Allowing an option to expire unexercised. Also, withdrawal from a cancellable forward contract to purchase securities.

Absolute Return

An outright return achieved irrespective of overall market direction. Whereas traditional investments typically measure their success in terms of whether they track or outperform a key market benchmark or index (relative returns), hedge funds, CTAs and alternative investment strategies aim to achieve outright positive returns irrespective of whether asset prices or key market indices rise or fall (i.e. absolute returns rather than relative returns).

Account Executive

The agent of a commission house who serves customers.

Accredited Investor

An accredited investor is a sophisticated investor who meets or exceeds minimum SEC requirements for net worth and annual income, especially as they relate to some restricted offerings. The SEC Criteria are as follows:

Any director, executive officer or general partner of the issuer of the securities being offered or sold, or any director, executive officer or general partner of a general partner of that issuer.

Any natural person whose individual net worth or joint net worth with that person’s spouse, at the time of his purchase, exceeds $1,000,000. Any natural person who had individual income in excess of $200,000 in each of the two most recent years, or joint income with that person´s spouse in excess of $300,000 in each of those years, and has a reasonable expectation of reaching the same income level in the current year. Any trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase of the securities is directed by a person who has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment. Any organization that was not formed for the purpose of acquiring the securities being sold, with total assets in excess of $5,000,000. And, any entity in which all of the equity owners are Accredited Investors.

Accrued Interest

Interest earned between the most recent interest payment and the present date but not yet paid to the lender. 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.


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”.

Active Management

Refers to the use of a human element – such as a single manager, co–managers, or a team of managers – to actively manage an investment portfolio. Active managers rely on analytical research, forecasts and their own judgment and experience in making investment decisions on what securities to buy, hold and sell. The opposite of active management is called passive management, better known as indexing. Investors who believe in active management do not follow the efficient market hypothesis. They believe it is possible to profit from the stock market through any number of strategies that aim to identify mispriced securities. Investment companies who believe it is possible to outperform the market, employ professional investment managers to manage one or more of the company´s product offerings. The objective with active management is to produce better returns than those of passively managed investments.

Active Risk

A type of risk that a managed portfolio creates as it attempts to beat the returns of the benchmark against which it is compared. In theory, to generate a higher return than the benchmark, the manager is required to take on more risk. This risk is referred to as active risk. The more an active portfolio manager diverges from a stated benchmark, the higher the chances become that the returns of the fund could diverge from that benchmark as well. Passive managers who look to replicate an index as closely as possible usually provide the lowest levels of active risk, but this also limits the potential for market–beating returns.


The physical or cash commodity, as distinguished from futures contracts.

Adjusted Futures Price

The cash-price equivalent reflected in the current futures price. This is calculated by taking the futures price times the conversion factor for the particular financial instrument (e.g. bond or note) being delivered.

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 Principal orders)


The policy under which all futures positions owned or controlled by one trader or a group of traders are combined to determine reportable positions and speculative limits.


German for “share”.

A la criée

See Auction market. A la criée is an 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 Renounceable documents.


Widely considered to be a measure of the "value added" by an investment manager. It is therefore regarded as a proxy for manager or strategy skill. Alpha is sometimes described as outperformance of a benchmark or the return generated by an investment independent of the market – what an investment would hypothetically achieve if the market return was zero. More specifically, alpha is sometimes described as the return of an investment less the risk–free interest rate, or the return of the portfolio less the return on the S&P 500 Index or some other relevant benchmark index.


Alpha refers to that part of a stock's risk and return that is attributable to the stock individually, as opposed to the overall market. Alpha-capture is a spread trade between a stock futures contract and a stock index futures contract. You may see alpha-capture also referred to as "company-specific trading".

Alpha Generator

Any security that, when added to an existing portfolio of assets, generates excess returns or returns higher than a pre–selected benchmark without additional risk. An alpha generator can be any security; this includes government bonds, foreign stocks, or derivative products such as stock options and futures. Keep in mind that alpha itself measures the returns a portfolio produces in excess of the return originally estimated by the capital asset pricing model, on a risk–adjusted basis. Therefore, an alpha generator adds to portfolio returns without adding any additional risk, as measured by volatility or downside volatility. This follows Modern Portfolio Theory in allowing investors to maximize returns while keeping a certain level of risk.

Alternative Investment

The terms "alternative investment" and "hedge fund" often get used interchangeably as hedge funds are an important and growing part of the alternative investment arena, which also includes private equity and debt, venture capital and real estate. Do not confuse hedge funds with managed futures. Managed futures clients have their funds held in segregated accounts at an FCM.

In the field of asset management, the essential defining features of alternative investments are the pursuit of absolute returns. That is:

The quest to achieve a positive return regardless of whether asset prices are rising or falling. Freedom to trade in a wide range of assets and instruments employing a variety of styles and investment techniques in diverse markets. Reliance on the investment manager´s skill and application of a clear investment process to exploit market inefficiencies and opportunities with identifiable and understandable causes and origins. Alternative investment managers may take advantage of pricing anomalies between related financial instruments, engage in "momentum" investing to capture market trends, or utilize their expert knowledge of markets and industries to capture profit opportunities that arise from special situations. The ability to use derivatives, arbitrage techniques and, importantly, short selling – selling assets that one does not own in the expectation of buying them back at a lower price – affords alternative investment managers rich possibilities to generate growth in falling, rising and unstable markets.

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.

Analysis of Variance

A statistical analysis tool that separates the total variability found within a dataset into two components, random and systematic factors. The random factors do not have any statistical influence on the given dataset, while the systematic factors do. The ANOVA test is used to determine the impact independent variables have on the dependent variable in a regression analysis. The ANOVA test is the initial step in identifying factors that are influencing a given data set. After the ANOVA test is performed, the analyst is able to perform further analysis on the systematic factors that are statistically contributing to the data set´s variability. ANOVA test results can then be used in an F–test on the significance of the regression formula overall.

Annualized Compound Rate of Return

The rate of compound return (ROR) shown on an annualized basis. Obviously the higher the Rate of Return (ROR), the greater the historical annualized rate of performance.


The procedure of settling disputes between members, or between members and customers.


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.


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.

ASX 200

A market capitalisation weighted index of the top 200 companies listed in the Australian stock exchange. Often used as a gauge of sentiment for the Australian market.


To make an option seller perform his obligation to assume a short futures position (as a seller of a call option) or a long futures position (as a seller of a put option).


Describes a currency strengthening in response to market demand rather than by official action.


The price at which the currency or instrument is offered.

The same as offer. Indicates a willingness to sell a futures contract at a given price. (See Bid.)

Ask price

The price at which a seller has offered to sell a security or commodity.

At best

An instruction given to a dealer to buy or sell at the best rate that can be obtained.

At or Better

An order to deal at a specific rate or better.

Association Française des Sociétés de Bourse

A Professional association which advises members of the French stock exchanges and represents them to outside bodies.

Associated Person (AP)

An individual who solicits orders, customers, or customer funds (or who supervises persons performing such duties) on behalf of a Futures Commission Merchant, an Introducing Broker, a Commodity Trading Advisor, or a Commodity Pool Operator.

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.


See Market order.


An option whose strike/exercise price is equal to or near the current price of the underlying instrument.

At–the–Money Option

An option whose strike price is equal, or approximately equal, to the current market price of the underlying futures contract.

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.


Slang term for the Australian dollar.

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.


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.

Back Month

Futures delivery months other than the spot or front month (also called deferred months).


A futures market in which the relationship between two delivery months of the same commodity is abnormal. The opposite of Contango.

Balance/account balance

The total financial result of all completed transactions and deposits/withdrawals on the trading account.

Balance of Payment

A summary of the international transactions of a country over a period of time; including commodity and service transactions, capital transactions, and gold movements.

Balloon maturity

The last bonds of an issue maturing in a substantially larger amount than those of earlier maturities.

Bar chart

On a daily bar chart each bar represents one day's activity. The vertical bar is drawn from the day's highest price to the day's lowest price. Closing price and opening price are represented by ticks on the bar.


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.

Base currency

The first currency quoted in a currency pair on forex.

Base rate

The lending rate of the central bank of a given country.


The difference between the current cash price and the futures price of the same commodity. The basis is determined by the costs of actually holding the commodity versus contracting to buy it for a later delivery (i.e. a futures contract). The basis is affected by other influences as well, such as unusual situations in supply or demand. Unless otherwise specified, the price of the nearby futures contract month is generally used to calculate the basis. (See Carrying Charge)

Basis grade

The grade of a commodity used as the standard of the futures contract.

Basis point

Typically one hundredth of 1%, e.g. an interest rate cut of 50 basis points is equal to 0.5%.

For most currencies, denotes the fourth decimal place in exchange rate and represents 1/100 of one percent (.01%).

Basis price:

The price expressed in terms of yield to maturity or annual rate group of securities.


The purchase of sale of equity securities, which comprise a pre-defined group of securities.


An investor who believes that prices are going to fall.

Bear market

A market distinguished by declining prices, lower highs and lower lows.

Bear Spread

In most commodities and financial instruments, the term refers to selling the nearby contract month, and buying the deferred contract, to profit from a change in the price relationship.

Bearer security

A security whose owner is not registered on the books of the issuer.

Bed-and-breakfast deal

Selling shares one day and buying them back the next, for tax purposes at the end of the true shareholder.


A standard against which the performance of an investment manager can be measured. Generally, broad market and market–segment stock and bond indexes are used for this purpose. When evaluating the performance of any investment, it´s important to compare it against an appropriate benchmark. In the financial field, there are dozens of indexes that analysts use to gauge the performance of any given investment including the S&P 500, the Dow Jones Industrial Average and the Russell 2000 Index.

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.

Base currency

In general terms the base currency is the currency in which an investor or issuer maintains its book of accounts. In FX markets the US Dollar is normally considered the ‘base currency for quotes, meaning that quotes are expressed as a unit of $1 USD per the other currency quoted in the pair. The primary exceptions to this rule are the British Pound, the Euro and the Australian Dollar.


A measure of how sensitive an investment portfolio is to market movements. The sign of the beta (+/–) indicates whether, on average, the portfolio´s returns move in line with the market (+), or in the opposite direction (–) to the market. If the beta of a portfolio relative to a benchmark index is equal to +1, then the returns on the portfolio follow those of the index. By definition, the beta of that benchmark index is +1. A portfolio with a beta greater than +1 tends to amplify the overall movements of the market, while a portfolio with a beta between 0 and +1 tends to move in the same direction as the market but not to the same extent. A portfolio with a beta of –1 tends to move in the opposite direction to the market.


A current market price is made up of a level at which you can sell and a level at which you can buy. The level at which you can sell is always the lower of the two prices and is called the bid. Opposite of offer.

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.

The distance, usually in pips, between the Bid and the Ask price. A tighter spread is better for the trader!

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.


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 investments. Blue-chip stocks are normally relatively high-priced stocks with a long record of dividend payments.

Bollinger bands

A chart indicator used in technical analysis to measure market volatility, consisting of a single moving average and two standard deviation bands.

Bonus issue

See Capitalisation issue.

