
Limit up	The maximum price advance from the previous trading day’s settlement price permitted in one trading session.
Liquid	A characteristic of a security or commodity market with enough units outstanding to allow large transactions without a substantial change in price. Institutional investors are inclined to seek out liquid investments so that their trading activity will not influence the market price.
Liquid stocks	The London Stock Exchange has classified its listed shares and USM-company shares that have a normal market size greater than 1,000 as liquid stocks.
Liquidity	The liquidity of a stock is the ease with which the market can absorb volume buying or selling, without dramatic fluctuation in price.
Listed security	The security of a private company or public body which is traded on a securities exchange and has signed a listing agreement with the stock exchange.
Loan stock	Stock bearing a fixed rate of interest. Unlike a debenture (qv), loan stock may be unsecured.
Local	A futures trader who normally trades on an exchange on his/her own account.
Locked market	For equities a market is locked when the bid price equals the asked price. In futures markets a locked market is one where trading is halted because prices have reached their daily limit move.
Long	Owning a security.
M
Maintenance margin	The minimum margin which an investor must keep on deposit in a margin account at all times.
Make-a-market	A dealer is said to make-a-market when he or she quotes bid and offer prices at which he or she stands ready to buy and sell.
Mandatory Quote Period (MQP)	On the London Stock Exchange, the period during which all registered market-makers are obliged to display prices. For SEAQ the period is currently 0830-1630, and for SEAQ International 0930-1600.
Marché a réglement mensuel	The monthly settlement market. The major and most heavily traded French securities are traded on this market. Trading is done in lots, with payment and delivery made on the last day of the month.
Marché au comptant	The French cash market. All securities on the official list not traded on the monthly settlement market are traded on this market. Cash transactions comprise the least active shares and the great majority of bonds; any quantity may be negotiated for immediate settlement and delivery.
Marché official	Official list of French stock exchanges.
Margin	(i) In equity markets, the amount paid by the customer when he/she uses his broker’s credit to buy a security. (ii) For options, the sum required as collateral from the writer of an option. (iii) For futures, a deposit made to the clearing house on establishing a futures position.
Margin call	A demand for additional funds to be deposited in a margin account to meet margin requirements because of adverse future price movements.
Mark-to-market	the daily adjustment of an account to reflect accrued profits and losses.
Market capitalisation	The current total market value of a company’s issued shares. Obtained by multiplaying the current market price by the current number of shares in issue.
Market-maker	A market-maker is a person or firm authorized to create and maintain a market in a security. Market-makers commit themselves to always being ready to deal in the range of stocks for which they are registered.
Market-maker spread	The difference between the price at which a Market Maker is willing to buy a security and the price at which the firm is willing to sell it.
Market order	An order to buy or sell a financial instrument immediately at the best possible price.
Market value	The number of shares in issue multiplied by their current market price.
Maturity date	Date, on which a bond matures, at which time the face value will be returned to the purchaser. Sometimes the maturity date is not one specified date but a range of dates during which the bond may be repaid.
Maximum on-line publication level	On the London Stock Exchange, the maximum size of bargain in each SEAQ security which will be published on-line on SEAQ, immediately following trade reporting.
Maximum SAEF size	On the London Stock Exchange, the maximum size of bargain in each SEAQ security which can be transacted via SAEF.
Member firm	A trading firm on the London Stock Exchange which may act as an agency broker on behalf of clients or a principal.
Mercato ristretto	Italian regulated market for unlisted securities.
Mid-price	The price half-way between the 2 prices shown on the London Stock Exchange’s daily official list under quotation, or the average of both buying and selling prices offered by the market-makers.
Minimum quote size	On the London Stock Exchange, the minimum numbers of shares in which market-makers are obligated to display prices on SEAQ for securities in which they are registered.
Minimum price fluctuation	The smallest increment of market price movement possible in a given futures contract.
Money market	The market for short-term investments. ‘Short term’ is usually defined as less than one year.
Money –market fund	An open-ended mutual fund that invests in very short-term instruments such as US treasury bills, corporate commercial paper and certificates of deposit of US and foreign banks.
Mutual fund	An open-end investment company. Equivalent to unit trust.
