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Search our Trader's Terms

The American Bankers Association

Failure to exercise or offset an option before its expiration.

The Associazione Bancaria Italiana, the Italian Banking Association.

The theory that trade between nations occurs when one nation is absolutely more productive than other nations in the production of a good. Nations should export those goods for which they possess an absolute advantage and import goods for which other nations possess an absolute advantage.

A quote made which is given as an absolute rate rather than in reference to a funding base such as LIBOR, US treasury rates, etc. For example rather than T-Bill rate + 0.25% the bid is expressed as 5.75%, (If T-Bill = 5.50%).

The financial institution with a draft drawn on it and accepted by that same financial institution

Transaction undertaken by a central bank solely to accommodate autonomous transactions; also called compensatory transaction.

When the financial institution agrees to lend money, or provide other special consideration to a customer, even though the customer may not be qualified to receive special treatment.

The bookkeeping record of a customer’s transaction and credit (or debit) balances. This record usually includes confirmation of transactions, listing of holdings and/or open positions, cash and/or cash equivalents, beginning and ending liquidating value.

A record of transactions against a specific account or list of accounts.

The amount of money or debt in an account.

Occurs when a certain amount of an account is reserved for a specified period. During the blockage, the blocked amount of the account cannot be touched by the account holder. An account can be totally or partially blocked.

Action of preventing any movement or action in an account.

The broker or clerk that is assigned to work with a customer and his/her account on behalf of a financial institution.

A fee condition (amount, percentage, charging date, etc.) which applies to a particular account.

(1) A series of characters (alpha and/or numeric) used to identify a customer account or relationship. (2) The remitting financial institution’s account serviced by the receiving bank. (3) The identification assigned by a financial institution often called the account number.

Refers to all data that can be recorded in a database about an account, e.g., address, financial information, etc.

See Account identification.

A financial institution staff member who looks after one or more client account relationships.

The balance and current holdings of an account.

Action of reinstating an account to its normal condition, after a blocking or deactivation operation.

The status of an account often affects what and how many transactions can be performed on that account. For example an account that is undermargined (insufficient funds) will not be allowed to add positions to the account.

(1) An information system conveying data in financial terms, about a specific entity, that can be made reasonably precise. (2) The method of recording all transactions affecting the financial condition of a given business.

Money a company owes for merchandise or services bought for delayed payment.

Money owed to a company for merchandise or services bought on credit.

A method of reporting income when earned and expenses when incurred, as opposed to reporting income when received and expenses when paid.

A cumulative fee to be paid to or received from an account holder, but is not yet due. A fee which has been earned even though the related transaction is yet complete.

(1) The interest that has been earned but not yet been paid. (2) Interest due but not yet paid or received as from the last interest settlement date. In the securities market, for instance, the bond buyer pays the seller the agreed price of the bond plus interest accrued since the last interest payment date up to and including the value date. The same calculations are also used in swap product transactions. (3) The interest that has accumulated since the last interest payment up to, but not including, the settlement date and that is added to the contract price of a bond transaction.

The physical (cash) commodity or financial instrument rather than a futures or derivative contract for that commodity or financial instrument.

A provision of the Bretton Woods system by which a country had a limited right to adjust the value of its currency in terms of gold.

A CFTC official authorized to conduct a proceedings and render a decision in formal complaint procedures.

A department of a financial institution that carries out tasks which deal with administrative affairs of the customers e.g. account opening and approval, etc.

(1) The affirmation that an action has taken place. (2) A market recommendation.

A report to the executing party to give brief and early information about a transaction.

Letter of credit in which the seller’s bank advises the seller about the credit-worthiness of the bank issuing the letter of credit.

The French Bankers Association.

Two companies are affiliated when one owns less than a majority stake of the other, or when both are subsidiaries of a third company. Or, in general terms, any association between two companies that is short of a parent-subsidiary tie.

Partly owned, separately incorporated foreign banking operation of a domestic bank.

A total amount.

The policy under which all futures positions owned or controlled by one trader or a group of traders are combined to determine reporting status and speculative limit compliance (CFTC Regulation).

Portfolio allocation and management aimed at achieving maximum return. Aggressive investors place a high percentage of their investable assets in equity securities and a far lower percentage in safer debt securities and cash equivalents, and pursue aggressive policies including trading on margin, arbitrage and options trading.

1. A specified mathematical process for computation. 2. A sequence of steps to be followed to perform a task. Often used when talking about computer programming.

The total cost of a financial transaction including interest cost, periodic charges and all front-end compensation expressed as a per cent per annum figure.

A request to change something. Also referred to as an Amendment Request, or an Update Request.

The date on which amendment or change was made.

A negotiable certificate (receipt) representing a given number of shares of stock in a foreign corporation; it is bought and sold in the American securities markets, just as stock is traded. Syn. American depository share.

A stock exchange, a private, not-for-profit corporation, located in New York City. The third most-active market in the U.S. The exchange was founded in 1842. Also called Amex, and the curb exchange.

An option that may be exercised at any time prior to expiration.

(1) The paying off of debt in regular installments over a period of time. (2) The ratable deduction of capitalized expenditures over a specified period of time. (3) The cost of the asset has been amortized when this period is over. (4)The accounting procedure that companies use to write off intangible rights or assets — such as goodwill, patents or copyrights — over the period of their existence.

The Amount of debits: value in units of currency.

The sum amount of all credit transactions, exclusive of any fees.

The actual annual return on an account after interest is compounded.

The interest rate borrowers pay on a loan. A loan’s up-front fees are usually factored into the APR.

The increase in an asset’s value. A gradual increase in the value of currency, usually occurring over a period as the result of market forces of supply and demand in a system of floating exchange rates. When the value of currency is substantially changed in one moment, this is called revaluation and is due to government intervention in a fixed exchange rate currency.

A classic trading strategy to profit from different prices for the same security, commodity or financial instrument in different markets. Market forces will normally ensure that these arbitrage differences are short lived. The simultaneous purchase of one commodity against the sale of another in order to profit from distortions from usual price relationships.

A theory that if an investor earns a higher-than-normal return, then that is because he/she is accepting a higher-than-normal risk.

Dispute resolution technique in which both parties agree to submit their cases to a private individual or body for resolution. A forum for the fair and impartial settlement of disputes. NFA’s arbitration program provides a forum for resolving futures related disputes.

The Japanese Securities and Exchange regulation, modeled on the Glass- Steagall Act in the United States. Article 65 separates merchant/investment banking from commercial banking. It does not permit a financial institution to engage in both types of banking.

An indication by a trader or a dealer of a willingness to sell a security, a futures, or other financial instrument. The price at which an investor can buy. Syn. offer. See also bid; quotation.

The price that someone is willing to accept for a security, futures or other financial instrument. The ask portion of a quote is the lowest price anyone is willing to accept at that time.

The price at which sellers offer securities, futures or other financial instrument to buyers. Also called offer price.

Anything owned by an individual, a business, or a financial institution which has commercial or exchange value. Assets may consist of property or claims against others, in contrast to obligations or liabilities due to others. Assets may be tangible or intangible, short-term (current) or long-term (non current).

The basic classification of financial items in the financial institution’s balance sheet.

Management arrangement in which one partner in a strategic alliance assumes primary responsibility for the operations of the alliance.

An individual who solicits orders, customers, or customer funds on behalf of a Futures Commission Merchant, an Introducing Broker, a Commodity Trading Advisor, or a Commodity Pool Operator and who is registered with the Commodity Futures Trading Commission (CFTC) via the National Futures Association (NFA).

(1) In a buy order for securities, futures or other financial instruments it is purchasing at the specified price or under it (2) For a sell order, it is selling at the specified price or above it. See Limit Order

See Market Order.

An option with a strike price equal to the current price of the instrument, such as a stock, upon which the option was granted.

An order that specifies it is to be executed at the opening of the market or of trading or else it is to be canceled. The order does not have to be executed at the opening price, but within the opening range of prices.

A market in which buyers enter competitive bids and sellers enter competitive offers simultaneously.

The action of checking that the corporation, individual, partnership or other institution is following the correct procedures as required by the regulatory authorities and by the firm’s own procedures.

The checking of a request (e.g. to execute a financial transaction) to ensure that it is bona fide.

(1) The approval of a financial transaction or a change. (2) To have power of attorney.

Transaction conducted for the economic self-interest of a market participant.

The balance at the disposal of the account owner at the close of the statement period. The cleared balance of an account.