Book Entry Securities

Electronically recorded securities that include each creditor's name, address, Social Security or tax identification number, and dollar amount loaned, (i.e. no certificates are issued to bond holders, instead, the transfer agent electronically credits in.

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.


Italian stock exchange.


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.


The asked (offered price) on German and Swiss stock exchanges.


Individual or firm executing buy or sell orders for a customer, typically for a commission or fee.


See Dealer.


A rapid price advance.


An investor who believes that prices are going to rise.

Bull market

A market distinguished by rising prices.

Bull Spread

In most commodities and financial instruments, the term refers to buying the nearby month, and selling the deferred month, to profit from the change in the price relationship.


Sterling bonds issued in the UK by foreign institutions.


Central bank of Germany.

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.


Purchase. A transaction type that indicates you wish to make a purchase or to go long. Opposite of selling or going short.

Buy limit

A conditional trading order that indicates a security may be purchased only at the designated price or lower.

Buy OCO (Buy Order Cancels Order)

Two alternative instructions for a Buy Order. The execution of either alternative will result in the cancellation of the other. Buy and sell instructions cannot be combined. Normally placed as limit and stop surrounding current market price.

Buy On Close

To buy at the end of a trading session at a price within the closing range.

Buy On Opening

To buy at the beginning of a trading session at a price within the opening range.

Buy position

A commitment to buy a given amount of a financial instrument.

Buy Spread

A transaction type you choose to indicate an option buy spread.

Buy stop

When you buy a security which is entered at a price above the current offering price. It is triggered when the market price touches or goes through the buy stop price.


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.


Products generated from the same raw materials.

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.


A term used in the foreign-exchange market for the US dollar/British pound rate.


A market capitalisation weighted index of the top 40 companies listed in the Paris stock exchange.

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.


A period of trading.

Call Option

An option that gives the buyer the right, but not the obligation, to purchase (go "long'') the underlying futures contract at the strike price on or before the expiration date. The buyer (taker) pays the seller (grantor) a Premium for this.

Calmar Ratio

A ratio used to determine returns relative to drawdown´s (downside) risk in a futures portfolio or other similar investment vehicles. The Calmar ratio is determined by dividing the compounded annual return by the maximum drawdown, using the absolute value.

Generally speaking, the higher the Calmar ratio the better. Some programs have high annual returns, but they also have extremely high drawdown risk. This ratio helps determine return on a downside risk–adjusted basis. Most Calmar ratios utilize three years of data.

Cancelling Order

An order that removes a customer's previous order from the market.

Candlestick chart

Identical to a bar chart in the information conveyed, but presented in a way to describe price movements. A visual representation of the prevailing trend and current market sentiment.


An agreement with a counterparty that sets an upper limit to interest rates for the cap buyer for a stated time period.

Capital Guarantee Fund

An investment vehicle offered by certain institutions that guarantees the investor´s initial capital investment from any losses. Even though these products prevent investors from losing their invested capital, they also limit the amount of return that investors can obtain if the investments appreciate. This is how the offering institutions can afford to guarantee the principal investment.


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.

Capital market

The market for medium- and long-term securities.


The interest cost of financing securities held.

Carry trade

A strategy in which a trader sells a certain currency with a low interest rate and uses the funds to purchase a different currency yielding a higher interest rate, attempting to capture the difference between the rates. Common low yielding currencies include the USD and JYP and common high yielding currencies include the AUD and NZD.

Carrying Broker

A member of a futures exchange, usually a clearinghouse member, through which another firm, broker or customer chooses to clear all or some trades.

Carrying Charge (Cost To Carry)

For physical commodities such as grains and metals, the cost of storage space, insurance, and finance charges incurred by holding a physical commodity. In interest rate futures markets, it refers to the differential between the yield on a cash instrument and the cost necessary to buy the instrument. (See Basis)

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 Commodity

An actual physical commodity someone is buying or selling, e.g., soybeans, corn, gold, silver, Treasury bonds, etc. Also referred to as actuals.

Cash Contract

An actual physical commodity someone is buying or selling, e.g. soybeans, corn, gold, silver, Treasury bonds, etc. Also referred to as actuals.

Cash Delivery

Same day settlement.

Cash market

The market in the actual financial instrument on which a futures or options contract is based.

Cash market

The actual, underlying market on which derivatives contracts are based.

Cash on Cash Return

A rate of return commonly used in real–estate transactions. The calculation determines the cash income on the cash invested: Cash on Cash returns equal the annual dollar income divided by the total dollar investment.

Cash price (also see Spot)

The price of an asset for immediate delivery. In other words, the actual price of an instrument right now; this term is often used for stock indices, whereas the synonymous term of spot is more often applied to forex and commodity prices.

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.

Central bank

A government or quasi-governmental organisation that manages a country's monetary policy. For example, the UK’s central bank is the Bank of England, and the US central bank is the Federal Reserve.

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.


Contracts for difference (CFDs) are derivative products which enable you to trade on the price movement of underlying financial assets (such as indices and commodities). A CFD is an agreement to exchange the difference in the value of an asset from the time the contract is opened until the time at which it is closed. With a CFD, you never actually own the asset or instrument you have chosen to trade, but you can still benefit if the market moves in your favour.


An upwards or downwards trend whose boundaries are marked by two straight lines. A break above/below the channel lines signals a potential change in the trend.


The use of charts to analyse market behaviour and anticipate future price movements. Those who use charting as a trading method plot such factors as high, low, and settlement prices; average price movements; volume; and open interest.


The rate at which the banks 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.


The process by which a clearinghouse maintains records of all trades and settles margin flow on a daily mark-to-market basis for its clearing member.


The process of matching, registering and guaranteeing transactions.

Clearing Margin

Financial safeguards to ensure that clearing members (usually companies or corporations) perform 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.

Clearing Member

A member of a clearinghouse. Memberships in clearing organizations are usually held by companies. Clearing members are responsible for the financial commitments of customers that clear through their firm. All trades of a non–clearing member must be registered and eventually settled through a clearing member.

Clearing House

An exchange-associated, usually independent organisation through which all contracts are made, offset and delivered.


The period at the end of the trading session. Sometimes used to refer to the closing range.

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.


The process of ending an existing trade. Closing a trade results in a profit or loss being realised.

Closing Bell

Any signal which indicates the conclusion of normal daily trading hours in any commodity.

Closing Price

The last price of a contract at the end of a trading session.

Closing range

The high and low prices, or bids and offers recorded during the period designated by the exchange as the official close of trading in a given pit (the final 60 seconds of trading in currencies and 30 seconds in all other contracts).

Closed position

A transaction which leaves the trade with a zero net commitment to the market with respect to a particular currency.

Cluster Analysis

An investment approach that places investment instruments into groups based on the correlation found among their returns. Instruments with high positive correlations are grouped together and segregated from those with negative correlation. Between each cluster, very little correlation should exist. Holding investments in each cluster provides the investor with a diversified portfolio. Cluster analysis enables the investor to eliminate any overlap in his or her portfolio by identifying securities with related returns. This approach increases diversification, which provides the investor with a less risky portfolio.


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.


A fee charged by a broker or agent for carrying out transactions/orders.

Commitment or Open Interest

The number of open or outstanding contracts for which an individual or entity is obligated to the Exchange because that individual or entity has not yet made an offsetting sale or purchase, an actual contract delivery, or, in the case of options, exercise.

Commission des Operérations de bourse (COB)

The French securities-market watchdog. The COB holds the status of an autonomous administrative body.

Commission Fee

A fee charged by a broker for executing a transaction. Also referred to as brokerage fee.


Financial instruments relating to the exchange of real physical substances, for example gold, crude oil or cotton.

Commodity Futures Trading Commission (CFTC)

The US Federal regulatory agency for futures traded on commodity markets.

Commodity Pool

An enterprise in which funds contributed by a number of persons are combined for the purpose of trading futures or options contracts. Also referred to as a Pool.

Commodity Pool Operator (CPO)

An individual or organization that operates or solicits funds for a commodity pool.

Commodity Trading Advisor (CTA)

A person who, for compensation or profit, directly or indirectly advises others as to the value or the advisability of buying or selling futures contracts or commodity options. Advising indirectly includes exercising trading authority over a customer's account.

Compound Annual Rate of Return (CARR)

The compounded ´growth´ of an investment that has been achieved each year to enable the initial price to grow to the latest selected price over a particular time period.

Compound Annual Return

This is the rate of return which, if compounded over the years covered by the performance history, would yield the cumulative gain or loss actually achieved by the trading program during that period.


The ability of an asset to generate earnings, which are then reinvested in order to generate their own earnings. In other words, compounding refers to generating earnings from previous earnings.

Concert 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.

Conditional Value at Risk

A risk assessment technique often used to reduce the probability a portfolio will incur large losses. This is performed by assessing the likelihood (at a specific confidence level) that a specific loss will exceed the value at risk. Mathematically speaking, Conditional Value at Risk (CVaR) is derived by taking a weighted average between the value at risk and losses exceeding the value at risk. This term is also known as "Mean Excess Loss", "Mean Shortfall" and "Tail VaR. CVaR was created to be an extension of Value at Risk (VaR). The VaR model does allow managers to limit the likelihood of incurring losses caused by certain types of risk – but not all risks. The problem with relying solely on the VaR model is that the scope of risk assessed is limited, since the tail end of the distribution of loss is not typically assessed. Therefore, if losses are incurred, the amount of the losses will be substantial in value.


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.


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.

Constant Proportion Portfolio Insurance (CPPI)

A strategy that synthetically reproduces the pay–out of a put or call option through dynamically adjusting the delta hedge of the underlying asset. Unlike a conventional option, the investment exposure (or participation) of the underlying asset will change over the life of the structure.

Consumer Price Index (CPI)

A measure of a country or region’s inflation rate, based on the price growth of a sample group of goods and services.


(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 (unit or lot)

The standard trading unit on certain exchanges. For stock index, forex and commodity positions, the amount of base currency profit or loss per point movement in the market.

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.

Controlled Risk

A position which has a strictly limited maximum loss by virtue of a guaranteed stop. See also Limited risk.


A term referring to cash and futures prices tending to come together (i.e. the basis approaches zero) as the futures contract nears expiration.


The process by which an asset or liability denominated in one currency is exchanged for an asset or liability denominated in another currency.

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 Bond

A bond issued by a company that has a set maturity date and pays interest in the form of a coupon. It has features of both a bond and stock and its valuation reflects both types of instrument. It gives the holder the option to convert the bond into a specific number of shares of the issuing company – in other words, it has an “embedded option”.

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 is a measure of the interdependence or strength of the relationship between two investments. It tells us something about the degree to which the variations of returns from their respective means move together. So if two investments are positively correlated, when one performs above its mean return it is likely that the other will also perform above its own mean return. If two investments are negatively correlated, when one performs above its mean return it is likely that the other will perform below its mean return. Note that correlation says nothing about the mean returns themselves – they could both be up, or both down, or one could be up and one down. To measure the strength of the relationship, we use the correlation coefficient. Values range from –1 (perfect negative correlation), through 0 (no correlation or uncorrelated) to +1 (perfect positive correlation). From a risk management perspective, it is generally favorable if two investments are uncorrelated because it means that there is no identifiable directional pattern or proportional relationship between the deviations of their monthly returns from each of their respective trends – sometimes investment B is positively correlated to investment A when the returns of A are positive and negatively correlated when they are negative, meaning that over a period of time our strategy returns get closer to non–correlation. This produces a smoother overall return profile.