N
Nakadachi	regular members of the Osaka Stock Exchange buy and sell securities on the trading floor through the medium of Nakadachi members who serve as intermediate agents in transactions between members. Nakadachi members are prohibited from trading on their own account.
Namenaktien	On German and Swiss exchanges, shares made out in the name of the owner who is entered in the register of shareholders of the company concerned.
Nasdaq	The Nasdaq stock market is the 2nd largest equity market in the US. It is screen-based, with multiple competing market-makers. The NASDAQ system is the market’s electronic communications facility.
Nearby contracts	(front month) The closest active futures contracts, those that expire the soonest.
Net change	The difference between today’s last trade and the previous day’s last trade.
Net-asset value	The market value of all assets owned by an investment trust minus liabilities and dividend by the number of shares outstanding. In mutual funds, the market value of a fund share.
Netback	An industry term referring to the net FOB cost of product offered on a delivered or CIF basis. it is derived by subtracting all costs of shipment from the landed price.
New issue	A company coming to the market for the 1st time or issuing additional new shares.
New shares	Shares recently issued by a company; these shares can usually be transferred on renounceable documents.
New time	On the London Stock Exchange, new time dealings may be transacted by special arrangement in the last 2 days of an account, and settled as if they had been done during the following account.
Nil paid	A new of shares, usually as the result of a rights issue, on which no payment has yet been made.
No beginner	A transaction guaranteed to make a profit.
Nominal quotation	(i) Securities – an approximation of a security’s market value, given for the purpose of valuation. (ii) Futures – an estimated price for a future month or date for which is no bid , ask or trade price.
Nominee name	Name in which a security is registered and held in trust on behalf of the beneficial owner.
Normal Market Size (NMS)	A value expressed as a number of shares used to calculate the minimum quotation size for UK domestic equities and ADRs traded on the London Stock Exchange. The NMS values, which range from 500 shares to 200,000 shares, are based on each individual stock’s average market turnover value in the previous 12 values.
Notice day	Any day on which notices of intent to deliver on futures contracts may be issued.
O
Odd lot	A block of securities bid or offered which is smaller than standard lot size for that particular security.
Offer for sale	A method of bringing a company to the market. The public can apply for shares directly at a fixed price. A prospectus containing details of the sale must be printed in a national newspaper.
Offer price	the price at which a seller is willing to sell. The best offer is the lowest such price available.
Official list	The list of securities which have obtained a formal listing on the main market of an exchange.
Offset	the closing – out or liquidation of a futures position.
Open interest	The total number of outstanding option or futures contracts that have not been closed out by offset or fulfilled by delivery.
Open order	An order to buy or sell a security which remains in place until it is either executed or cancelled.
Open-outcry	A public auction method of trading conducted by calling out bids and offers across a trading ring or pit and having them accepted.
Open range	Price (or price range) recorded during the opening period of the market.
Option	A contract conferring the right but not the obligation to buy (call) or to sell (put) a specified amount of an instrument at a specified price within a predetermined time period.
Option class	All options of the same type – calls or puts - listed on the same underlying instrument.
Option series	All options of the same class having the same exercise/strike price and expiration date.
Optionspreis	German for ‘premium’. The price a put or call buyer must pay to a put or call seller for an option contract.
Optionsscheine	German for ‘warrant’.
Order ticket	The document on which the details of the order are manually recorded, as soon as the order is received.
Ordinary share	The most common form of share or stock. A certificate that represents share ownership in a corporation.
Out-of-the-money	A call option is out-of-the-money if the price of the underlying instrument is lower than the exercise/strike price. A put option is out-of-the-money of the price of the underlying instrument is above the exercise/strike price. See also In-the-money.
Out trade	A trade that cannot be reconciled in the clearing process.
Over-the-counter (OTC)	In the US, a market where small capitalization stocks (and some large capitalization sock as well), shell companies, inactively traded and unregistered stocks trade. The pink sheets and the OTC Bulletin Board (OTCBB) are the only places left in the US where unregistered stocks trade. See also Pink Sheets.