Funds available for transfer or withdrawal in cash.

The average of the daily balances over a period of time (such as a month or quarter).

See Reparations Award.

The amount of damages (usually monetary) a respondent may be ordered to pay to complainant.

An acronym for Balance Sheet.

Departments in a financial institution in which the majority of their work is accounting, balancing, clearing, and bookkeeping, not directly in dealing with clients.

The amount in an account. Usually includes cash, open trade equity , and securities on deposit. See also Cleared balance, available balance, average book balance, average value date balance, average balance and value balance.

An international accounting record of all transactions made by one particular country with others during a certain time period. The difference between receipts and payments is directly reflected in the foreign exchange reserves held by the country. A negative balance of payments will result in a reduction in the countries foreign currency reserves, unless the country borrows additional foreign currency on the international markets.

The difference between a country’s imports and exports during a specific time period. The largest component of a country’s balance of payments; it concerns the export and import of merchandise (not services).

Difference between a country’s merchandise exports and imports.

Difference between a country’s service exports and imports.

A report of a firm’s financial condition at a specific time.

A formula stating that a corporation’s assets equal the sum of its liabilities plus shareholders’ equity.

Technique for eliminating translation (exchange rate) exposure when a firm matches its assets and liabilities denominated in a given currency on a consolidated basis.

Portfolio allocation and management aimed at balancing risk and return; a balanced portfolio may combine stocks, bonds, mutual funds and cash equivalents.

A financial institution authorized or chartered by its national regulatory authority to be designated as a bank. This term can include credit institutions, mortgage institutions, foreign central banks, and multilateral development banks.

A code used to identify financial institutions in order to facilitate automated processing of telecommunication messages in banking and related financial transaction environments. In the U.S., the ABA number

The minimum rate at which a bank, either alone, or in conjunction with other banks in a market, lends money to other banks.

Any instructions or additional information for the receiving, ‘account with’, intermediary or beneficiary bank.

A transfer between banks effecting accounts held by banks. Not accounts held by banks on behalf of customers.

A private telecommunication/settlement service for banks in the USA.

Draft that has been endorsed by a bank, signifying the bank’s promise to guarantee payment at a designated time. A form of financing sometimes used in import/export transactions.

Transactions which involve money.

Form of countertrade involving exchange of goods or services between two parties without involving monetary payment.

Currency in which general ledger and P/L accounts are maintained.

The lowest or starting point interest rate from which other rates are made. A standard interest rate serving as a basis for interest calculation e.g. LIBOR.

(1) The difference between two interest rates or prices of two financial instruments. The difference between the cash price of the underlying financial instrument and the price for the related financial futures contract. (2) The difference between the cash or spot price and the price of the nearby futures contract.

A one one- hundredth of one percent (i.e., 0.01%), used to express interest rates and bond yield differentials. The smallest measure used in quoting yields on bonds and notes.

The risk of a movement between two different interest rate profiles, for example, prime lending rate and US Treasury rates.

A market in which prices are declining. A trader who believes prices will move lower is called a “bear.” A period of generally failing prices and pessimistic attitudes.

A measure of an investment’s volatility. The lower the beta, the less risky the investment.

A means of measuring the volatility of an individual market (security, future, financial instrument) in comparison with the market as a whole. A beta of 1 indicates that the individual market’s price will move with the overall market.

An indication of a trader of a willingness to buy a security. The price at which an investor can sell.

The difference between the bid price and the offer price.

A common term for bank bills, trade bills, note issuance facilities (NIF’s) and Promissory Notes.

A widely used option pricing equation developed in 1973 by Fischer Black and Myron Scholes. Used to evaluate OTC options, option portfolios, or option trading on exchanges.

Any exchange or association of persons who are engaged in the business of buying or selling any commodity or receiving the same for sale on consignment. It usually means an exchange where commodity futures and/or options are traded. Sometimes referred to as Contract Market or Exchange.

A method used by technical analysts. Bollinger bands are fixed lines above and below a market’s average price. As volatility increases, the bands widen.

A debt instrument that pays a set amount of interest on a regular basis. The issuer promises to repay the debt on time and in full.

The rate of return on a bond, calculated by using the purchase price and the coupon rate.

A premium over normal.

Reflects the total sum of all balances and transactions of an account, regardless of other characteristics (such as the funds not yet being cleared).

A transfer between two accounts both serviced by the financial institution executing the transaction.

(1)The value, in terms of the currency and the amount per security, future, or other financial instrument. (2) The value of a financial instrument as shown by the accounting records. It is often not the same as the instrument is valued by the market.

A transaction is said to have been booked when the transaction handling program has processed the transaction. i.e. the funds may not yet be available but the system has posted it on the book date and marked it as having, for example, a value date of two days in the future.

The date the payment is to be booked and executed. The date the payment will be passed to the automated system to book.

A collection of records of financial transactions processed by automated systems. Booking are also called postings.

The process of keeping financial records. The process of analyzing and recording transactions in the accounts of an automated system.

Buying stocks whose prices appear to have bottomed out or fallen to low levels.

Accounting term for the net profit or loss.

Overseas banking operation of a home country bank that is not separately incorporated.

A rapid and sharp price decline.

(1) The point at which gains equal losses. (2) The price a market must reach for an option buyer to avoid a loss if he exercises. For a call, it is the strike price plus the premium paid. For a put, it is the strike price minus the premium paid.

The term commonly applied to news wires carrying price and background information on securities and commodities markets. This contrasts to the exchanges’ own price transmission wires, which use a narrow ticker tape.

An individual or firm that charges a fee or commission for executing buy and sell orders placed by another individual or firm, floor broker in commodities futures trading, a person who actually executes orders on the trading floor of an exchange; an account executive (associated person) as the person who deals with customers and their orders in commission house offices.

A fee charged by a broker for execution of a transaction. An amount charged per transaction or a percentage of the total value of the transaction.

A person or firm in the business of buying and selling securities. A form may act as both broker (agent) or dealer (principal), but not in the same transaction. Broker-dealers must register with the SEC, in the U.S. and any state in which they do business.

Illegal practice of accepting orders to buy or sell without executing such orders on an official Board of Trade; the illegal use of the customer’s funds without disclosing the fact of such use.

A plan of future income and expenses during a specified period.

A market in which prices are rising. A trader who believes prices will move higher is called a "bull". A news item is considered bullish if it is expected to bring on higher prices.

Germany’s central bank.

Legal system based on interpretations, actions, and decisions of government employees.

A purchase to offset, cover or close a short position.

Buying securities, futures or other financial instruments at the end of a trading session at a price within the closing range.

Buying securities, futures or other financial instruments at the beginning of a trading session at a price within the opening range.

An order to buy a market that is entered at a price above the current offering price and that is triggered when the market price touches or goes through the buy stop price.

buying futures contracts (or other financial instruments) to protect against possible increased cost of inputs slated for futures uses. See Hedging.

Publicly traded contract granting the owner the right, but not the obligation, to buy a specific amount of foreign currency or other financial instrument at a specified price at a stated future date. The buyer of a call option acquires the right but not the obligation to purchase a particular market at a stated price on or before a particular date.

Publicly traded contract granting the owner the right, but not the obligation, to buy a specific amount of foreign currency or other financial instrument at a specified price at a stated future date. The buyer of a call option acquires the right but not the obligation to purchase a particular market at a stated price on or before a particular date.

The sum of the delta amounts of call options bought and written for each currency.

An investment product that pays you compensation when interest rates rise above a certain level.

Accumulated money, resources or goods available for use in producing more money, resources or goods.

Balance of payments account that records capital transactions between residents of one country and those of other countries.

Contains: contributed capital (capital stock and other paid-in surplus) retained earnings (profit and loss previous years) accounts.

A rise in the market price of an asset.

All tangible property, including securities, real estate and other property, held for the long term.

The difference between the purchase price and the sale price of an asset when the asset was sold for more than it was bought.

The difference between the purchase price and the sale price of an asset when the asset was sold for less than it was bought.

The market for the purchase and sale of medium and long term financial instruments, such as equities, commodities, bonds, notes, swaps and other derivatives.

The sum of a firm’s long-term debt, stock and surpluses. Syn. invested capital.

A colloquialism for futures contract(s). It came into common use when a railroad car or hopper of corn, wheat, etc. equaled the amount of a commodity in a futures contract. See also Contract.