Correlation Coefficient

A measure that determines the degree to which two variable´s movements are associated. The correlation coefficient will vary from –1 to +1. A –1 indicates perfect negative correlation, and +1 indicates perfect positive correlation.

Cote Officielle

The market on the Paris Stock Exchange where securities of the largest French issuers (public or private) are traded.


(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.


On Belgian and French exchanges, the market price of a share.


A measure of the co movement between 2 variables. A negative covariance means returns move inversely. One method of calculating covariance is by looking at return surprises (deviations from expected return) in each scenario. Another method is to multiply the correlation between the two variables by the standard deviation of each variable.


(1) To take out a forward foreign exchange contract.

(2) To close out a short position by buying currency or securities which have been sold.

Cross rates

The exchange rates between any two currencies that are considered non-standard in the country where the currency pair is quoted. For example, in the US, a GBP/JPY quote would be considered a cross rate, whereas in the UK or Japan it would be one of the primary currency pairs traded.

Currency Futures

Futures contracts traded on an exchange, most typically the Chicago Mercantile Exchange (CME). Always quoted in terms of the currency value with respect to the US Dollar. Parameters of the futures contract are standardized by the exchange

Covered Option

A short call or put option position which is covered by the sale or purchase of the underlying futures contract or physical commodity.

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.


A Crore equates to 10 million (10,000,000).

Cross Correlation

A statistical measure timing the movements and proximity of alignment between two different information sets of a series of information. Cross correlation is generally used when measuring information between two different time series. The range of the data is –1 to 1 such that the closer the cross–correlation value is to 1, the more closely the information sets are.

Cross currency (or Cross rates)

A pair of currencies traded in forex that does not include the US dollar, for example EURJPY.


Hedging a cash commodity using a different but related futures contract when there is no futures contract for the cash commodity being hedged and the cash and futures markets follow similar price trends (e.g. using soybean meal futures to hedge fish meal).

Cross – Margining

A procedure for margining related securities, options, and futures contracts jointly when different clearing houses clear each side of the position.


A cross-trade transaction is a transaction where both 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.


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.


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.

Cumulative Return

The aggregate amount that an investment has gained or lost over time, independent of the period of time involved. Presented as a percentage, the cumulative return is the raw mathematical return of the following calculation, current price of asset minus original price of asset divided by the original price of asset.

Currency pair

The two currencies that comprise a forex rate. A forex rate is the amount that the first currency in the pair is worth expressed in terms of the second currency.

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.

Current Yield

The ratio of the coupon to the current market price of the debt instrument.

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, funds required of both buyers and sellers of futures contracts and sellers of options contracts to ensure fulfilment 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.

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

An order that is placed for execution during only one trading session. If the order cannot be executed during that session, it is automatically cancelled.

Day Trade

The purchase and sale of a futures or options contract in the same day, thus ending the day with no established position in the market or being flat.

Day Trader

A trader who establishes and liquidates positions within one day's trading, ending the day with no established position in the market.

Daily Trading Limit

The maximum price range set by the exchange each day for a contract.


A firm or individual who puts up capital and takes one side of a position, seeking to earn a spread (profit) through closing out the position in another trade with a different party.

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.


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.


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.


A general decline in prices, often caused by a reduction in the supply of money or credit. Deflation can be caused also by a decrease in government, personal or investment spending. The opposite of inflation, deflation has the side effect of increased unemployment since there is a lower level of demand in the economy, which can lead to an economic depression. Declining prices, if they persist, generally create a vicious spiral of negatives such as falling profits, closing factories, shrinking employment and incomes, and increasing defaults on loans by companies and individuals. To counter deflation, the Federal Reserve (the Fed) can use monetary policy to increase the money supply and deliberately induce rising prices, causing inflation. Rising prices provide an essential lubricant for any sustained recovery because businesses increase profits and take some of the depressive pressures off wages and debtors of every kind.


The transfer of the cash commodity from the seller of a futures contract to the buyer of a futures contract. Each futures exchanges has specific procedures for delivery of a cash commodity.

Delivery date

The date of maturity of the contract, when the exchange of the currencies is made This date is more commonly known as the value date in the FX or Money markets.

Delivery Month

The calendar month in which a futures contract comes to maturity and becomes deliverable. Also referred to as contract month.

Delivery Points

The locations and facilities designated by a futures exchange where stocks of a commodity may be delivered in fulfilment of a futures contract, under procedures established by the exchange.


The sensitivity of an option price to moves in the price of the underlying asset. Delta often is interpreted as the probability that the option will be in-the-money by expiration.


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.


A fall in the value of a currency due to market forces rather than due to official action.

Depth of market

A 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.


A type of investment whose value depends on the value of other investments, indices or assets. Futures, swaps, some forwards, options and warrants, and certain mortgage-backed securities are the most common derivative forms. They are used to hedge risk or to exchange a floating rate of return for a fixed rate of return.

Designated Self–Regulatory Organization (DSRO)

When a Futures Commission Merchant (FCM) is a member of more than one Self–Regulatory Organization (SRO), the SROs may decide among themselves which of them will be primarily responsible for enforcing minimum financial and sales practice requirements. The SRO will be appointed Designated Self-Regulatory Organization (DSRO) for that particular FCM. NFA is the DSRO for all non–exchange member FCMs.


Deliberate downward adjustment of a currency against its fixed parities or bands, normally by formal announcement.


Price differences between classes, grades, and delivery locations of various stocks of the same commodity.


The diminution in the proportion of income to which each share is entitled.

Direct Quote

Price of a foreign currency in terms of a country’s domestic currency.

Dirty prices

Bond prices which include the accrued interest.

Disclosure Document

The statement that must be provided to prospective customers that describes trading strategy, fees, performance, etc.


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 Method

A method of paying interest by issuing a security at less than par and repaying par value at maturity. The difference between the higher par value and the lower purchase price is the interest.

Discount rate

(i) The rate used to calculate the present value of future cash flows.

(ii) The interest rate charged on loans by the Federal Reserve to member banks.

Discounted cash flow

Future cash flows multiplied by discount factors to obtain the present value.

Discretionary Account

An arrangement by which the holder of the account gives written power of attorney to another person, often his or her broker, to make trading decisions. Also known as a controlled or managed account.

Distressed Securities

Distressed Securities strategies invest in, and may sell short, the securities of companies where the security´s price has been, or is expected to be, affected by a distressed situation. This may involve reorganizations, bankruptcies, distressed sales and other corporate restructurings. Depending on the manager´s style, investments may be made in bank debt, corporate debt, trade claims, common stock, preferred stock and warrants. Strategies may be sub–categorized as "high–yield" or "orphan equities." Some managers may use leverage. Fund managers may run a market hedge using S&P put options or put option spreads.

Distribution date

See Payment date.


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.


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.

Earnings per share

The total net profit of a company per share.

Economic Value of Equity

A cash flow calculation that takes the present value of all asset cash flows and subtracts the present value of all liability cash flows. This calculation is used by banks for asset/liability management. The value of a bank´s assets and liabilities are directly linked to interest rates. By calculating its EVE, a bank is able to construct models that show the effect of different interest rate changes on its total capital. This risk analysis is a key tool that allows banks to prepare against constantly changing interest rates.

Economic Indicator

A statistic which indicates current economic growth rates and trends such as retail sales and employment.

European Monetary System

A system designed to stabilize if not eliminate exchange risk between member states of the EMS as part of the economic convergence policy of the EU. It permits currencies to move in a measured fashion (divergence indicator) within agreed bands (the parity grid) with respect to the ECU and consequently with each other.

Efficiency Index

This is a ratio calculated by dividing the annual return by the annualized monthly standard deviation.

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.

Emerging Markets

Emerging Markets funds invest in securities of companies, or the sovereign debt of developing or "emerging" countries. Investments are primarily long. "Emerging Markets" include countries in Latin America, Eastern Europe, the former Soviet Union, Africa and parts of Asia. Emerging Markets – Global funds will shift their weightings among these regions according to market conditions and manager perspectives. In addition, some managers invest solely in individual regions.

Equilibrium Price

The market price at which the quantity supplied of a commodity equals the quantity demanded.


The ordinary shares of companies. The ownership interest in a company of holders of its common and preferred stock.

Equity Hedge

Equity Hedge investing consists of a core holding of long equities hedged at all times with short sales of stocks and/or stock index options. Some managers maintain a substantial portion of assets within a hedged structure and commonly employ leverage. Where short sales are used, hedged assets may be comprised of an equal dollar value of long and short stock positions. Other variations use short sales unrelated to long holdings and/or puts on the S&P index and put spreads. Conservative programs mitigate market risk by maintaining market exposure from zero to 100 percent. Aggressive programs may magnify market risk by exceeding 100 percent exposure and, in some instances, maintain a short exposure. In addition to equities, some programs may have limited assets invested in other types of securities.

Equity Market Neutral

Equity Market Neutral investing seeks to profit by exploiting pricing inefficiencies between related equity securities, neutralizing exposure to market risk by combining long and short positions. Typically, the strategy is based on quantitative models for selecting specific stocks with equal dollar amounts comprising the long and short sides of the portfolio. One example of this strategy is to build portfolios made up of long positions in the strongest companies in several industries and taking corresponding short positions in those showing signs of weakness. Another variation is investing long stocks and selling short index futures.

Equity warrant bonds

See Subscription warrant.


A futures and options exchange that is a public company and is owned by Deutsche Börse AG and SWX Swiss Exchange. Aside from operating an electronic trading platform, Eurex provides an automated and integrated joint clearing house for participants, thereby achieving centralized, cross-border risk management.


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.


U.S. dollars on deposit with a bank outside of the United States and, consequently, outside the jurisdiction of the United States. The bank could be either a foreign bank or a subsidiary of a U.S. bank.

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.


Event–Driven is also known as "corporate life cycle" investing. This involves investing in opportunities created by significant transactional events, such as spin–offs, mergers and acquisitions, bankruptcy reorganizations, recapitalizations and share buybacks. The portfolio of some Event–Driven managers may shift in majority weighting between Risk Arbitrage and Distressed Investment instruments, while others may take a broader scope. Instruments include long and short common and preferred stocks, as well as debt securities and options. Leverage may be used by some managers. Program managers may hedge against market risk by purchasing S&P put options or put option spreads.


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 (EFP)

A transaction generally used by two hedgers who want to exchange futures for cash positions. Also referred to as "against actuals" or "versus cash".


The action taken by the holder of a call option if he or she wishes to purchase the underlying futures contract or by the holder of a put option if he or she wishes to sell the underlying futures contract.

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

The price at which the owner of an option can purchase (call) or sell (put) the underlying stock or futures. Also known as "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 during which expiration date occurs.

Expiration Value

The last day that an option may be exercised into the underlying futures contract. Also, the last day of trading for a futures contract.

Extra mark

The London Stock Exchange market for innovative investment companies and products, dedicated to providing investors with special investment opportunities.

Extrinsic value

See Time value.