P
Par	(i) Price of 100%. (ii) The principal amount at which the issuer of a debt security contracts to redeem at maturity. (iii) The nominal value of a security. Par value: The amount, exclusive of interest or premium, due to a security holder at maturity. The face value (par value) of a security is shown on the face to the security’s certificate.
Parallelmarket	The parallel market introduced at the Amsterdam Stock Exchange in 1982 for bringing smaller and younger companies into contact with a new and larger circle of investors.
Partizipationsscheine	On Swiss exchanges, a bearer security incorporating the same rights as the dividend-right certificate and thus similar to that. It is issued for the purpose of raising capital, and its nominal value is part of the equity of the company.
Payment date	the date on which a dividend or bond interest payment is scheduled to be paid.
Penny stocks	Low-priced stocks selling at less than USD1 a share, often highly speculative.
Perpetual	A security without a time limit for redemption.
Pink Sheets	A list of securities which are traded by OTC market makers, published by the National Quotations Bureau; the price quotations for equity securities are published on pink sheets, those of debt securities on yellow sheets.
Pip	1/100 of 1% of the nominal value of a security.
Pit	Trading floor, physical market place for trading in financial instruments such as stocks and financial and commodity futures and options. See also Ring.
Portfolio	A collection of securities held by an investor.
Position limit	The maximum position, either net long or net short, in once commodity future ori n all futures of one commodity combined which may be held or contolled by one person.
Preferentail form	London Stock Exchange allows companies offering shares to the public to set aside up to 10% of the issue for applications from employees and, where a parent company is floating off a subsidary, from shareholders of the parentē company.
Preferred ordinary shares	Asee Preferred stock.
Preferred stock	Shares that pay dividends at a specified or sometimes adjustable rate and have preference over ordinary shares (common stock) in the payment of dividends and liquidation of assets.
Premium	(i) For options, the price a put or call buyer must pay to a put or call seller for an option contract. (ii) The amount by which the market price of a bond exceeds its par value.
Present value	The discounted value of future cash flows.
Price-earnings ratio	Current price of a stock dividend by its trailing 12-months earnings.
Primary market	the market relating to the orginal issue or 1st sale of new securities.
Principal	A dealer who buys or sells stock for his/her own account. Principal orders Activity by a broker/dealer when buying or selling for its own account and risk. Also called principal trades.
Principal trades	See principal orders.
Private placement	An issue that is offered to a single or a few investors as opposed to being publicy offered.
Privatisation	The conversion of a state-run company to PLC status, often accompanied by a sale of its shares to the public.
Probate price	In the UK, the price used to assess the value of shares for inheritance tax purposes. The probate price is calculated by dividing the diference between the bid and offer prices by 4 and adding the result to the lower of the 2 prices.
Prospectus	A document giving the details that a company is required to make public, to support a new issue of shares.
Proxy	A form which, when completed by the shareholder, grants another person the authorisation or power to vote on his/her behalf at company meetings.
Public Limited Company (plc)	In the UK, a publicē company limited by shares and having a share capital, and which may offer shares for purchase by the general public. Only PLCs may qualify for listing or trading on the London Stock Exchange.
Put option	A put option confers the right but not the obligation to sell stock, shares or futures at the option exercise price within a predetermined time period.
Q
Quotation	The price quoted by a market-maker at which he/she will trade.
Quotation size	The maximum number of shares per order of a particular security that a Market Maker is willing to buy or sell at his or her current price.
R
Range	The difference between the highest and lowest price of a future recorded during a given trading session.
Rating	A grade – usually denoted by a letter or series of letters – signifying a security’s investment quality.
Recognised Investment Exchange (RIE)	In the UK, an exchange authorized by the Securities and Investments board and which conforms to schedule 4 of the Financial Services Act (1986).
Record date	The date on which a shareholder must be registered as the owner of shares in order to be entitled to a dividend.
Redemption	The extinguishing of a debt through cash payment.
Redemption date	The date on which a security (usually a fixed-interest stock) is due to be repaid by the issuer at its full face value. The year is included in the title of the security; the actual redemption date being that on which the last interest is due to be paid.
Reduced size market-maker	On the London Stock Exchange, a market-maker concerned priparily with retail business who has permission to display prices in reduced sizes on SEAQ.