A member of a commodity exchange, usually a clearinghouse member, through whom other brokers or customers, clear all or some trades.

Costs incurred in warehousing the physical commodity, generally including interest, insurance, and storage.

That part of the current supply of a commodity consisting of stocks from previous production/marketing seasons.

Currency on hand and deposits immediately convertible to cash.

The actual commodity or financial instrument as opposed to a futures contract based upon the commodity or instrument. See also Actuals.

A cash transaction common in many industries, including commodities, in which the buyer and seller agree upon delivery of a specified quality and quantity of goods at a specified future date. Specific price may be agreed upon in advance or there may be agreements that the price will be determined at the time of delivery on the basis of either the prevailing local cash price or a futures price.

The underlying commodity, security, currency or money market in which transactions for the purchase and sale of cash instruments which futures and derivative contracts relate to, are carried out.

A price quotation obtained or a price actually received in a cash market.

All kind of transactions involving the cash market.

The Chicago Board Options Exchange. The CBOE has markets in Equities, Options and Over-the-counter securities.

The Chicago Board of Trade.

Certificate of Deposits.

The government bank that coordinates the nation’s banks and the flow of payments between different banks. May also be the central regulatory authority in a country for banks.

The highest governing and executive bodies of the state.

The entity controlled by a parent firm that coordinates worldwide cash flows of its subsidiaries and pools their cash reserves.

Economy in which government planners determine price and production levels for individual firms.

Stocks of a cash market that have been inspected and found to be a quality deliverable against futures contracts, stored or deposited at the delivery points designated as regular or acceptable for delivery by the futures exchange.

The Commodities Futures Trading Commission

The difference between the current price and the previous day’s close or settlement price.

Fees associated with financial services.

The use of graphs and charts in the technical analysis of markets to plot trends of price movements, average movements of price volume, and open interest. See Technical Analysis.

The oldest futures exchange in the United States; established in 1848. The exchange lists agricultural commodity futures such as corn, oatsand soybeans, in addition to financial instruments, e.g., Treasury Bonds, Treasury Notes.

An exchange by the Chicago Board of Trade to trade stock options.

Excessive trading of the customer’s account by a broker, who has control over the trading decisions for the account, to make more commissions while disregarding the best interest of the customer. This violates the NASD, CFTC, and NFA rules.

Law based upon detailed codification of permissible and nonpermissible activities. The world’s most common form of legal system.

(1) Unsettled amounts which a financial institution is obliged to pay. (2) Legal statement of actions done or not done, e.g., claim of wrong doing.

The formal completion of a trade.

Funds available for transfer or withdrawal in cash.

The procedure through which trades are checked for accuracy. Once the trades are validated, the clearinghouse or association becomes the buyer to each seller and the seller to each buyer.

A member of a clearinghouse or an association. All trades of a non-clearing member must be registered and eventually settled through a clearing member.

An organization with which securities may be deposited for safe- keeping and through which the purchase and sale transactions may be realized. The two main systems in the Eurobond market are Cedel and Euroclear.

See Settlement Price.

An agency connected with exchanges through which all transactions are made, offset, or fulfilled through delivery of the actual cash market and through which financial settlement is made; often, is a fully chartered separate corporation rather than a division of the exchange proper.

Accounting system used to facilitate international countertrade. A firm must balance its overall countertrade transactions but need not balance any single countertrade transaction.

A client, also called party, is a natural person or a corporate body, involved in any transaction with a financial institution.

The period at the end of a trading session during which all transactions are considered to be made at the close.

The balance of entries posted to the account at the close of the statement period.

The price at which transactions are made just before the close on a given day. A number of transactions are often made at this time and they will be included over a range of prices. See also closing range.

A range of closely related prices at which transactions took place at the closing of the market; buy and sell orders at the closing might have been filled at any point within such a range.

An acronym for Chicago Mercantile Exchange. Also operates the International Monetary Market (IMM), the Index and Options Market (IOM) and the Growth and Emerging Markets (GEM).

A measurable economic factor that varies directly and simultaneously with the business cycle, thus indicating the current state of the economy. See also lagging indicator; leading indicator.

A reduction in the financial worth of a collateral. This is usually due to changes in financial conditions (for example changed interest rates, stock values, risk ratings, etc.).

An increase in the financial worth of a collateral. This is usually due to changes in financial conditions (for example changed interest rates, stock values, risk ratings, etc.).

Specific items of property that a borrower pledges as security for the repayment of a loan or as margin for an account. The pledger agrees that the pledgee will have the right to sell the collateral for the purpose of liquidating the debt or paying the margin if the pledger defaults under the terms of the pledge agreement.

The principle in international law that one country will honor and enforce within its own territory the judgments and decisions of foreign courts.

A bank owned by shareholders that accepts deposits, makes commercial and industrial loans, and provides other banking services for the public. Commercial banks may not underwrite corporate securities or most municipal bonds. Also called a full-service bank.

(1) A fee charged by a broker to a customer for performance of a specific duty, such as the buying or selling of futures contracts. Banks charge commissions for issuing letters of credit, accepting drafts drawn under letters of credit, entering foreign exchange transactions for their customers, custodial services, acting as fiscal agent, etc. Fees are paid by banks to others for various services and include fees to foreign exchange brokers for arranging foreign exchange transactions. A commission must be fair and reasonable, considering all the relevant factors of the transaction. (2) Sometimes used to refer to the Commodity Futures Trading Commission (CFTC).

A member of an exchange who executes orders for the sale or purchase of financial futures contracts.

One who makes a trade, either for another member of the exchange or for a non-member client, in his or her own name and becomes liable as principal to the other party to the transaction.

An entity of trade or commerce, services or rights in which contracts for future delivery may be traded. Som of the contracts currently traded are wheat, corn, cotton, livestock, copper, gold, silver, oil, propane, plywood, currencies, Treasury Bills, Treasury Bonds and Stock Indexes.

Cartel created by producers of a good to control production and prices of that good, e.g., OPEC.

The federal act that provides for federal regulation of futures trading. CEA is administered by the Commodity Future Trading Commission.

A division of the New York Mercantile Exchange.

The Federal agency established by the Commodity Futures Trading Commission Act of 1974 to ensure the open and efficient operation of the futures markets. The five futures markets commissioners are appointed by the President (subject to Senate approval).

An enterprise in which funds contributed by a number of persons are combined for the purpose of trading futures contracts and/or options on futures. Not the same as a joint account.

An individual or organization which operates or solicits funds for a commodity pool. Generally required to be registered with the Commodity Futures Trading Commission.

Individuals or firms that, for a fee, issue analysis or reports concerning commodities, provide advice to others trading commodity futures, options, or leverage contracts.

Law that forms the foundation of the legal system in Anglo-American countries; an accumulation of findings of judges in individual cases.

The theory that trade between countries occurs when one country is relatively more productive than others in the production of a good.

The individual who files a complaint seeking a reparations award against another individual or firm.

The department within a brokerage firm that oversees the trading and market-making activities of the firm. It ensures that the employees and officers of the firm are abiding by the rules and regulations of the SEC, CFTC, NASD, and NFA exchanges and Designated Supervisory Regulatory Organizations (SROs).

A Treasury Department official, appointed by the President and confirmed by the Senate, who is responsible for chartering, examining, supervising and liquidating national banks.

A statement sent by a commission house to a customer when a transaction is made. The statement confirms the number of contracts bought or sold and the prices at which the contracts were bought or sold.

A financial statement combining the accounting records of a parent corporation and all its subsidiaries into a single set of statements denominated in a single currency.

A technical analysis term. A pause in trading activity in which price moves sideways, setting the stage for the next move. Traders are said to evaluate their positions during periods of consolidation.

A measure of price changes in consumer goods and services used to identify periods of inflation or deflation. The index is based on a list of specific goods and services purchased in urban areas. It is released monthly by the Labor Department.

Goods and services sold for use by individual consumers.

Assets recorded on a balance sheet as incoming cash flows which will materialize in the future or of which the materialization is uncertain.

Liabilities recorded on a balance sheet as outgoing cash flows which will materialize in the future or of which the materialization is uncertain.

(1) An agreement between at least two parties to buy or sell on certain conditions, a certain product, as a result of which a legal status concerning rights and duties of the parties exists. (2) A term of reference describing a unit of trading for a commodity.

The currency and the amount of the agreement.

Date on which the contract is agreed between the parties.