In foreign exchange, a potential for gain or loss because of movement in foreign exchange rate. There are three primary types of exposure:
Economic: The change in future earning power and cash flow arising from a change in exchange rates. In effect, it represents a change in the value of a company holding foreign currency.
Transnational: A potential gain or loss arising from transactions that will definitely occur in the future, are currently in progress, or could have already been completed. A signed but not shipped sales contract, a receivable or foreign currency payment collected but not converted to local currency would all be examples of transaction exposure.
Translation: The potential for change in reported earnings and/or the book value of the consolidated company equity accounts, as the result of a change in foreign exchange rates used to translate the foreign currency statements of subsidiaries and affiliates known as accounting exposure.

Face Value

The amount of money printed on the face of the certificate of a security; the original dollar amount of indebtedness incurred.

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.

Fed Fund Rate

The interest rate on Fed funds. This is a closely watched short term interest rate as it signals the Feds view as to the state of the money supply.


The United States Federal Reserve. Federal Deposit Insurance Corporation Membership is compulsory for Federal Reserve members. The corporation had deep involvement in the Savings and Loans crisis of the late 80s.

Federal Reserve System

The central banking system in the United States.

Fill or Kill

An order which must be entered for trading, normally in a pit three times, if not filled is immediately canceled.

Fixed exchange rate

Official rate set by monetary authorities. Often the fixed exchange rate permits fluctuation within a band.

Flexible exchange rate

Exchange rates with a fixed parity against one or more currencies with frequent revaluations. A form of managed float.

Floating exchange rate

An exchange rate where the value is determined by market forces. Even floating currencies are subject to intervention by the monetary authorities. When such activity is frequent the float is known as a dirty float.


Federal Open Market Committee, the committee that sets money supply targets in the US which tend to be implemented through Fed Fund interest rates etc.

Foreign Exchange

The purchase or sale of a currency against sale or purchase of another.


Term commonly used when referring to the foreign exchange market.

Forward Outright

A commitment to buy or sell a currency for delivery on a specified future date or period. The price is quoted as the Spot rate minus or plus the forward points for the chosen period.

Forward Rate

The pre-specified exchange rate for a foreign exchange contract settling at some agreed future date, based upon the interest rate differential between the two currencies involved.
Forward rates are quoted in terms of forward points, which represent the difference between the forward and spot rates. In order to obtain the forward rate from the actual exchange rate the forward points are either added or subtracted from the exchange rate. The decision to subtract or add points is determined by the differential between the deposit rates for both currencies concerned in the transaction.
The base currency with the higher interest rate is said to be at a discount to the lower interest rate quoted currency in the forward market. Therefor the forward points are subtracted from the spot rate. Similarly, the lower interest rate base currency is said to be at a premium, and the forward points are added to the spot rate to obtain the forward rate.


Foreign Exchange.

Fair value

The premium (or discount) of a futures contract against its underlying spot/cash instrument that is normally comprised of an interest and dividend component. The fair value represents the rational pricing of a futures contract such that no arbitrage opportunity exists between the futures and the cash.

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.

Feed Ratio

A ratio used to express the relationship of feeding costs to the dollar value of livestock.


Named after mathematician Leonardo Fibonacci, they are technical analysis ratios used in trading to identify future price movements. The most popular Fibonacci tools are retracements and extensions.


The execution of an order.

Fill or kill order (FOK)

A customer order that is a price limit order that must be filled immediately or cancelled.

Financial Instrument

There are two basic types: (1) a debt instrument, which is a loan with an agreement to pay back funds with interest; (2) an equity security, which is a share or stock in a company.

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 1st day on which notices of intention to deliver actual commodities against futures market positions can be received.

Fisher Effect

A theory describing the long–run relationship between inflation and interest rates. This equation tells us that, all things being equal, a rise in a country´s expected inflation rate will eventually cause an equal rise in the interest rate (and vice versa).

Fixed-Income Arbitrage

Fixed-income arbitrage is a market neutral hedging strategy that seeks to profit by exploiting pricing inefficiencies between related fixed income securities while neutralizing exposure to interest rate risk. Fixed-income arbitrage is a generic description of a variety of strategies involving investment in fixed income instruments, and weighted in an attempt to eliminate or reduce exposure to changes in the yield curve. Managers attempt to exploit relative mispricing between related sets of fixed income securities. The generic types of fixed income hedging trades include: yield–curve arbitrage, corporate versus Treasury yield spreads, municipal bond versus Treasury yield spreads and cash versus futures.

Fixed-Income: Convertible Bonds

Fixed-income convertible bond funds are primarily long only convertible bonds. Convertible bonds have both fixed income and equity characteristics. If the underlying common stock appreciates, the convertible bond´s value should rise to reflect this increased value. Downside protection is offered because if the underlying common stock declines, the convertible bond´s value can decline only to the point where it behaves like a straight bond.

Fixed-Income: Diversified

Fixed-income diversified fund may invest in a variety of fixed income strategies. While many invest in multiple strategies, others may focus on a single strategy less followed by most fixed income hedge funds. Areas of focus include municipal bonds, corporate bonds and global fixed income securities.

Fixed-Income: High–Yield

Fixed-income high–yield managers invest in non–investment grade debt. Objectives may range from current income to acquisition of undervalued instruments. Emphasis is placed on assessing credit risk of the issuer. Some of the available high–yield instruments include extendible/reset securities, increasing–rate notes, pay–in–kind securities, split–coupon securities and usable bonds.

Fixed-Income: Mortgage–Backed

Fixed-income mortgage backed funds invest in mortgage–backed securities. Many funds focus solely on AAA–rated bonds. Instruments include: government agency, government–sponsored enterprise, private label fixed– or adjustable–rate mortgage pass–through securities, fixed– or adjustable–rate collateralized mortgage obligations (CMO´s), real estate mortgage investment conduits (REMICs) and stripped mortgage–backed securities (SMBSs). Funds may look to capitalize on security–specific mispricings. Hedging of prepayment risk and interest rate risk is common. Leverage may be used, as well as futures, short sales and options.


A security or bond which offers an annual guaranteed interest payment. There is usually a fixed date at which the bond is redeemed.

Flexible spread

Also known as floating spread. The difference between the bid and offer price that a broker can adjust according to market conditions.


The occasion on which a company’s shares are offered on the market for the 1st time.

Floating profit/loss

Current profit/loss on open positions calculated at the current prices.

Floating spreads

The difference between the rates at which you can buy or sell a currency change as the conditions of the forex market change. These moving spreads reflect true market conditions.


An agreement with a counterparty that sets a lower limit to interest rates for the floor buyer for a stated time period.

Floor Broker

An individual who executes orders for the purchase or sale of any commodity futures or options contract on any contract market for any other person. A floor broker executing orders must be licensed by the CFTC.

Floor Trader

An exchange member who generally trades only for his/her own account or for an account controlled by him/her. Also referred to as a "local."

Foreign exchange (forex, FX, currency)

Financial market for trading international currencies, where it is used to speculate on the relative strength of one currency against another. Participants are able to buy, sell, exchange and speculate on currencies. The forex markets is made up of banks, commercial companies, central banks, investment management firms, hedge funds, and retail forex brokers and investors.

Forex Futures

A shortened term for foreign exchange futures, also known as FX or currency futures. Forex futures are exchange-traded contracts to buy or sell a specified amount of a currency on a set future date, at a specified price.

Forex Market

An over-the-counter market where buyers and sellers conduct foreign exchange business by telephone and other means of communication. Also referred to as foreign exchange market.


A contract which locks in the price at which an entity can buy or sell a currency on a future date.

Forward Contract

A private, cash-market agreement between a buyer and seller for the future delivery of a commodity at an agreed price. In contrast to futures contracts, forward contracts are not standardized and not transferable.

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.

Free margin

Funds on the trading account which may be used to open a position. It is calculated as equity less necessary margin.


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.


The free market section of German stock exchanges.

Front month

The nearest month from settlement of a futures or options contract.

FTSE 100

A market capitalisation weighted index of the top 100 companies listed in the London stock exchange. This is often used as an indicator to assess the broader UK market.

Full Carrying-Charge Market

A futures market where the price difference between delivery months reflects the total costs of interest, insurance, and storage.

Fully paid

Applied to new issues, when the total amount payable in relation to the new shares has been paid to the company.

Fundamental analysis

The analysis of economic indicators and political and current events that could affect the future direction of financial markets. In the foreign exchange market, fundamental analysis is based primarily on macroeconomic events.


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.


A term used to designate all contracts covering the purchase and sale of financial instruments or physical commodities for future delivery on a commodity futures exchange.

Futures Contract

A legally binding agreement, made on the trading floor of a futures exchange, to buy or sell a commodity or financial instrument sometime in the future. Futures contracts are standardized according to the quality, quantity, and delivery time and location.

Futures Commission Merchant (FCM)

An individual or organization which solicits or accepts orders to buy or sell futures contracts or commodity options and accepts money or other assets from customers in connection with such orders. An FCM must be registered with the CFTC.

Futures Exchange

A central marketplace with established rules and regulations where buyers and sellers meet to trade futures and options on futures contracts.

Futures Price

The price of a given commodity contract.


The seven leading industrial countries, being US, Germany, Japan, France, UK, Canada, Italy.


G7 plus Belgium, Netherlands and Sweden, a group associated with IMF discussions. Switzerland is sometimes peripherally involved.


A measurement of how fast delta changes, given a unit change in the underlying futures price.


A price area at which the market didn't trade from one day to the next.

Gap Analysis

An analysis of systems or procedures to find differences in functionality or benefits.


The phenomenon of a market trading at a price away from the previous traded price without trades occurring at intervening prices: more usually, but not necessarily, relates to when a market resumes trading after a period of closure.

Gearing (also see Leverage)

In finance, gearing (or leverage) is using given resources in such a way that the potential positive or negative outcome is magnified. It generally refers to using borrowed funds, or debt, so as to attempt to increase the returns to equity.


The bid price on German and Swiss exchanges.


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.


(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.

Give up

An order to be given to another member firm in clearing system, an allocation. An order executed by clearing firm A and given to clearing firm B where it will be cleared and processed.

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.

Good-for-day (day order)

An order type that will expire if not filled by the end of the day. See also order to open, good-till-cancelled, fill.

Good-till-cancelled (GTC)

Unlike Good-for-day orders, GTC orders remain active on the account waiting for a fill unless cancelled before being filled. See also Order to open, Good-for-day, Fill.


A slang term for the US dollar.


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.


Before deduction of tax.

Gross domestic product (GDP)

One of the measures of national income and output for a country's economy; the total value of all final goods and services produced by the economy.

Gross margining

A method by which a clearing firm's customer margins are based on the firm's positions and applicable submitted spreads.

Gross position

The sum of a clearing firm's current open positions in a given contract.


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.

Guaranteed stop

A stop-loss order that puts an absolute limit on your liability, eliminating the chance of slippage and guaranteeing an exit price for your trade.

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.

Hard currency

Any one of the major world currencies that is well traded and easily converted into other currencies.

Hawk, hawkish

An economic policy advisor who favours relatively higher interest rates to keep inflation under control or curb rapid economic growth. See also Dove.