Registered representative	The employee of a member firm who gives advice on which securities to buy and sell, and who collects a percentage of the commission income he or she generates.
Registrar	the registrar is responsible for keeping track of the owners of bonds and the issuance of stocks. Working with the transfer agent, the registrar keeps current files of the owners of a bond issue and the stockholders in a corporation. The registrar ensures that no more than the authorized amount of stock is in circulation. If the registrar and transfer agent are the same company, then there must be a Chinese Wall separating the functions.
Remisier	A self-employed stockbroker who gets commission for buying and selling for his or her own clients.
Renouncable documents	On the London Stock Exchange. Temporary evidence of ownership, of which there are 4 main types. When a company offers shares to the public, it sends an allotment letter to the successful applicants; if it makes a rights issue, it sends a provisional allotment letter to its shareholders, or in the case of a capitalization issue, a renounceable certificate. All of these are in effect bearer securities and are valuable. Each includes full instructions on what the holder should do if he/she wishes to have the newly issued shares registered in his/her name, or if he/she wishes to renounce them in favor of somebody else.
Report	A premium on carrying over a position on a French equity from one settlement period to the next.
Reverse-crush spread	The spread between soya beans and soya-bean products created by buying soya-bean oil and soya-bean-meal futures and selling soya bean futures.
Reverse split	The reduction in a corporation’s outstanding common stock by fewer shares and increasing the stated or par value per share. The total number of shares will have the same market value immediately after the reverse split as before.
Rights issue	An offer of securities to existing shareholders by a company in proportion to their existing holdings.
Ring	An area on a trading floor where futures or equities are traded.
Risk factor	The risk factor (delta) indicates the risk of an option position relative to that of the related futures contract.
Risk premium	The expected additional return for making a risky investment rather than a safe one.
Road show	A series of meetings with potential investors in key cities designed and performed by a company and its investment banker as the company prepares to go public.
Rolling over	The substation of a far option for a near option of the same underlying stock at the same strike/exercise price.
Round lot	(i) For stocks, a unit of trading, and usually 100 shares. (ii) For futures, an amount of a commodity equal in size to the futures for that commodity.
Round trip	Buying and selling of a futures or options contract.
S
SAEF	Enables member firms to enter orders to trade directly via their terminals. These orders are then automatically executed by SAEF.
Saitori	Saitori members of the Tokyo Stock Exchange function as middlemen in transactions between regular members. Saitori members cannot trade for their own account, nor can they accept orders from members of the public.
Scrip issue	See Capitalisation issue.
SEAQ	An electronic system for displaying market-makers’ quotations in UK quotations admitted to the London Stock Exchange. SEAQ forms the interface between the market-makers and their customers allowing the entry and display of bid and ask prices on the SEAQ system.
SEAQ international	The London Stock Exchange’s electronic price quotations system for non-UK equities, similar to SEAQ.
SEATS	A London Sock Exchange service which supports the trading of listed UK equities in which turnover is insufficient for the market making system.
SEC	The Securities and Exchange Commission, established by Congress to protect investors in securities transactions.
Second Marché	Second Market of the Paris Stock Exchange. This market is chiefly intended for medium-sized firms.
Secondary market	Trading in a new issue, either OTC or on an exchange, immediately following its original issuance.
Secondary offering	A registered offering of a large block of a security that has been previously issued to the public. The blocks being offered may have been held by large investors or institutions, and proceeds of the sale go to those holders, not the issuing company. Also called secondary distribution.
Security	Generic name for a stock or share. Stocks are fixed-interest securities and shares are the rest.
Securities analyst	An individual who does investment research and makes recommendations to buy, sell, or hold. Most analysts specialize in a single industry or business sector.
SEDOL code	The stock code used to identify all securities issued in the UK or EIRE. The SEDOL code, which is the basis of the ISIN code for UK securities, consists of a 7-digit number allocated by the master file service of the London Stock Exchange.
Self-regulatory organization (SRO)	In the UK a recognized controlling body which regulates a specified class of investment business.
Seller/grantor	Also known as the option writer. The seller of an option is subject to a potential obligation if the buyer chooses to exercise the option.