Standards or grades of commodities listed in the rules of the exchanges which must be met when delivering cash commodities against futures contracts. Grades are often accompanied by a schedule of discounts and premiums allowable for delivery of commodities of lesser or greater quality than the contract grade.

A board of trade designated by the Commodity Futures Trading Commission to trade futures or option contracts on a particular commodity. Commonly used to mean any exchange on which futures are traded. See also Board of Trade and Exchange.

The month in which deliveries to be made in accordance with a futures contract.

The details which specifies the type of contract entered into by two parties.

See Discretionary Account.

The managerial position in an organization given specific responsibility for financial control.

The currencies that are freely traded and accepted in international commerce; also referred to as hard currencies.

To secure control of a market so that its price can be manipulated.

The banking that involves such tasks as, account management, credit services and trade finance for corporations.

A technical analysis term. A price reaction against the prevailing trend of the market. Common corrections often amount to 33 percent, 50 percent, or 66 percent of the most recent trend movement. Sometimes referred to as a retracement.

Foreign banks that are engaged in an exchange of services, and/or have an account or accounts with domestic banks.

Two banks which have opened accounts with each other and use them for financial transactions on behalf of their clients.

The combination of commissions, taxes, charges and additional costs that are involved in completing a transaction.

The level of prices of goods and services required for a reasonable standard of living.

Administrative costs or expenses incurred in obtaining money due the complainant. Included are costs such as, administrative fees, hearing room fees, charge for clerical services, travel expenses to attend the hearing, attorney’s fees, and filing costs.

A sustained rise in prices caused by businesses passing on increases in costs to purchasers.

The decision-making body of the European Economic Union, composed of 15 members, who represent the interests of their home government.

The corresponding party to the transaction. Party with whom a contract has been concluded, i.e. client, broker, other branch, H.O., other bank or a department.

The risk the counterparty will fail to meet its obligations under the terms agreed of all contracts resulting in possible replacement costs. Counterparty credit risk is becoming an important factor in the derivatives markets (such as swaps).

A code which identifies the country in which a financial institution is located.

The action of offsetting a futures securities or other financial instrument transaction with an equal and opposite transaction. Short covering - is a purchase to offset an earlier sale of an equal number of the same delivery month. Liquidation - is the sale to offset the obligation to take delivery.

An investment strategy in which the seller owns the underlying security.

Arbitrage that exploits geographic differences in interest rates and differences in exchange rates over time.

Consumer Price Index

(1) A loan to a customer. (2) An entry on the right hand side of an account ledger. (3) A balance that shows a profit in book-keeping.

A notification of a credit to the account of the receiver (account owner).

In finance, this normally means financial institutions which are subject to local government regulations relating to banking (i.e. which are legally required to submit periodical financial reports to the central banking authorities), they are not mortgage institutions, multilateral development banks and central banks.

(1)The maximum that a customer can borrow. (2) Maximum allowed counterparty credit risk for contracts other than foreign exchange contracts.

The hedging of a cash instrument on a different, but related, futures or other derivatives market.

An exchange rate between two foreign currencies. Two different currencies compared to the same third currency.

Commodity Trading Advisor.

A medium of exchange that circulates in an economy. Also refers to a country’s official unit of exchange. The currency may be represented by a currency code.

The ISO code identifying the currency.

Publicly traded contract involving the sale or purchase of a standardized amount of foreign currency at a price with delivery at a stated future date.

Publicly traded contract giving the owner the right, but not the obligation, to sell or buy a standardized amount of foreign currency at a price at a stated future date (see also call option; put option)

The changing of the value of one currency in terms of another by the legal authority (usually central bank) responsible for that currency.

The local currency of a country that is the authorized media of circulation and the basis for record keeping.

Balance of Payments account that records exports and imports of goods, exports and imports of services, investment income, and gifts.

Cash and other assets that are expected to be converted into cash within the next twelve months, such as cash and equivalents, accounts receivable, inventory and prepaid expenses.

The futures contracts which will come to maturity and become deliverable during the current month; also called “spot month”.

The technique used to consolidate the financial statements of a foreign subsidiary when the subsidiary’s functional currency is the subsidiary’s home currency.

Current value: The costs of replacement of an asset on the date of valuation or the proceeds from continued use or sale of the asset on the date of valuation, whichever is the lower.

Committee on Uniform Securities Identification Procedures

A client who is registered in the files of the financial institution, under a unique customer number.

The collateral guaranteed or pledged by the customer as security for financial transactions.

A statement produced daily showing the position of a customer’s account or group of accounts.

See Segregated Account.

An order that if not executed expires automatically at the end of the trading session of the day it was entered.

Traders who take positions in the market and then liquidate them prior to the close of the trading day.

This is a bargain made to buy or sell a currency.

The currency and the quantity of the currency purchased/sold multiplied by the deal price.

The date on which the deal was made.

An ISO term. The currency code and the price or percentage price of the deal.

An individual or company which buys and sells financial instruments for its own account and customer accounts.

A put or call on a physical commodity, not originating on or subject to the rules of an exchange, written by a firm which deals in the underlying cash commodity.

A foreign exchange system sold by Reuters.

A sum owed.

Accounting condition where the trading losses in a customer’s account exceed the amount of equity in the customer’s account.

Financial instrument representing money owed such as bonds, notes, mortgages and other forms of paper that indicate the intent to repay an amount owed.

Raising money for working capital or for capital expenditures by selling commercial paper, bonds, bills or notes to individual or institutional investors. In return for the money lent, the individuals or institutions become creditors and receive a promise to repay principal and interest on the debt.

The schedule for repayment of interest and principal on an outstanding debt.

All of the unexecuted orders in a floor broker’s possession.

(1) Failure to pay principal or interest on a financial obligation. It can also refer to a breach or nonperformance of the terms of a debt instrument. (2) The failure to perform on a futures contract as required by an exchange.

The distant delivery months in which futures or options trading is taking place, as distinguished from the nearby futures delivery month.

A decline in the overall price level of goods and services that results in increased purchasing power of money. The opposite of inflation.

See Contract Grades.

The tender and receipt of an actual cash commodity or warehouse receipt or other negotiable instrument covering such market, in settlement of a futures contract or other forward financial transaction.

The date on which a financial instrument is to be/have been delivered/received.

A calendar month during which a futures or options contract matures and becomes deliverable.

Notice from the clearinghouse of a seller’s intention to deliver the physical commodity against a short futures position; it precedes and is distinct from the warehouse receipt or shipping certificate, which is the instrument of transfer of ownership.

Those locations designated by commodity exchanges at which stocks of a commodity represented by a futures contract may be delivered in fulfillment of the contract.

The official settlement price of the trading session during which the buyer of futures contracts receives, through the clearinghouse, a notice of the seller’s intention to deliver and the price at which the buyer must pay for the commodities represented by the futures contract.

In all foreign currency transactions there is a delivery risk between currency settlement hours outside the country involved, and the actual settlement hours in the country of the currency.

A measure of the relationship between an option price and its underlying futures contract or stock price. Delta measures how rapidly the value of an option moves in relation to the underlying value. It is the change in an options's price divided by the change in the price of the underlying instrument. An option whose price changes by $1 for every $2 change in the price of the underlying instrument, has a delta of 0.5.

The partial offset of the exchange risk of a currency option by an opposite open currency spot position in the same foreign currency.

A consumer’s desire and willingness to pay for a good or service. See also supply.

An increase in prices that occurs when demand exceeds supply.

A decline in value.

A severe downturn in an economy that is marked by falling prices, reduced purchasing power, and high unemployment.

The transaction size that can be dealt in a market without causing a price change. Shallow (thin) markets usually have wide spreads and substantial price fluctuations during a short period of time. Deep markets tend to have relatively narrow spreads and stable prices.

A complex investment whose value is derived from or linked to some underlying financial asset, such as a stock, bond, currency or mortgage. Derivatives may be listed on exchanges or traded privately over-the-counter. For example, derivatives may be futures, options, or mortgage-backed securities.

A complex investment whose value is derived from or linked to some underlying financial asset, such as a stock, bond, currency or mortgage. Derivatives may be listed on exchanges or traded privately over-the-counter.

The government’s reduction of the value of its currency in relation to the currency of other counties. A devaluation produces a substantial decrease in an exchange rate

The difference between two values (such as a buy and sell (bid/offer) price for a currency.

A slight decline in a market’s price followed by a rise.

Price of a foreign currency in terms of the home currency; also called a direct quote.