The purchase or sale of a futures contract as a temporary substitute for a cash market transaction to be made at a later date. Usually it involves opposite positions in the cash market and futures market at the same time. A position established with the specific intent of protecting an existing position in the cash market.

Hedge ratio

For futures the number of contracts required to hedge one contract’s value of the underlying asset. For options see Delta.


An individual or company owning or planning to own a cash commodity and concerned that the cost of the commodity may change before either buying or selling it in the cash market.


The practice of offsetting the price risk inherent in any cash market position by taking an equal but opposite position in the futures market. Hedgers use the futures markets to protect their businesses from adverse price changes.


(i) The highest price for a particular futures contract over a specified time period.

(ii) One who purchases an option.

High Watermark

A requirement that an investment program must recoup any prior losses before the investment manager may take a performance (incentive) fee. In addition to performance losses, prior losses may include any combination of fees that the investment manager charges, such as management and administrative fees.

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.


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.


The person who buys an option contract to open a position.

Horizontal Speed

The purchase of either a call or put option and the simultaneous sale of the same type of option with typically the same strike price but with a different expiration month. Also referred to as a calendar spread.

Horizontal spread

A calendar or time spread.


The market on the Paris Stock Exchange where issues not traded on the official list or 2nd market is traded.

Hurdle Rate

The level of return (often the risk–free interest rate) which investment managers sometimes stipulate net new highs must exceed in order for performance fees to be charged.

Illiquid market

A market with relatively less aggregate volume in the order book. In an illiquid market, a small amount of business often moves prices by a disproportionate amount, and bid and offer prices can be far apart.

Implied Rates

The interest rate determined by calculating the difference between spot and forward rates.

Implied volatility

A measurement of the markets expected price range of the underlying commodity futures based on the market-traded option premiums.

Incentive Fee

Fee paid as an incentive to the general partner of a hedge fund or a Commodity Trading Advisor, the amount of which depends on his/her performance, usually relative to some benchmark index. Such a form of compensation could in fact extend to any financial professional, but tends to be most common among people directly responsible for managing funds.


An indicator that is representative of a whole market or market segment, usually computed by a sum product of a list of instruments' current prices and a list of weights assigned to these instruments. The index variations give trends of the market/market

Index Option

An option whose underlying interest is an index. Generally, index options are cash-settled.

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.

Indirect Quote

Price of the domestic currency in terms of the foreign currency.

Inefficient Portfolio

A portfolio that delivers an expected return that is too low for the amount of risk it requires, or equivalently, a portfolio that requires too much risk for a given expected return.


Swiss or German bearer shares.

Initial Margin

The minimum value on deposit in your account to establish a new futures or options position, or to add to an existing position. Initial margin amount levels differ by contract. Clearing houses set the level of Initial Margin required, and it may change at any time at their discretion. Increases or decreases in Initial Margin levels reflect anticipated or actual changes in market volatility. Also called "Initial Performance Bond".

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.

Instant execution

An order that is executed at the price displayed on the screen. If the price isn’t available a requote is offered at a new two-way price at which you can resubmit the order or choose to cancel it.

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.

Intercommodity Spread

The purchase of a given delivery month of one futures market and the simultaneous sale of the same delivery month of a different, but related, futures market.

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.

Interdelivery Spread

The purchase of one delivery month of a given futures contract and simultaneous sale of another delivery month of the same commodity on the same exchange. Also referred to as an intermarket or calendar spread.

Intermarket Spread

The sale of a given delivery month of a futures contract on one exchange and the simultaneous purchase of the same delivery month and futures contract on another exchange.


Action by a central bank to effect the value of its currency by entering the market. Concerted intervention refers to action by a number of central banks to control exchange rates.

Interim dividend

A dividend declared part of the way through a company’s financial year, authorized solely by the directors.


An institution acting between 2 or more other entities by assuming certain rights and obligations.

In-the-money Option

A call option is in-the-money if the price of the underlying instrument is 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.

Intraday trading

The execution of one or more transactions in a trading session, within one trading day.

Intrinsic Value

The amount by which an option is in-the-money.

Introducing Brokers (IB)

A person or organization that solicits or accepts orders to buy or sell futures contracts or commodity options but does not accept money or other assets from customers to support such orders.

Interbank rates

FX rates quoted to each other by international banks


Cash adjustments made to reflect the economic effect of owing or receiving the notional amount of equity controlled by a CFD position.

Internal rate of return (IRR)

The discount rate at which an investment has zero net present value.


A sister company of the Swiss Securities clearing Corporation (SEGA). This has been set up for international settlement purposes.

Inverse floater

A bond with a coupon rate structured to move in the opposite direction of interest rates.

Inverted Market

A futures market in which the relationship between two delivery months of the same commodity is abnormal.

Investment Strategy

An investor´s plan of distributing assets among various investments, taking into consideration such factors as individual goals, risk tolerance and horizon.

Investment trust

A company whose sole business consists of buying, selling and holding shares.

Invisible Supply

Uncounted stocks of a commodity in the hands of wholesalers, manufacturers, and producers that cannot be identified accurately; stocks outside commercial channels but theoretically available to the market.

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.


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.


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.


On German stock exchanges, the official cash settlement price established once per day, for orders of the amount of less than 50 shares.


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.


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.


A public body representing the Kursmaklers 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.

Lagging Indicators

Market indicators showing the general direction of the economy and confirming or denying the trend implied by the leading indicators. Also referred to as concurrent indicators.


A Lakh equates to a hundred thousand.

Lapsed rights

Rights for which call payments have not been made by the acceptance date.

Last dealing day

The last day on which you may trade in a particular market. This may or may not coincide with the settlement date for that market.

Last dealing time

The last time (on the last dealing day) you may trade in a particular market.

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.

Leading Indicators

Market indicators that signal the state of the economy for the coming months.

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.


The amount, expressed as a multiple, by which the notional amount traded exceeds the margin required to trade.

Letter of renunciation

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 (also see Gearing)

Leverage is the ratio of the size of the position to the size of the deposit. For example a leverage of 1:100 means that in order to open and maintain a position the necessary margin is one hundred times less than transaction size. It allows traders to gain a large exposure with a relatively small outlay.


The rate charged by one bank to another for a deposit.


London InterBank Offered Rate. The interest rate charged between banks in London for short-term loans – a key benchmark that influences many other interest rate charges/products. Individual currency denominations have an associated Libor. It is produced for ten currencies with 15 maturities quoted for each, ranging from overnight to 12 months, producing 150 rates each business day.

Life of contract

The period between the beginning of trading in a particular future and the expiration of trading.


The average of the LIBOR and LIBID rates.


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 for a contract, as fixed by the rules of the exchange on which it is traded.

Limit order

An order with restrictions on the minimum sale price or maximum purchase price to be received, for example to 'buy' if the price goes down to a specified level, e.g. if the current price of USDJPY is 93.00/03, then a buy limit USD would be at a price below 93 (i.e. 92.50). A limit order can be attached to an existing position or used to initiate a new position (see Order to open).

Limit up

The maximum price advance from the previous trading day’s settlement price permitted in one trading session.

Limited risk

A trade which has a strictly limited maximum loss. See also controlled risk.


The ability to buy (sell) contracts on one exchange (such as the Chicago Mercantile Exchange) and later sell (buy) them on another exchange (such as the Singapore Exchange).

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.


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 market

A liquid market has sufficient volume of two-way business for a large transaction to occur with little or no impact on price. Such a market will normally exhibit tight bid-offer spreads.

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.


Selling (or purchasing) futures contracts of the same delivery month purchased (or sold) during an earlier transaction or making (or taking) delivery of the cash commodity represented by the futures contract.


Any transaction that offsets or closes out a long or short futures position.


A trading environment characterized by a high trading volume, a narrow spread between the bid and ask prices, and the ability to generate large-sized orders without significant price changes

Loan Rate

The amount lent per unit of a commodity to farmers by the U.S. Government.

Loan stock

Stock bearing a fixed rate of interest. Unlike a debenture (qv), loan stock may be unsecured.


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.

Log file

An ongoing journal of your trading activity.


(1) One who has bought a futures contract to establish a market position;

(2) A market position that obligates the holder to take delivery;

(3) One who owns an inventory of commodities.

Long Hedge

The purchase of a futures contract in anticipation of an actual purchase in the cash market. Used by processors or exporters as protection against an advance in the cash price.

Long Options Value

The combined value of all options purchased. Options marked to the last reported price. Market movement may cause bids and offers to be away from the last reported price.

Long position

A position taken in anticipation of a rising market. To go long means to buy. When trading FX it refers to buying the base currency against the quote currency.


A slang term for the Canadian dollar.


A unit of trading (used to describe a designated number of contracts). As an example, a trade quantity of one equals a "one lot;" a trade quantity of three equals a "three lot".

Lot size

Also known as order volume, it’s the standardised quantity of a financial instrument, such as base currency, underlying asset or shares, per contract.


The lowest price of a specified time period for a particular futures contract.


Moving Average Convergence Divergence – a chart indicator used in technical analysis to indicate a potential bullish or bearish trend reversal.


Macro involves investing by making leveraged bets on anticipated price movements of stock markets, interest rates, forex and physical commodities. Macro managers employ a "top down" global approach, and may invest in any markets using any instruments to participate in expected market movements. These movements may result from forecasted shifts in world economies, political fortunes or global supply and demand for resources, both physical and financial. Exchange traded and over–the–counter derivatives are often used to magnify these price movements.

Major currency pair

Refers to the four most heavily traded FX pairs in the market: EURUSD, USDJPY, GBPUSD and USDCHF.

Maintenance Margin

The minimum value that you must keep in your account in order to continue to hold a position. The Maintenance Margin is typically less than the Initial Margin, and also differs by contract. If your account falls below the Maintenance Margin requirement, you will receive a margin call. If you wish to continue to hold the position, you will be required to restore your account to the full Initial Margin level (not to the Maintenance Margin level). Also known as the Maintenance Performance Bond.


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.

Managed Futures

Represents an asset class comprised of professional money managers known as commodity trading advisors who manage client assets on a discretionary basis, using global futures markets as an investment medium.

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.

Mark to market

The daily adjustment of an account to reflect accrued profits and losses often required to calculate variations of margins.

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.


(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.

See also Performance Bond.

Margin call

A demand from a clearinghouse to a clearing member, or from a brokerage firm to a customer, to bring margin deposits up to a minimum level required to support the positions held. This can be done by either depositing more funds or offsetting some or all of the positions held.


To debit or credit on a daily basis a margin account based on the close of that day´s trading session. In this way, buyers and sellers are protected against the possibility of contract default.

Market capitalization:

The current total market value of a company’s issued shares. Obtained by multiplying the current market price by the current number of shares in issue.

Market execution

An order that is executed at the best price available in the market, with no re quotes.

Market-If-Touched (MIT)

A price order that automatically becomes a market order if the price is reached.

Market Maker

A firm or person with trading privileges on an exchange who has an obligation to buy when there is an excess of sell orders and to sell when there is an excess of buy orders. In the futures industry, this term is sometimes loosely used to refer to a floor.