Sell-side trader	An employee of a retail broker, institutional broker and trader, or research department who engages in securities transactions.
SEQUAL	The London Stock Exchange trade conformation service.
Serial expiration	Options on the same underlying futures contract which expire in more than one month.
Series	All options of the same class which share a common strike price.
Settlement date	The date by which an executed order must be settled by the transference of securities and funds between buyer and seller.
Settlement price	The official closing price for a future set by the clearing house at the end of each trading day.
Shares	See Security
Short interest	The total number of shares of a security sold short.
Short sale	The sale of a security or commodities futures not owned by the seller at the time of the trade. Short sales are usually made in anticipation of a decline in the price.
Sinking fund	The repayment of debt by an issuer at stated regular intervals through purchases in the open market or drawings by lot.
SICOVAM code	A 5-digit code allocated to French securities.
Size	(i) The number of shares or bonds which are available for sale. (ii) A term used when there are a large number of shares for sale.
SOFFEX	A fully automated and integrated trading and clearing system.
Specialist	A member of a US stock exchange who holds an exclusive franchise to trade in one or more securities on the exchange floor. The specialist in return is obliged to maintain a fair and orderly market in the stocks in which he or she is registered.
Split	The division of the outstanding shares of a corporation usually into a larger number of shares.
Spot commodity	The actual physical commodity, as opposed to the futures contract.
Spot month	The contract month closest to delivery or expiry.
Spot price	The price at which the spot or cash commodity is currently trading in the spot market.
Spread	(i) The difference between the bid and ask price of a security. (ii) The difference between the bid and ask price of a security. (ii) The difference between the prices of 2 related futures contracts. (iii) For options, transactions involving 2 or more option series on the same underlying security.
Stag	One who applies for a new issue in the hope of being able to sell the shares allotted to him/her at a profit as soon as dealing starts.
Stamp duty	In the UK, a tax levied on the purchase of shares.
Stammaktie	German for ‘ordinary share’.
Stillhalter option	Swiss form of covered warrant.
Straddle	The simultaneous purchase/sale of both call and put options for the same share, exercise/strike price and expiry date.
Strike price	Also called exercise price. The price at which an options holder can buy or sell the underlying instrument.
Strip	For futures, buying (selling) the strip involves the simultaneous purchase (sale) of contracts of 4 or 6 consecutive delivery months in the same futures contract. For options, a stock option contract made up of 2 puts and one call.
Subscription warrant	A type of security that entitles the holder to purchase a specified number of shares at a fixed price within a fixed- or perpetual-time period. The conversion price per share at which the warrants are exercised is adjusted in the event of a rights issue or a stock split.
Swap	A forward type of contractual agreement to exchange one type of cash flow or asset for another, according to predetermined rules.
Swiss certificate (Schweizer Zertifikat)	Original share certificate of a foreign company, mainly originating in the US, the UK or Canada, which is quoted on a Swiss Stock Exchange and is registered in the nominee name of a specified Swiss nominee endorsed in blank. For Dividend payments or participation in corporate actions it must be stamped by the nominee company.
Swiss Index	The Swiss index family with 2 major components – The Swiss Markets Index (SMI) which comprises 23 blue chips and the Swiss Performance Index (SPI), which comprises all listed and major OTC stocks.
T
Tap stocks	UK Government stocks which the government broker will supply at a given price. The price chosen provides a means of influencing interest rates in general.
Taurus	The planned electronic system for UK equities and corporate bonds intended to permit securities to be held without certificates. The London Stock Exchange suspended work on Taurus in March 1993.
Tender offer	In an offer by tender, buyers of shares specify the price at which they, are willing to purchase.
Termine price	Italian bond market forward price.
Theta	The measure of the change in an option’s premium given a change in the option’s time until expiration. Equal to the change in the option’s premium divided by the change in time to expiration.
Third market	In the US, the trading of exchange-listed securities on the OTC market by non-exchange member broker-dealers and institutional investors.
Tick	A minimum change in price, up or down.
Tick size	This is the minimum price movement for a futures contract.
Ticker symbol	Characters that identify a financial instrument on an exchange ticker.
Time value	That part of an option premium which reflects the length of time remaining in the option prior to expiration. The longer the time remaining until expiration, the higher the time value.