Product sales to customers located outside the firm’s home country.

See direct exchange rate.

Selling products to final consumers.

(1) A downward adjustment in price allowed for delivery of stocks of a commodity of lesser than deliverable grade against a futures contract. (2) Sometimes used to refer to the price difference between futures of different delivery months, as in the phrase “July at a discount to May,” indicating that the price of the July future is lower than that of the May. (3) In general, the amount by which one market price is less than another.

Brokers who charge lower commissions than full-service brokers.

The interest rate charged by the Federal Reserve on loans to member banks. This rate influences the rates these financial institutions then charge to their customers.

The process which allows one party to obtain information and documents relating to the dispute from the other party(ies) in the dispute.

An arrangement by which the holder of the account gives written power of attorney to another, often a broker, to make buying and selling decisions without notification to the holder; often referred to as a managed account or controlled account.

A slowdown in the rate of price increases. Disinflation occurs during a recession, when sales drop and retailers are unable to pass higher prices along to consumers.

process of getting a firm’s products and services to its customers.

An ISO term. The amount of income per share/unit expressed in terms of the currency, the amount, and when necessary, the period for which the income was paid/received.

A U.S. publishing and information services group. Owns and operates the Telerate service.

The most widely quoted and oldest measures of change in stock prices.

The most commonly watched U.S. securities index.

Organization created by the Maastricht Treaty whose goal is to create a single currency for the EU, thereby eliminating exchange-rate risks and the costs of converting currencies for intra-EU trade.

Impact on the value of a firm’s operations of unanticipated exchange-rate changes.

Statistics used to analyze business conditions and make forecasts.

A form of regional economic integration that combines features of a common market with coordination of economic policies among its members such as the European Union (EU).

Bank that is located outside that parent bank’s home state and provides international banking services.

A characteristic of commodities which describes the interaction of the supply, demand, and price of a commodity. A commodity is said to be elastic in demand when a price change creates an increase or decrease in consumption. The supply of a commodity is said to be elastic when a change in price creates change in the production of the commodity. Inelasticity of supply or demand exists when either supply or demand is relatively unresponsive to changes in price.

Any method of electronically moving money between accounts (between banks). Often simply known as EFT.

The computerized matching of buyers and sellers of financial instruments, Globex, Project A and Access are examples.

A ban on the exporting and/or importing of goods.

The dollar value of a futures account if all open positions were offset at the current market price. In securities markets, it is the part of a company’s net worth that belongs to shareholders.

Bonds issued by a borrower outside its own country. The bonds are denominated in a currency foreign to the borrower or the purchaser or both.

A deposit in a bank outside the depositor’s country of origin. Most deposits are U.S. dollar deposits, although nearly all major Western currencies are represented.

U.S. dollars deposited in banks outside the borders of the United States.

Loans of dollar-denominated deposits in banks outside the U.S. or of other deposits in banks outside the depositor’s country of origin.

Eurobond and Euroloan markets.

Twenty-person group that acts as the European Union’s administrative branch of government and proposes all EU legislation.

A monetary unit created in 1979 by nine European nations to promote currency stability in the European Union. The European Currency Unit consists of weighted amounts of the national currencies of members of the European Monetary System. The value of the European Currency Unit in relation to other currencies is published daily in newspapers. Also called the ECU.

An organization created by the Maastricht Treaty as a preliminary step in establishing a European Central Bank. It plays an important role in promoting economic and monetary union among EU members.

An exchange rate system established by a 1979 agreement among members of the European Union to manage currency relationships among themselves.

An intergovernmental organization of 12 Western European nations created under the Maastricht Treaty of December 1991 having its own institutional structures and decision-making framework. Prior to the Maastricht Treaty, the organization was known as the European Community or the Common Market. Its members are Belgium, Denmark, France, Germany, Greece, Italy, Luxembourg, the Netherlands, Portugal, Spain and the United Kingdom. Its council of ministers and the European Commission are based in Brussels, Belgium, and its parliament is based in Strasbourg, France.

An option that may be exercised only on its expiration date.

An association of persons or entities engaged in the business of buying and selling futures and/or options usually involving an auction process. Also called a Board of Trade or Contract Market.

The price at which one currency can be traded for another currency. The price of one country’s currency in terms of another country’s currency. (1) Direct quotation: One unit of foreign currency expressed as a number of units of the local currency.(2) Indirect quotation: One unit of the local currency expressed as a number of units of the foreign currency

An agreement among European Union members to maintain fixed exchange rates among themselves within a narrow band.

The risk of market fluctuation of an asset or liability denominated in a foreign currency, such as the ownership of a currency (spot or forward) or trade account payable in foreign currency.

(1) The completion of an order for a transaction. (3) The carrying out of an instruction.

The date on which a trader wishes to exercise the option.

Exercising an option means the buyer elects to accept the underlying market at the option’s strike price.

The date on which the buyer of an option chooses to exercise the buyer’s right under the option contract with the seller of the option.

The last day on which the option can be exercised as well as the currency and price at which the market can be purchased or sold, on or before that date.

The price at which the buyer of a call (put) option may choose to exercise his right to purchase (sell) the underlying futures contract. Also called strike price or strike.

Any of a class of options with unusual underlying assets or terms. For example, rainbow options depend on the amount by which one asset outperforms another.

Costs incurred.

Generally the last date on which an option may be exercised or a transaction can be made.

Occurs when a condition is no longer valid or applicable.

Selling products of one country for use or resale in other countries.

A possible loss of value caused by changes in market value, interest rates or exchange rates.

The monetary value of a bond printed on its face. Face value and market value usually differ.

The Federal Deposit Insurance Corporation. A U.S. body which regulates and insures the U.S. banking system.

The short name for the U.S. Federal Reserve Banks. Also U.S. Federal Reserve Banks.

The total amount the federal government owes because of past deficits.

The amount of money the federal government owes because it spent more than it received in revenue for the past year.

(1).U.S. dollars on deposit at a Federal Reserve Bank in the U.S. (2).Reserves traded between commercial banks in the U.S. for overnight use. The minimum amount is US $1,000,000.

A committee of the Federal Reserve Banks that makes decisions concerning the Fed’s operations to control the money supply.. The FOMC’s chief mechanism is the purchase and sale of government securities, which increase or decrease the money supply. It also sets key interest rates, such as the discount rate and Fed fund rate.

The central bank of the U.S. that sets monetary policy. The Federal Reserve and FOMC oversees money supply, interest rates and credit with the goal of keeping the U.S. economy and currency stable. Governed by a seven-member board, led by the Federal Reserve Chairman, the Fed includes 12 regional Federal Reserve Banks, 25 branches, and all national and state banks that are part of the system. Also called Fed.

The U.S. Federal Reserve Banks.

A seven-member board that directs the operations of the Federal Reserve System. FRB members are appointed by the president, subject to approval by Congress.

An electronic payment service operated by the United States Federal Reserve System as a private wire network for transfers between financial institutions having accounts at the Federal Reserve Bank. Also known as Federal Reserve Wire Network

Fees are all interests, charges, taxes or commissions which have to be paid or received for certain transactions or services to or from a customer.

A way of recognizing that an expense (or revenue) and the related liability (or asset) can increase over time and not as signaled by an specific cash transaction.

A rate expressed as a percentage.

The variable relationships of the cost of feeding animals to market weight sales prices, expressed in ratios, such as the hog/corn ratio. These serve as indicators of the profit return or lack of it in feeding animals to market weight.

The sequence of numbers (0, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233...), used in technical analysis, discovered by the Italian mathematician Leonardo de Pise in the 13th century. It is the mathematical basis of the Elliott Wave Theory: Where the first tow terms of the sequence are 0 and 1 and each successive number is the sum of the previous two numbers.

A person legally appointed and authorized to hold assets in trust for another person and manage those assets for the benefit of that person.

Responsibility imposed by operation of law which requires a broker to act with special care in the handling of a customer’s account.

First in, first out

A strategic alliance in which two or more firms work together to optimize resources and/or to reduce the financial risks associated with a project.

A financial instrument whose return derives from an underlying bond, stock, commodity, currency, or other asset.

An individual that designs or develops innovative financial instruments and processes. Someone who formulates creative solutions to financing problems.

The activities of a financial engineer.

An organization primarily related to providing of financial [monetary] services established to offer and perform services specifically. These services can include loans, leases, banking, cashiering, foreign exchange, issuance of guarantees or pledges, brokerage, portfolio management, custody or trust services, and/or credit card services.