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 Neutral

Denotes an approach to investment where the emphasis is on the value of securities relative to each other and the use of arbitrage techniques, rather than market direction forecasting. By emphasizing the relative value of securities and the exploitation of pricing anomalies between related securities, practitioners of market neutral approaches aim to generate profits regardless of the overall direction of broad market prices. Market neutrality is generally achieved by offsetting or hedging long and short positions or maintaining balanced exposure in the market. The term market neutral can be applied with some justification to the majority of alternative investment styles because of their ability to capitalize both on upward or downward price moves or to profit in a wide range of market environments.

Market on Close (MOC)

An order to buy or sell at the end of the trading session at a price within the closing range of prices.

Market Order (MKT)

An order to buy or sell a specified commodity, including quantity and delivery month at the best possible price available, as soon as possible.

Market Reporter

A person employed by the exchange and located in or near the trading pit who records prices as they occur during trading.

Market Segment

A part of a market that relates to a place, an exchange authority, a type of security, and a list of securities with a given set of trading methods.

Market Value

The number of shares in issue multiplied by their current market price.

Matched Trade

The execution of the buy and sell orders that together consummate a trade; consists of one or more contracts and occurs when the same price is specified by buy and sells orders, for a specified number of contracts.


Period within which a futures contract can be settled by delivery of the actual commodity; the period between the first notice day and the last trading day of a commodity futures contract.

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 Price Fluctuation

The maximum amount the contract price can change, up or down, during one trading session, as stipulated by Exchange rules.

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.

Merger Arbitrage

Merger arbitrage, sometimes called risk arbitrage, involves investment in event–driven situations such as leveraged buyouts, mergers and hostile takeovers. Normally, the stock of an acquisition target appreciates while the acquiring company´s stock decreases in value. These strategies generate returns by purchasing the stock of the company being acquired, and in some instances, selling short the stock of the acquiring company.

Managers may employ the use of equity options as a low–risk alternative to the outright purchase or sale of common stock. Most merger arbitrage funds hedge against market risk by purchasing S&P put options or put option spreads.


The software company that created MT4 and MT5.


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 Price Fluctuation

Smallest increment of price movement possible in trading a given contract, often referred to as a "tick”.

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.


The speed of price change over a period of time. Momentum based investment styles, notably trend following approaches, aim to capitalize on the acceleration in directional price movements, be they upward or downward.

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.

Monte Carlo Simulation

A mathematical technique used to model the price characteristics of an investment structure based on random simulations of the underlying assets or variables that affect the price of that investment. This form of analysis involves constructing multiple NAV paths for a product, net of all appropriate fees and interest, using random samples of gross monthly returns. The price characteristics that can be modelled using this powerful technique are known as ´path–dependent´ characteristics, such as risk, return and drawdowns, which depend on NAV movements over the life of an investment structure.

Moving average

The graphical representation of a smoothed-out price action over a set period of time, moving averages can help identify a trend, points of entry and potential target levels for stops.

Moving-Average Charts

A statistical price analysis method of recognizing different price trends. A moving average is calculated by adding the prices (e.g. closing price) for a predetermined number of days and then dividing by the number of days.


The programming language used by MetaQuotes for scripting Expert Advisors and indicators.


A platform used to manage multiple MetaTrader accounts

Municipal Bonds

Debt securities issued by state and local governments, and special districts and countries.

Mutual fund

An open-end investment company. Equivalent to unit trust.


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.

Naked Futures Position

An open futures position that is not covered by an offsetting futures position or by an options contract against which it can be spread.

Naked Option Position

An open options contract that is not covered by an offsetting position in the underlying futures commodity or by another options contract against which it can be spread.


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.

National Futures Association (NFA)

The self-regulatory organization of the futures industry. Chartered by Congress in 1981, the NFA regulates the activities of its member brokerage firms and their employees. Overseen by the Commodity Futures Trading Commission (CFTC).

Narrow-Based Index Futures

Also called industry-sector futures and exchange-traded baskets. Like a stock index future, except targeted to a specific group of stocks, such as the auto, airline or telecom industries.


The NASDAQ is the second largest stock exchange in the US and traditionally lists many technology companies.


The relationship between an option’s strike price and the value of the underlying instrument, where the strike price is near the underlying instrument’s current market price.

Nearby contracts

(Front month) The closest active futures contracts, those that expire the soonest.

Negative Gearing

Negative gearing is a form of financial leverage where an investor borrows money to buy an asset, but the income generated by that asset does not cover the interest on the loan. When the income does cover the interest it is called positive gearing. A negative gearing strategy can only make a profit if the asset rises in value by enough to cover the shortfall between the income and interest which the investor suffers. The investor must also be able to fund that shortfall until the asset is sold.

Net Asset Value

The value of each unit of participation in a commodity pool. Basically, a calculation of assets minus liabilities plus or minus the value of open positions when marked to the market, divided by the total number of outstanding units.


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.

Net change

The difference between today’s last trade and the previous day’s last trade.

Net Liquidation Value

Total Trade Equity plus Net Option Value, on a marked-to-market basis. It is the value of your account if you were to liquidate all positions in your account. This information appears on your account statement.

Net Margining

A method by which a clearing firm's margins are based on the net position, e.g. the remaining position after netting long positions in a contract against the short positions in the customer origin.

Net New Highs

A net new high is reached when the net asset value of an investment exceeds the previous peak level in the net asset value (also known as the ´high watermark´). Performance fees are levied on net new highs.

Net Options Value

The credit or debit value of all option positions combined, marked-to-the-market.

Net position

The amount of currency bought or sold which have not yet been offset by opposite transactions.

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.

Nikkei 225

A price-weighted index of the top 225 shares listed in the Tokyo stock exchange.

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.

Non-dealing desk (NDD)

An execution model that allows you to trade directly with numerous market liquidity providers in order to get the most competitive bid and ask prices.

Non-farm payrolls

A notable economic indicator released on the first Friday of every month by the US Department of Labor. It presents the number of people on the payrolls of all non-agricultural businesses. The monthly changes in payrolls can be excessively volatile. Generally speaking, a high reading is seen as positive (or bullish) for the USD, while a low reading is seen as negative (or bearish).

Notice Day

The second day of the three-day delivery process when the clearing corporation matches the buyer with the oldest reported long position to the delivering seller and notifies both parties.

Notional Funding

Notional funding is the term used for funding an account below its nominal value. For example, assume a CTA requires a minimum investment of $1,000,000 (the "Nominal Value") and the margin requirement is $50,000.

The investor can either deposit $1,000,000 to "fully fund" that minimum investment requirement or they can invest only a portion of the $1,000,000, as long as they meet the $50,000 margin requirement. Now assume that the investor decides to fund the $1,000,000 account with $100,000 (the "Funding Level"). This means that the investor is using leverage of 10X—ten times $100,000 equals the $1,000,000 minimum investment. The difference between the nominal value ($1,000,000) and the funding level ($100,000) is $900,000. The $900,000 is referred to as "notional funding". 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.

Odd lot

A block of securities bid or offered which is smaller than standard lot size for that particular security.


The price at which a seller is willing to sell. The best offer is the lowest such price available.

Offer day

Indicates a willingness to sell a futures contract at a given price. Also called "ask."

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.


The closing – out or liquidation of a futures position.

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.


These are total probability weighted gains / losses. The steeper the curve is, the less the possibility of extreme returns (risky distribution is flatter). The function is equivalent to the return distribution itself, as it combines effect of all of its moments. Returns are distributed into loss and gain above and below a return threshold and then the probability weighted ratio of returns above and below a threshold is considered.

Open interest

The total number of outstanding option or futures contracts that have not been closed out by offset or fulfilled by delivery.

Open Market Operation

The buying and selling of government securities Treasury bills, notes, and bonds by the Federal Reserve.

Open order

An order to buy or sell a security which remains in place until it is either executed or cancelled.

Open Outcry

Method of public auction for making verbal bids and offers in the trading pits or rings of futures exchanges.

Open Trade Equity

The difference between the initial trade price and the last tick of the market. It is marked-to-market. It is the value of the positions you are holding, if you were you to close the position at the last tick.


The period at the beginning of the trading session during which all transactions are considered made or first transactions were completed.

Open range

Price (or price range) recorded during the opening period of the market.


A contract giving the holder the right, but not the obligation, hence, "option," to buy (call option) or sell (put option) a futures contract in a given commodity at a specified price at any time between now and the expiration of the option contract.

Option class

All options of the same type – calls or puts - listed on the same underlying instrument.

Option Buyer

The purchaser of either a call or put option. Option buyers receive the right, but not the obligation, to assume a futures position. Also referred to as the holder.

Option Premium

The price of an option. The sum of money that the option buyer pays and the option seller receives for the rights granted by the option.

Option Seller

The person who sells an option in return for a premium and is obligated to perform when the holder exercises his right under the option contract. Also referred to as the option writer.

Option series

All options of the same class having the same exercise/strike price and expiration date.

Option Spread

The simultaneous purchase and sale of one or more options contracts, futures, and/or cash positions.


German for ‘premium’. The price a put or call buyer must pay to a put or call seller for an option contract.


German for ‘warrant’.


An instruction by a customer to a broker/trader to buy or sell should a specified price be reached. The order remains valid until executed or cancelled by the customer.

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.

Order to open

An instruction to open a position should a specified price be reached.

Original Margin

The amount a futures market participant must deposit into a margin account when placing an order to buy or sell a futures contract. Also referred to as initial margin.


A leading indicator in chart analysis which shows a potential trend reversal before it occurs.


Refers to trading outside of the main operating hours of the market.

Out-of-the-Money Option

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) Market

A market where a product such as stocks, foreign currencies, and other cash items are bought and sold by telephone and other means of communication.

Pair Trading

Another term for Spread Trading but more specifically to securities (stocks in particular) rather than commodities. Commonly refers to buying one stock and selling another related stock against it. An example would be spreading Toyota SSF against Ford SSF. See also Spread Trade.


The face value of a security. For example, a bond selling at par is worth the same dollar amount as when it was issued or the price at which it will be redeemed at maturity.

Parabolic SAR

Stop and reversal – a chart indicator used in technical analysis to identify trend endings and potential reversals.


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.


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.

Performance Bond (Margin)

Funds that must be deposited as a performance bond by a customer with his or her broker, by a broker with a clearing member, or by a clearing member, with the Clearing House. The performance bond helps to ensure the financial integrity of brokers, clearing members and the Exchange as a whole. (See also Initial Margin and Maintenance Margin).

Performance Fee

Often referred to as an incentive fee, this is the fee earned by a manager on profits that surpass the previous high watermark – the peak level in the net asset value of an investment since inception. The calculation of performance fees is sometimes based on that portion of the new highs which exceeds a hurdle rate such as the risk–free interest rate.


A security without a time limit for redemption.

Physical Delivery

The transfer of the underlying commodity from the seller of a futures contract to the buyer of a futures contract. Each futures exchange has specific procedures for delivery of a physical commodity. Some futures contracts, such as stock index contracts, are cash settled.

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.


One unit of price change in the bid/ask price of a currency or the smallest price increment in a currency. For most currencies, it denotes the fourth decimal place in an exchange rate and represents 1/100 of one percent (.01%).