Touch	the best buying and selling prices available from a market-maker on SEAQ and SEAQ International in a given security at any one time.
Trade date	The date on which a trade occurs.
Traded options	Transferable options with the right to buy and sell a standarised amount of a security at a fixed price within a specified period.
Trading halt	The suspension of trading in a security whilmaterial news from the issuer is being disseminated. A trading halt generally lasts 30 minutes and gives all investors equal opportunity to evaluate news and make buy, sell, or hold decisions on that basis.
Trading range	The range of prices that have been traded over a particular period.
Traditional options	Traditional options cannot be traded and are offered by 3 market-makers acting as principals.
Transaction	The buying or selling of securities resulting from the execution of an order.
Transfer	On the London Stock Exchange, the form signed by the seller of a security authorizing the company to remove his name from the register, and substitute that of the buyer.
Transparent market	the degree to which trade and quotation information is available to the public on a current basis.
Treasury bills	Short-term obligations of a government issued for periods of one year or less. Treasury bills do not carry a rate of interest and are issued at a discount on the par value. Treasury bills are repaid at par one the due date.
Treasury bonds	Government obligations with maturities of 10 years or more.
Treasury notes	Government obligations with maturities greater than one year but less than 10 years.
Treasury stock	previously issued stock that has been repurchased by, or donated to, or otherwise reacquired by the issuing firm. Treasury stocks pay on dividends and have no voting privileges.
Triple-witching	The simultaneous expiry of index futures, index options and individual stock options.
Turnover	The total money value of securities traded, as calculated by multiplying price by the number of securities traded.
U
Underlying security	The instrument upon which traded options are listed.
Underwriting	An arrangement under which a company is guaranteed that an issue of shares will raise a given amount of cash. Because the underwriters, for a commission, undertake to subscribe for any of the issue not taken up by the public.
Unit	More than one class of securities trading together as one (e.g. a stock and a warrant).
Unit trust	A fund which raises money from investors and invests it in a range of securities.
Unlisted securities	Securities that are not listed on an exchange.
Unlisted trading privileges	The trading of securities not listed on a US exchange but traded on that exchange at the request of a member of that exchange, and not at the request of the issuing corporation.
Up tick	A transaction executed at a price greater than the previous transaction.
V
Value date	The date up to and including which accrued interest is calculated.
Variation margin	Profits or losses on open positions in futures and options contracts which are paid or collected daily.
Vega	The measure of the change in an option’s premium for a 1% change in the volatility of the underlying futures contract. Equal to the change in premium divided by 1% change in volatility.
Volatility	usually defined as the standard deviation of returns of an asset. Volatility generally refers to the magnitude of price movements in a specific asset. Large price movements are said to be more volatile and vice versa. Volatility has a major direct influence on option premium levels. When volatility is high, premiums increase (all other assumptions remaining the same). When volatility is low, premium decline.
Volume	Amount of trading activity, expressed in shares or dollars, experienced by a single security or the entire market within a specified period, usually daily, monthly, or annually.
VWAP	VWAP (volume-weighted average price) represents the total value of shares traded in a particular stock on a given day, divided by the total volume of shares traded in that stock on that day. Calculation techniques vary: some will use data from all markets or just the primary market and may or may not adjust for resubmits and other error corrections. VWAP is a method of pricing transactions and also a benchmark to measure the efficiency of institutional trading or the performance of traders themselves.
W
Warrant	A certificate giving the holder the long-term and at times perpetual privilege but not the obligation of purchasing securities at a specified price.
Wash trade	A matched deal which produces neither a gain nor a loss.
Wertpapierkennummer	Security code number on German stock exchanges. The German securities identification number is a 6-digit numeric code. Codes up to 499,999 are allocated to fixed-interest securities, codes from 500,000 are allocated to shares, warrants and unit trusts.
When issued	A transaction made conditionally in a security authorized but not yet issued.
White knight	A company which rescues another which is in financial difficulty, especially one which saves a company from an unwelcome takeover bid.
Y
Yield	The percentage rate of return computed by dividing a security’s annual dividend by its current market price.

Conversion table

renesource.capital