Also known as financial products or simply as instruments, includes bonds, stocks, derivatives, and other financial representations of assets.

The risk of a loss in relation to expectations.

A transaction which effects or is expected to effect an account balance.

First day on which notices of intention to deliver cash commodities against futures contracts can be presented by sellers and received by buyers through the exchange clearinghouse.

The federal tax, budget, and spending policies set by Congress or the President. These policies can effect tax rates, interest rates and government spending.

The 12-month period that a corporation or government uses for bookkeeping purposes.

Accounts which contain all non-monetary assets, the services of which are to be received over a period longer than one accounting period. Can include accumulated depreciation accounts and capital leasing accounts.

The international monetary system in which each government tries to maintain the price of its currency in terms of other currencies.

A rate agreed beforehand for future interest payments.

A chart showing the yields of debt instruments with short maturities as equal to the yields of long term debt instruments.

The system in which currency exchange rates are determined by supply and demand.

An interest rate for a debt instrument that will change as interest rates change.

(1) The lowest rate a financial market is allowed to fall. (2) The trading floor of an exchange.

An individual who executes orders on the trading floor of an exchange for any other person or entity.

Members of an exchange who are personally present, on the trading floors of the exchanges, to make trades for themselves.

Federal Open Market Committee

Bonds issued by entities of one country to an entity of a second country and denominated in the second country’s currency.

Central banks outside the country of domicile of an entity.

(1) Any currency other than the local currency. (2) Within the spectrum of flow of payments foreign currencies are all currencies, with the exception of the currency of the country.

All currencies other than the base currency.

Trading one country’s currency for another country’s currency. Money instruments used to make payments between countries. Trading derivatives of foreign currencies such as forwards, options, and swaps. Also known as FX or Forex.

See to Forex book.

The foreign currency exchange rates at the close of trading.

Market in which foreign currencies are bought and sold and exchange rates between currencies are determined. Also called the Forex market

A report showing the foreign currency contracts and positions held by a customer.

Risk that the market value of a firm, measured in the base currency, is exposed to fluctuations in foreign exchange rates.

A transfer of funds between two banks in different countries.

Transfers of money in foreign currency from one account to another. One of the accounts will be in the local currency, the amount which has to debited/credited, will be calculated using the exchange rate.

Refer to foreign exchange.

The department of a financial institution in which foreign exchange transactions are recorded per currency.

Usually means a rate or price of a financial instrument or of an event which is in the future.

The difference between the lower forward and the higher spot price of a currency expressed as an annualized percentage.

A currency exchange contract that traders have agreed upon for a future forward date. The forward rate is usually for one, two, three or six months, and often referred to as 30-day forward, 60-day forward, etc.

Accounts which contain all FX purchases (sales) with a future value date.

The maximum allowed counterparty credit risk for foreign exchange contracts.

A market for foreign exchange involving delivery of currency at some date in the future.

The difference between the spot rate and the forward rate for a specific foreign currency, measured in pips.

The difference between the higher forward and the lower spot price of a currency expressed as an annualized percentage.

An exchange rate for delivery on a date later than spot date.

The premium or discount of forward (i.e. future) foreign exchange swap contracts and the forward spot rates.

Trading, in which actual delivery and settlement is made at a future date. Forward trade occurs in the commodity, foreign exchange, stock, bond and futures markets.

A valuation based upon a date in the future.

A cash transaction common in many industries, including commodities, in which the buyer and seller agree upon delivery of a specified quality and quantity of goods at a specified future date. Specific price may be agreed upon in advance or there may be agreements that the price will be determined at the time of delivery on the basis of either the prevailing local cash price or a futures price.

The trade between nations that is unrestricted by governmental actions.

The department of a financial institution involving direct contact with customers.

Brokers who execute buy and sell orders, research investments, help investors develop and meet investment goals and give advice to investors. They charge commissions for their work.

An account carried by the Futures Commission Merchant or other financial institution in the actual name of the individual customer; it is the opposite of an omnibus account.

The currency of the principal economic environment in which a firm operates.

Money for investment.

An approach to the analysis of markets which examines the underlying factors which will affect the supply and demand of the market, overall economy, industry conditions, etc. (See also Technical Analysis.)

See Liquidity risk.

Movement of funds directly between two parties involving no intermediaries other than a payment or communications service.

The value of a cash flow, expressed as a cash flow, for a certain future date, by compounding at the appropriate interest rate.

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. The individual or organization must be registered with the Commodity Futures Trading commission.

A standardized binding agreement to buy or sell a specified quantity or grade of a commodity at a later date, i.e. during a specified month. Futures contracts are freely transferable and can be traded only by public auction on designated exchanges.

The national trade association for the futures industry.

An option on a futures contract.

See Foreign exchange or Forex.

See Forex book.

In technical analysis, a trading day during which the daily price range is completely above or below the previous day’s range

A trade pact ratified in 1994 to cut tariffs world-wide, reduce agricultural subsidies, standardize copyright and patent protection and set up arbitration panels. The institution changed its name to the World Trade Organization after the trade pact was ratified.

An accounting book in which trade transactions, debits and credits are recorded.

Guidelines that explain what should be done in specific accounting situations as determined by the Financial Accounting Standards Board.

See two-point arbitrage.

Large, liquid bond issues designed to be traded in numerous capital markets worldwide

An organization that treats the world as a single marketplace and strives to create standardized goods and services to meet the needs of customers worldwide.

The Chicago Mercantile Exchange’s electronic trading system that trades virtually 24 hours a day.

Greenwich Mean Time: The time at the meridian at Greenwich, England, used as the basis for standard time throughout most of the world.

The international monetary system based on the willingness of countries to trade their paper currencies for gold at a fixed rate.

Physical, tangible products.

A debt obligation of the U.S. Treasury, backed by its full faith, credit and taxing power of the U.S. government, and regarded as having no risk of default. The government issues short-term Treasury bills, medium-term Treasury notes and long-term Treasury bonds.

A person who sells an option and assumes the obligation but not the right to sell (in the case of a call) or buy (in the case of a put) the underlying futures contract or commodity at the exercise price. See also Writer.

The world-wide economic depression generally regarded as having begun with the stock market collapse of Oct. 29, 1929 and continued through most of the 1930s.

The measure of market value of goods and services produced in a country. It includes consumption, government purchases, investments, and exports minus imports. In the U.S. it is calculated by the Commerce Department.

The dollar value of all goods and services produced in a nation’s economy. Unlike GDP, it includes goods and services produced abroad.

Refers to the difference between the cost of a raw material and the combined sales income of the product(s) which results from processing.

An organization of the seven major industrialized nations. The country’s leaders meet annually to discuss to monetary and fiscal issues. The countries are the US, Canada, Britain, France, Italy, Germany and Japan.

Also known as tangible assets These investments tend to perform well during inflation any time.. Gold and other precious metals are the best-known hard assets.

The currencies that are freely tradable. Also called convertible currencies.

The world bank lending policy requiring that loans be made only if they are likely to be repaid.

A technical analysis chart, pattern that has three peaks resembling a head and two shoulders. The market’s price moves up to its first peak (the left shoulder), drops back, then moves to a higher peak (the top of the head), drops again but recovers to another, lower peak (the right shoulder). A head and shoulders top typically forms after a substantial rise and indicates a market reversal. A head and shoulders bottom (an inverted head and shoulders) indicates a market advance.

The office of a financial institution which is legally registered as the main office of the firm.

An investment made in order to reduce the risk of an adverse price movement. See also hedging.

The proportion of underlying currencies, securities or options needed to hedge a written option.

A transaction strategy used by dealers and traders in foreign exchange, commodities and securities, as well as farmers, manufactures, and other producers, to protect against severe fluctuations in exchange rates and market prices. A current sale or purchase is offset by contracting to purchase or sell at a specified future date.

The country in which a firm’s headquarters is located.

The minimum rate of return a firm or investor finds acceptable for capital investments.

The International Finance Corporation. The private-sector arm of the World Bank.

The restrictions placed on economic policies of countries receiving IMF loans.

The International Monetary Market Division of the Chicago Mercantile Exchange.

The payments a country’s residents make on capital supplied by foreigners.

A tax levied on goods entering a country.

Buying products or raw materials from other countries for use or resale in one’s own country.

Goods and services one country purchases from another country.