The area on an exchange trading floor where futures and options on futures contracts are bought and sold. Pits are usually raised octagonal platforms with steps descending on the inside that permit buyers and sellers of contracts to see each other.

Pivot points

Used in technical analysis, pivot points use the previous period’s high, low and close to calculate the current period’s support and resistance levels.


Abbreviation of profit and loss: an account compiled at the end of an accounting period to show gross and net profit or loss.


A collection of securities held by an investor.

Portfolio Efficient Frontier

By plotting the intersection of risk and reward for different investments or weightings of assets, one can generate a risk/reward curve or ´frontier´ for those investments. The efficient frontier is the point on such curve where an investment combination delivers the most favourable balance of risk and reward.


An open trade that you have in the market.

Position Day

The first day in the process of making or taking delivery of the actual commodity on a futures contract. The clearing firm representing the seller notifies the clearinghouse that its short customers want to deliver on a futures contract.

Position Limit

The maximum number of speculative futures contracts one can hold as determined by the Commodity Futures Trading Commission and/or the exchange upon which the contract is traded. Also referred to as trading limit.

Position Trader

An approach to trading, in which the trader either buys or sells contracts and holds them for an extended period of time.

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 subsidiary, from shareholders of the parent company.

Preferred ordinary shares

See 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.


(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.

Primary Dealer

A designation given by the Federal Reserve System to commercial banks or broker/dealers who meet specific criteria. Among the criteria are capital requirements and meaningful participation in the Treasury auctions.

Price Discovery

The generation of information about "future'' cash market prices through the futures markets.

Price-earnings ratio

Current price of a stock dividend by its trailing 12-months earnings.

Price Limit

The maximum advance or decline from the previous day's settlement price permitted for a contract in one trading session by the rules of the exchange.

Price Limit Order

An order that specifies the highest price at which a bidder will pay for a contract, or the lowest price a seller will sell a contract.

Primary Market

The market relating to the original issue or 1st sale of new securities.

Prime Rate

Interest rate charged by major banks to their most creditworthy customers.


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 Protection

An arrangement or mechanism built into an investment product whereby investors are assured that their initial or investment is secure and that this amount will at the very least be returned to them when such a product reaches its maturity date. Principal protection features can take a variety of forms, including capital guarantees provided by banks.

Principal trades

See principal orders.

Private placement

An issue that is offered to a single or a few investors as opposed to being publicly offered.


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 difference between the bid and offer prices by 4 and adding the result to the lower of the 2 prices.


A document giving the details that a company is required to make public, to support a new issue of shares.


A form which, when completed by the shareholder, grants another person the authorization or power to vote on his/her behalf at company meetings.

Public Limited Company (PLC)

In the UK, a public 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.

Purchasing Managers Index (PMI)

An indicator of economic activity created through surveys completed by managers in a number of manufacturing companies. It provides a picture of economic conditions, within the manufacturing sector.

Purchasing Power

Total Trade Equity minus Initial Margin. Your purchasing power represents funds available to you to establish new positions. Your purchasing power changes throughout the day as your total trade equity and margins change.


An option to sell a commodity, security, or futures contract at a specified price at any time between now and the expiration of the option contract.

Put Option

An option that gives the option buyer the right but not the obligation to sell (go "short'') the underlying futures contract at the strike price on or before the expiration date.

Qualitative Analysis

Analysis that uses subjective judgment to evaluate investments based on non–financial information such as management expertise, cyclicality of industry, strength of research and development, labour relations and depth of operational infrastructure. Qualitative analysis evaluates important factors that cannot be precisely measured, rather than the actual financial data about a company.

Quantitative Analysis

Quantitative analysis uses statistical techniques to develop investment models using key financial ratios and economic indicators. The use of objective data facilitates the comparison of a large universe of investment products to identify a select range of potential investment possibilities. Quantitative analysis deals with measurable factors in contrast from qualitative considerations, such as the character of management.


Number of units or lots of a futures contract. Sometimes also called size.

Quantitative easing

It is a measure adopted by a central bank to stimulate an economy, when traditional monetary policy measures (like the cutting of rates) have failed. The central bank electronically creates funds in its own bank account to purchase previously-issued government bonds, plus private sector and distressed assets (so companies can raise capital) This serves to create more tradable and liquid markets to help stimulate the economy.

Quarterly CFDs

A type of future with periodic expiries spaced three months apart. Prices are normally quoted for the next two or three quarter months. See also Rollover.


(i) The two-way market price for a given instrument; because it is two-way, you can buy or sell, according to whether you think the price will rise or fall.

(ii) An indication of current bids and offers in the market on a particular contract or spread.

Quote currency

The second currency in a pair.


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.


An upward movement of prices following a decline; the opposite of a reaction.


The difference between the highest and lowest price recorded during a given trading session, week, month, life of contract, or any given period.


A grade – usually denoted by a letter or series of letters – signifying a security’s investment quality.

Ratio Spread

An option strategy where the number of long options purchased is less than the number of short options sold. In the case of a ratio call spread, the long call option has a lower strike price than the short call options.

Realised profit/loss

The amount of money you have made or lost on a position once it has been closed. Realised profit or loss will add to or subtract from your account cash balance.


A decline in prices following an advance. The opposite of rally.

Recognized 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.

Reciprocal currency

A currency that is normally quoted as dollars per unit of currency rather than the normal quote method of units of currency per dollar. Sterling is the most common example.


(i) The extinguishing of a debt through cash payment.

(ii) The time period in which an investor in a hedge fund or a mutual fund may withdraw his or her capital from the fund. For example, quarterly redemption allows an investor to withdraw capital every quarter.

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 primarily with retail business who has permission to display prices in reduced sizes on SEAQ.


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.

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.

Relative Value Arbitrage

Relative value arbitrage attempts to take advantage of relative pricing discrepancies between instruments, including equities, debt, options and futures. Managers may use mathematical, fundamental or technical analysis to determine misevaluations. Securities may be mispriced relative to the underlying security, related securities, groups of securities or the overall market. Many funds use leverage and seek opportunities globally. Arbitrage strategies include dividend arbitrage, pairs trading, options arbitrage and yield curve trading.


A self-employed stockbroker who gets commission for buying and selling for his or her own clients.

Renounceable 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 favour of somebody else.


A premium on carrying over a position on a French equity from one settlement period to the next.


An act that an assigned long may perform to avoid obligation to receive delivery of live cattle. To avoid obligation, the assigned long must establish a short position on the business day following assignment and pay a retender fee.


Requotes are missed prices caused by the market moving in the direction that you wish to trade. A requote occurs when you request to execute an order at a specific price that is no longer available and you’re offered a different quote. This can happen during fast-moving markets.

Resistance level

A term used in technical analysis indicating a price level at which analysis suggests a predominance of selling – and hence a greater likelihood that the price will fail to break through the level.

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.


Increase in the exchange rate of a currency as a result of official action.

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.


An area on a trading floor where futures or equities are traded.


(1)The possibility of loss.

(2) The dollar difference between the current price and the price at which the liquidation of open positions would occur.

(3) The portion of the performance bond requirement associated with the likely worst case change in value.

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.

Risk–Adjusted Performance

Risk relative to return – the return achieved per unit of risk or the risk associated with a particular level of reward, typically represented by the Sharpe ratio. Improving the risk–adjusted return depends either on increasing returns and maintaining the level of risk, or maintaining the level of returns and lowering the associated risk.

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.


A charge or credit for holding a currency position overnight. The value of the process is measured by the interest rate differential between the two currencies.

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.


Procedure by which a long or short position is offset by an opposite transaction or by accepting or making delivery of the actual financial instrument or physical commodity.


An overnight swap, specifically the next business day against the following business day (also called Tomorrow Next, abbreviated to Tom-Next).


Relative strength index – a chart indicator used in technical analysis which identifies when trends are coming to the end of their current direction, as well as overbought and oversold market conditions.

Running profit/loss

How your open positions are performing: the unrealised money that you would gain or lose on your open positions if they were closed at prevailing market prices.


Messengers who rush orders received by phone clerks to brokers for execution in the pit.


Enables member firms to enter orders to trade directly via their terminals. These orders are then automatically executed by SAEF.


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.


A trading strategy that involves placing short-term trades, sometimes only a minute long or less, usually to try and capture the spread.

Scrip issue

See Capitalisation issue.


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.


A London Stock Exchange service which supports the trading of listed UK equities in which turnover is insufficient for the market making system.

SEAQ international

The London Stock Exchange’s electronic price quotations system for non-UK equities, similar to SEAQ.


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

Market where previously issued securities are bought and sold.

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.


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.

Sell (Sell Order)

An offer. This transaction type indicates to sell or to go short. Opposite of buy or go long.

Selling Hedge (Short Hedge)

Selling futures contracts to protect against possible declining prices of commodities that will be sold in the future. At the time the cash commodities are sold, the open futures position is closed by purchasing an equal number and type of futures contracts.

Sell limit

A conditional trading order that indicates a security may be sold only at the designated price or higher.


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.

Sell Spread (Option sell spread)

The transaction type you choose to indicate an option sell spread.

Sell stop

An order to open a sell position at a price lower than the price was at the moment of placing the order.


The London Stock Exchange trade conformation service.

Serial expiration

Options on the same underlying futures contract which expire in more than one month.


All options of the same class which share a common strike price.

Settlement (also see Expiry)

The process of a position closing against a specified market level once the position has gone beyond its last dealing time.

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.

Segregated Account

A special account used to hold and separate customers´ assets from those of the broker or firm.


See Security

Sharpe Ratio

A measure of risk–adjusted performance that indicates the level of excess return per unit of risk. In the calculation of Sharpe ratio, excess return is the return over and above the short–term risk free rate of return and this figure is divided by the risk, which is represented by the annualized volatility or standard deviation. In summary, the Sharpe Ratio is equal to compound annual rate of return minus rate of return on a risk–free investment divided by the annualized monthly standard deviation. The greater the Sharpe ratio, the greater the risk–adjusted return.


The selling side of an open futures contract; a trader whose net position in the futures market shows an excess of open sales over open purchases.

Short Hedge

The sale of a futures contract in anticipation of a later cash market sale. Used to eliminate or lessen the possible decline in value of ownership of an approximately equal amount of the cash financial instrument or physical commodity.

Short interest

The total number of shares of a security sold short.

Short Options Value

The total cost of purchasing back all short options on a marked-to-market basis.

Short position

A position taken in anticipation of a falling market. To go short means to sell. When trading FX it refers to selling the base currency against the quote currency.

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.


A 5-digit code allocated to French securities.

Simulated Trading

The process of buying and selling without actually entering the market or risking any real funds.

Single-Stock Futures (SSF)

SSF are an agreement between two parties that commits one party to buy a stock and one party to sell a stock at a given price and on a specified date. They are similar to existing futures contracts for gold, crude oil, natural gas, currencies, bonds, and stock indices. Unlike actual stock, there is no ownership or voting rights contained in a SSF. (See also Universal Stock Futures)

Sinking fund

The repayment of debt by an issuer at stated regular intervals through purchases in the open market or drawings by lot.


(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.


The difference between the requested level of an order and the actual price at which it was executed (see also Fill). Slippage can occur during periods of higher volatility when market prices move rapidly or gap.