An option having intrinsic value. A call is in the money if its strike price is below the current price of the underlying futures contract. A put is in the money if its strike price is above the current price of the underlying futures contract.

Currencies that are not freely traded. Also called soft currencies.

The price of the home currency in terms of the foreign currency. Also called indirect quote.

The sale of a firm’s products to a domestic customer, who exports the product, either in its original form or a modified form.

See indirect exchange rate.

Goods and services sold primarily for use by industry.

A characteristic that describes the interdependence of the supply, demand, and price of a commodity. A commodity is inelastic when a price change does not create an increase or decrease in consumption; inelasticity exists when supply and demand are relatively unresponsive to changes in price. See also Elasticity.

Inflation is a time of generally rising prices.

Customers’ funds required at the time a futures or forex position is established, or an option is sold, to assure performance of the customer’s obligations. Margin in futures or forex markets is not a down payment, as it is in securities. See also Margin.

Material information that has not been made available to the general public.

An individual having access to material nonpublic information about a corporation. Insiders include directors, officers and stockholders who own more than 10% of any class of equity security of a corporation.

(1) The legal trading of securities by corporate officers based on information available to the public. (2) The illegal trading of securities by any investor based on information not available to the public.

A person or organization that trades securities or other financial instruments in large enough quantities or dollar amounts that it qualifies for special treatment and/or lower commissions. Institutional investors are protected by regulations because it is assumed that they are more knowledgeable and better able to protect themselves.

The charge or cost for using money; expressed as a percentage rate per period.

The amount of interest payable (receivable) over the full life of a fixed deposit (or loan).

Using foreign exchange swap contracts to earn a higher rate of return in the market of another currency.

A type of fee charged to an account.

Refer to interest maturity date.

The date on which interest calculation ends for a specific interest rate.

The time period between interest start date and interest maturity date.

The risk that the market value of a firm is exposed to influctuations in interest rates.

Date on which interest has to be settled as per the terms of a contract.

The date on which interest calculation starts.

A derivative in which one entity agrees to pay a fixed interest rate in return for receiving a floating interest rate from another entity.

An international trade involving the exchange of goods produced in one industry in one country, for goods produced in another industry in a different country.

Third parties that specialize in facilitating imports and exports.

The factors affecting the desirability of a firm producing a good or service itself, rather than relying on existing local firms to control production.

The theory stating foreign direct investment occurs because of the high costs of entering into production or procurement contracts with foreign firms.

The international organization having the missions to harmonize the national accounting standards used by various nations.

A company which rates the credit worthiness of banks.

The official name of the World Bank.

An entity of a U.S. bank that is exempted from domestic banking regulations as long as it provides only international banking services.

Cross-border commercial transactions with individuals, private firms, and/or public sector organizations.

World Bank affiliate that specializes in loans to less developed countries.

World Bank affiliate specializing in the development of the private sector in developing countries.

The observation that differences in nominal interest rates among countries are due to differences in their expected inflation rates.

The capital invested by residents of one country in business or other opportunities in another country.

The agency created by the Bretton Woods Agreement to promote international monetary cooperation after World War II. It makes loans and provides other services intended to stabilize world currencies and promote orderly and balanced trade. Member nations may obtain foreign currency when needed, making it possible to make adjustments in their balance of payments without currency depreciation.

The system by which countries value and exchange their currencies.

A comprehensive and ongoing management planning process aimed at developing and implementing strategies that enable a firm to compete effectively internationally.

The main body representing swap dealers. It develops guidelines for the swaps markets and products. ISDA controls the master agreement for swaps.

The trading of goods, services, or assets between a person or organization located in one country and a person or organization located in another country.

A firm directly engaged in international trade (importing and exporting) of goods for its own account.

The selling of goods by a firm in one country to an affiliated firm in another country.

The trade between two firms in different countries involving the exchange of goods produced by the same industry.

The absolute value of the in the money amount; that is, the amount that would be realized if an in the money option were exercised.

A firm or individual that solicits and accepts commodity futures orders from customers but does not accept money, securities or property from the customer. An IB must be registered with the Commodity Futures Trading Commission and must carry all of its accounts through an FCM on a fully disclosed basis.

Futures or forward market in which the nearer months are selling at premiums over the more distant months; it is, characteristically, a market in which supplies are currently in shortage.

Long-term debt instruments having lower yields than short-term debt instruments.

Expenditure on real or financial assets with the expectation of an increase in value.

A bank in the business of raising capital for corporations and municipalities. It may not accept deposits or make commercial loans.

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

The currency in which an international transaction is invoiced.

International Options Market Division of the Chicago Mercantile Exchange.

Letter of credit that cannot be changed without the consent of all parties, buyer, seller, and the issuing bank.

(1) The entity, such as a corporation or municipality, that offers its securities for sale. (2) The creator of an option: the issuer of an over-the-counter option is the option writer, and the issuer of a listed option is the Options Clearing Corporation.

The agreement among central bankers made in 1976, allowing each country to adopt whatever exchange-rate system it wished.

A special form of strategic alliance created when two or more firms agree to work together and jointly in a specific business enterprise.

The economics theory that active government intervention in the marketplace is the best method of ensuring economic growth and stability.

An option activated only when the price of the option’s underlying instrument or market reaches a certain level above or below an agreed upon range.

An option that becomes worthless when the price of the option’s underlying instrument or market reaches a previously agreed upon point.

A composite of 7 economic measurements that tend to trail developments in the economy as a whole. Lagging indicators are believed to confirm long-term trends. These indicators are duration of unemployment, ratio of inventories to sales, index of labor costs per unit of output, average prime rate, outstanding commercial and industrial loans, ratio of outstanding consumer installment credit to personal income and consumer price index for services.

Day on which trading ceases for the maturing (current) delivery month.

A composite of 11 economic measurements that tend to change in the economy as a whole. Leading indicators are believed to predict changes in the economy. The components are: average work week, unemployment claims, orders for consumer goods, slower deliveries, plant and equipment orders; building permits, durable order backlog, materials prices, stock prices, M2 money supply and consumer expectations.

Money management technique in which a multi-national corporation attempts to increase its holding of currencies and assets denominated in currencies that are expected to rise in value, and to decrease its holdings of currencies and assets denominated in currencies that are expected to fall in value.

A document issued by a bank promising to pay the seller a specific amount if all conditions specified in the letter of credit are met. It’s used mostly in foreign trade but also is used domestically to guarantee payment of securities for other financial transactions.

Essentially, it allows an investor to establish a position in the marketplace by depositing funds that are less than the value of the contract. The use of borrowed assets by a business to enhance the return to the owner’s equity.

A standardized agreement calling for the delivery of a commodity with payments against the total cost, spread out over a period of time. Its principal characteristics include standard units and quality of a commodity and terms and conditions of the contract, payment and maintenance of margin close out, by offset or delivery (after payment in full) and no right to or interest in a specific lot of the commodity. Leverage contracts are not traded on exchanges.

The firm or individual through whom leverage contracts are entered. LTMs must be registered with the Commodity Futures Trading Commission.

The claims against a corporation or other entity. They include accounts payable, wages and salaries, dividends, taxes and obligations such as bonds, debentures and bank loans. A legal obligation to pay a debt owed.

London Interbank Offered Rate. A floating interest rate that serves as a base for many lending agreements.

Period between the beginning of trading in a particular futures contract or other derivative and the expiration of trading in the delivery month.

A price that has advanced or declined the limit permitted during one trading session as fixed by the rules of a contract market.

An order in which the customer sets a limit on either price or time of execution, or both, as contrasted with a market order, which implies that the order should be filled at the most favorable price as soon as possible.

Common language

Assets consisting of cash and other assets readily convertible into cash without a substantial loss in value.

A market where selling and buying can be accomplished easily due to the presence of many interested buyers and sellers.

(1) The sale (or purchase) of futures contracts or other derivatives to offset the obligation to take (or make) delivery. (2) The process of converting stock or other assets into cash.

The ease of converting an asset to cash.

A broadly traded market where buying and selling can be accomplished with small price changes, and bid and offer price spreads are narrow.

The risk of insufficient liquidity to meet cash flow requirements on a certain date in the future. Also known as funding risk.

London Metal Exchange.

It is the primary means of government agricultural price support operations. The government lends money to farmers at announced rates, with using the crops as collateral. Default on these loans is the primary method by which the government acquires stocks of agricultural commodities.

The Central bank(s) in the country of domicile of the financial institutions foreign office.

Legal tender of the country where a firm is located.