A fully automated and integrated trading and clearing system.

Sortino Ratio

A measure of risk–adjusted performance that indicates the level of excess return per unit of downside risk. It differs from the Sharpe ratio in that it recognizes investors´ preference for upside (´good´) over downside (´bad´) volatility and uses a measure of ´bad´ volatility as provided by semi–deviation – the annualized standard deviation of the returns that fall below a target return, say the risk free rate.

S&P 500

A market capitalisation weighted index of the top 500 companies listed in the New York stock exchange (NYSE) or the NASDAQ. Often used as a gauge of sentiment for the US market.


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.


One who attempts to anticipate price changes and, through buying and selling futures contracts, aims to make profits. A speculator does not use the futures market in connection with the production, processing, marketing or handling of a product.


The division of the outstanding shares of a corporation usually into a larger number of shares.

Spot (also see Cash price)

The price for a currency, index, commodity or share for immediate settlement or delivery.

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.


(i)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.


The simultaneous buying and selling of two related markets in the expectation that a profit will be made when the position is offset. Examples include: buying one futures contract and selling another futures contract of the same commodity but different delivery month; buying and selling the same delivery month of the same commodity on different futures exchanges; buying a given delivery month of one futures market and selling the same delivery month of a different, but related, futures market.

Spread betting

Spread betting is a tax-free way of speculating on an outcome, where your degree of accuracy determines the size of your profit (or loss). You never physically own the underlying instrument, but can make a profit (or loss) from both rising and falling prices. With financial spread betting, you're speculating on the direction in which the price of an FX pair, stock index or commodity will move.

Spread Trade

The simultaneous buying and selling of two related markets in the expectation that a profit will be made when the position is offset. Examples include: buying one futures contract and selling another futures contract of the same commodity but different delivery month; buying and selling the same delivery month of the same commodity on different futures exchanges (CME group vs ICE); buying a given delivery month of one futures market and selling the same delivery month of a different, but related, futures market.


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.

Standard Deviation

A widely used measurement of risk usually used to represent volatility derived by calculating the square root of the variance of the returns of an investment from their mean.

Steer/Corn Ratio

The relationship of cattle prices to feeding costs. It is measured by dividing the price of cattle ($/hundredweight) by the price of corn ($/bushel).

Stillhalter option

Swiss form of covered warrant.


A chart indicator used in technical analysis to determine potential trend reversals, indicating an overbought or oversold market condition.

Stock exchange

A market on which securities are traded.

Stock index

An indicator used to measure and report value changes in a selected group of stocks. How a particular stock index tracks the market depends on its composition the sampling of stocks, the weighting of individual stocks, and the method of averaging used to establish an index.

Stock Index Futures

Futures contracts on a stock index, such as the Standard & Poor's 500 or the Dow Jones Industrial Average. Stock index futures contracts are a derivative of the underlying index, and are cash-settled.

Stop (STOP)

An order to buy or sell when the market reaches a specified point. A stop order to buy becomes a market order when the futures contract trades (or is bid) at or above the stop price. A stop order to sell becomes a market order when the futures contract trades (or is offered) at or below the stop price.

Stop Limit (STL)

A variation of a stop order. A stop limit order to buy becomes a limit order at the stop price when the futures contract trades (or is bid) at or above the stop price.

Stop loss

An order placed to sell a security when it reaches a certain price. A stop-loss order is designed to limit an investor’s loss on a security position.

Stop order

An instruction to deal if the price becomes less favourable. A stop order can be attached to an existing position (known as a stop loss) or can be used to initiate a new position (see Order to open).


German for ‘ordinary share’.


The simultaneous purchase/sale of both call and put options for the same share, exercise/strike price and expiry date.


The particular investment process employed by a manager in the application of an investment style.

Sterling Ratio

This ratio is also a comparison of historical reward and risk and was developed by Deane Sterling Jones. The Sterling ratio is equal to the average annual rate of return for the past three calendar years divided by the average of the maximum annual drawdown in each of those three years plus 10%.

Stress Testing

Stress testing is a method of determining how the program will behave during a period of financial crisis. We use the worst monthly S&P 500 returns as a stress time. You can also use hypothetical scenarios (for example Monte Carlo simulation) or known historical events (for example Russian debt default in 1998 or 9/11 terrorist attacks).

Strike Price

The price at which the holder (buyer) may purchase or sell the underlying futures contract upon the exercise of an option.


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.

Structured Product

Typically provides principal protection, invests across a range of styles and managers, provides increased investment exposure and requires a high level of structuring expertise with respect to blending investment approaches, financing, liquidity and risk management.

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.


The place on a chart where the buying of futures contracts is sufficient to halt a price decline.

Support level

A technique used in technical analysis to indicate a price floor at which you would expect the price to 'bounce' off. A price point where it is anticipated buyers will enter the market and 'support' the price. The opposite of this is resistance.


The rollover charge/credit for keeping a position open overnight.


A slang term for the Swiss Franc.

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.

Systemic Risk

Market risk due to price fluctuations, which cannot be eliminated by diversification.

Take profit

An order to close an open position at a more profitable price compared to the price when placing the order.

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.


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.

Technical analysis

A technique used to try and predict future movements of a security, commodity or currency, based solely on past price movements and volume levels. It examines charts and historical performance to forecast prices by analysing market data, such as historical price trends, averages and volumes.

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.


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.


A single price movement which can be either positive or negative.

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 Decay

A term used to describe how the theoretical value of an option "erodes" with the passage of time.

Time Limit Order

A customer order that designates the time during which it can be executed.


Part of the order-routing process in which the time of day is stamped on an order.

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.

Tom-next charges

In foreign exchange, the cost of holding a position overnight. Short for tomorrow-next, it normally incorporates the interest considerations in simultaneously holding and owing the notional and base currencies as well as being influenced by the relative availability of the associated currencies.

Total Return

The total percentage return of an investment over a specified period, calculated by expressing the difference between the investment´s initial price and final price as a percentage of the initial price.


The best buying and selling prices available from a market-maker on SEAQ and SEAQ International in a given security at any one time.

Track Record

The actual performance of an investment since inception, usually represented by audited monthly returns, net of fees.

Trade date

The date on which a trade occurs.

Trade size

The size of the underlying position that you are trading. Governs how much you make or lose on a trade for every point of movement in the price of the market.

Traded options

Transferable options with the right to buy and sell a standardised amount of a security at a fixed price within a specified period.

Trading halt

The suspension of trading in a security while material 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.

Trailing stop

Trailing stops are a special type of stop order that trails behind the market when the market moves in your favour.


The buying or selling of securities resulting from the execution of an order.


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.

Transaction costs

The costs that are incurred by a trader when buying or selling currencies or commodities. These costs include broker commissions or spreads.

Transaction date

The date a trade occurs.

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.


The general direction of the market.

Trend lines

A straight line drawn across a chart that indicates the overall trend. In an upward trend, the line is drawn below, and acts as a support line; the opposite holds true for a downward trend. Once the asset breaks the trend line, the trend is considered to be invalid.


The simultaneous expiry of index futures, index options and individual stock options.


The total money value of securities traded, as calculated by multiplying price by the number of securities traded.

Two-way price

When both a bid and offer rate is quoted for an FX transaction.


The actual traded market or markets from which the price of futures is derived.

Underlying Futures Contract

The specific futures contract that is bought or sold by exercising an option.

Underlying security

The instrument upon which traded options are listed.


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.


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.

Universal Stock Futures

Same as Single-Stock Futures, but used to refer to those contracts that trade on the LIFFE. See also, Single-Stock Futures.

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.

U.S. Treasury Bill

A short-term U.S. government debt instrument with an original maturity of one year or less. Bills are sold at a discount from par with the interest earned being the difference between the face value received at maturity and the price paid.

U.S. Treasury Bond

Government-debt security with a coupon and original maturity of more than 10 years. Interest is paid semi-annually.

U.S. Treasury Note

Government-debt security with a coupon and original maturity of one to 10 years.


A price quoted that is higher than the previous quote.

Value–Added Monthly Index (VAMI)

VAMI is defined as the growth in value of an average $1,000 investment. VAMI is calculated by multiplying (1 + current monthly ROR) X (previous monthly VAMI). VAMI assumes the reinvestment of all profits and interest income. Incentive and management fees have been deducted.

Value–At–Risk (VAR)

A widely used risk measurement technique that calculates (at a pre–specified level of probability) the loss that would be experienced in a day or some other pre–specified time horizon in the event of an increase in volatility or an adverse correlated move in market prices, assets or the investments making up a portfolio.

Value date

For a spot transaction it is two business banking days forward in the country of the bank providing quotations which determine the spot value date. The only exception to this general rule is the spot day in the quoting centre coinciding with a banking holiday in the country(ies) of the foreign currency(ies). The value date then moves forward a day.

Value Spot

Normally settlement for two working days from today. See value date.

Variable Limit

An expanded allowable price range set during volatile markets.

Variation Margin

(i) Profits or losses on open positions in futures and options contracts which are paid or collected daily.

(ii) During periods of great market volatility, or in the case of high-risk accounts, additional margin deposited by a clearing member firm to an exchange clearinghouse.


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.


A statistical measure of the variation in a market's price movements over time.


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.


Virtual private server; a platform which runs on a remote server, allowing you access from any computer, tablet or smartphone connected to the internet.


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.

Wall Street

An alternative, well-known term for the New York stock exchange (NYSE), the largest stock exchange in the US.


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.


A certificate giving the holder the long-term and at times perpetual privilege but not the obligation of purchasing securities at a specified price.


The relative proportion of each of a group of securities or asset classes within a single investment portfolio.


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.

Working an order

The process of having an order that has not yet been executed.


A billion units.


Percentage return on an investment.


Base unit of currency in China.

Yield Curve

A chart in which the yield level is plotted on the vertical axis and the term to maturity of debt instruments of similar creditworthiness is plotted on the horizontal axis. The yield curve is positive when long-term rates are higher than short-term rates

Yield to Maturity

The rate of return an investor receives if a fixed-income security is held to maturity.

Zero–Coupon Bond

This type of bond matures at its face value, is sold at a deep discount to its face value and pays no coupons. The key advantage of this type of bond is that there is no reinvestment risk, although there is the draw back of not being able to benefit from a rise in market interest rates.


Polish unit of currency.

Уведомление о рисках.
Маржинальные сделки (Forex, Контракты на разницу (CFD), фьючерсы и опции на фьючерсы, опции на акции, сделки РЕПО, сделки с внебиржевыми деривативами, а также сделки с использованием брокерского кредита, - так называемые 'короткие продажи') являются сделками с повышенной степенью риска. Уровень риска повышается с увеличением кредитного плеча Финансового Обеспечения (далее в тексте, - ФО). В результате заключения маржинальных сделок возможно как получение сравнительно большой прибыли при небольшом уровне первоначального вложения, так и существенные потери, которые могут превышать основную сумму инвестиций или сумму ФО. Просим Вас убедиться, отвечают ли по сути и подходят ли по содержанию маржинальные сделки Вашему профилю риска, который был Вам присвоен AS IBS Renesource Capital и отвечает ли содержание маржинальных сделок Вашим (инвестиционным) целям вложения.

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