The interest rate that London banks charge each other for short-term Eurocurrency loans.

Has markets in Aluminum, Tin, Copper, Lead, Nickel and Zinc.

Formally known as The International Stock Exchange of the United Kingdom and the Republic of Ireland Limited, or the ISE for short. Has markets in Equities, Options, Unlisted (USM) and UK ADR (American Depository Receipts) securities.

To own (buy) to a security, currency, futures contract, commodity, or derivative.

Buying futures contracts to protect against possible increased prices of commodities. See also Hedging.

An excess of assets (and/or forward purchase contracts) over liabilities (and/or forward sale contracts) in the same currency. A dealer’s position when the net of his or her purchases and sales leave him or her in a net-purchased position. See also short position and net position.

(1) A product having a maturity or history of 5 years or longer. (2) A product having a long term lifetime stipulated by a regulating authority, usually a Central bank.

Portfolio investments with maturities of more than one year.

The agreement made in 1987 among Central Bankers to stabilize the value of the U.S. dollar.

A category of the money supply that includes all coins, currency and demand deposits (that is, checking accounts and NOW accounts).

A category of the money supply that includes M1 in addition to all time deposits, savings deposits and noninstitutional money-market funds.

A category of the money supply that includes M2 in addition to all large time deposits, institutional money-market funds, short-term repurchase agreements and certain other large liquid assets.

Common name given to the Treaty on European Union (251).

The political risk affecting all firms operating within a country.

The amount of money that must be maintained on deposit while a futures and other derivative position are open. If the equity in a customer’s account drops under the maintenance margin level, the broker must issue a call for money that will restore the customer’s equity in the account to required initial levels. See also Margin.

A flexible currency exchange system in which government intervention plays a major role in determining exchange rates. Also called a dirty float.

(1) In the futures industry, it is an amount of money deposited by both buyers and sellers of futures contracts to ensure performance against the contract. It is not a down payment. (2) In the stock market, the amount of cash that must be put up in a purchase of securities. If the margin requirement is 50%, the buyer must put up 50% of the purchase price; the buyer must borrow the rest.

A brokerage account allowing customers to buy securities and/or other financial instruments with money borrowed from the brokerage.

A call from a brokerage firm to a customer to bring margin deposits back up to minimum levels required by exchange regulations; similarly, a request by the clearinghouse to a clearing member firm to make additional deposits to bring clearing margins back to minimum levels required by clearinghouse rules. A demand upon an investor to put up more collateral for securities bought on credit.

The difference between the highest current bid price among dealers and the lower price that a dealer pays to a customer.

(1) Any area or condition where buyers and sellers are in contact for doing business together. (2) The generic term for a financial instrument.

The simultaneous purchase and sale of the same security, futures, or other financial instrument in different markets to take advantage of a price disparity between the two markets.

An order to buy or sell futures contracts, stocks or other financial instrument which is to be filled at the best possible price and as soon as possible. A limit order, in contrast, may specify requirements for price or time of execution.

The potential for an investor to experience losses owing in day-to-day fluctuations in the prices at which a financial instrument can be bought or sold.

Shifting money in and out of investment markets in an effort to take advantage of rising prices and avoid being stung by downturns.

The price at which investors buy or sell a financial instrument at a given time. Market value is determined by actual bids and offers made by buyers and sellers.

Price (value) determined at arms’- length between a willing buyer and a willing seller, each acting rationally in his or her own self- interest. May be estimated in the absence of a monetary transaction.

The difference between the lowest current offering price among dealers and the higher price a dealer charges a customer.

Financial transactions made outside of an auction or negotiation process. Buy and sell orders for the same financial instrument, at the same price, are paired and executed, often by computer.

Simultaneously entering identical (or nearly identical) buy and sell orders for a financial instrument to create the appearance of active trading in that market.

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.

(1) Date on which the principal amount of a note, draft, acceptance, bond or other debt instrument becomes due and payable. Also, termination or due date on which an installment loan must be paid on full. (2) The date agreed upon which a fixed loan/deposit matures. (3) When a bond expires and the loan must be paid back in full.

See Limit Move.

Mid America Commodity Exchange.

(1) A financial product having a lifetime between 1 to 5 years. (2) A product having a medium term lifetime as stipulated by a regulating authority, such as a Central bank.

(1) A broker-dealer in which at least one of the principal officers is a member of the New York Stock Exchange, another exchange, a self-regulatory organization, or a clearing corporation. (2) A member of the National Futures Association.

The economic belief that a nation’s wealth is measured by its holdings of gold and silver.

The sale of a good to a resident of a foreign country.

he purchase of a good from a resident of a foreign country.

The political risk that effects only specific firms or a specific industry operating within a country.

See Point

An untrue or misleading statement concerning a material fact relied upon by a customer when making his/her decision about an investment.

A line that is plotted to represent the difference between today’s price and the price of a fixed number of days ago. Momentum can be measured as the difference between today’s price and the current value of a moving average. Often referred to as momentum oscillators.

Measures of a country’s money supply. See M1, M2 and M3.

The government entity, in charge of executing regulations, which have to be fulfilled by financial institutions.

The sum of reserve accounts of financial institutions at Federal Reserve banks and currency in circulation. It is the ultimate source of the nation’s money supply and is controllable, to some degree, by Federal Reserve monetary policy.

A government’s efforts to control its money supply. In the U.S., the actions of the Federal Reserve Bank.

A medium of exchange, currency.

The total stock of bills, coins, loans, credit and other liquid instruments in the economy. See also M1; M2; M3.

A mathematical procedure to smooth or eliminate the fluctuations in data. Moving averages emphasize the direction of a trend, confirm trend reversals, and smooth out price and volume fluctuations or “noise” that can confuse interpretation of the market.

A system which can process transactions, and post balances in more than one currency.

World Bank affiliate that offers political-risk insurance to investors in developing countries.

The netting of transactions between three or more business or trading units.

An incorporated firm that has extensive involvement in international business, engages in foreign direct investment, and/or owns or controls value-adding activities in more than one country.

A business that may or may not be incorporated and has extensive involvement in international business.

Any organization — profit making or not-for-profit — with extensive international involvement.

The expansion of the money supply that results from a Federal Reserve System member bank being able to lend more money than it takes in. A small increase in bank deposits generates a far larger increase in available credit.

An investment company that continuously offers new equity shares in an actively managed portfolio of securities. All mutual fund shareholders participate in the gains or losses of the fund. The shares are redeemable on any business day at the net asset value. Each mutual fund’s portfolio is invested to match the objective stated in the offering prospectus.

The National Association of Securities Dealers, Inc. A self-regulatory body which regulates and registers security deals. NASD oversees the NASDAQ and NASDAQ International markets.

National Association of Securities Dealers Automated Quotation System. (NASDAQ) The nation wide quotation system for up-to-the-minute bid and asked quotations on over-the-counter stocks.

The nationwide electronic quotation system for up-to-the-minute bid and asked quotations on over-the counter stocks.

The theory that states success in international trade is based upon the interaction of four elements: factor conditions, demand conditions, related and supporting industries, and firm strategy, structure, and rivalry.

The futures industry self-regulatory organization.

Net asset value. The value of a mutual fund share, calculated by dividing the total net asset value of the fund by the number of shares outstanding. The value of a mutual fund share is calculated once a day, based on the closing market price for each security in the fund’s portfolio. It is computed by deducting the fund’s liabilities from assets of the portfolio.

The futures contract delivery month closest to maturity.

The difference between the closing price of a financial instrument on the trading day reported and the previous day’s closing price. In over-the-counter transactions, the term refers to the difference between the closing bids.

( 1) A financial institution has a position in foreign currency when its assets, including future contracts to purchase, and liabilities, including future contracts to sell, in that currency are not equal. An excess of assets over liabilities is called a net “long” position and liabilities in excess of loss, because with each day, that position (asset) is convertible into fewer units of local currency. A short position in a currency which is appreciating represents a loss, because with each day, satisfaction of that position (liability) costs more units of local currency. (2) The difference between the open long (buy) contracts and the open short (sell) contracts held by any one entity in any one futures contract month or in all months combined.

The largest stock exchange in the United States. It is a corporation, operated by a board of directors, and it is responsible for administering the Exchange and member activities, listing securities, overseeing the transfer of members’ seats on the Exchange and determining whether an applicant is qualified to be a specialist.

National Futures Association. The futures industry self-regulatory organization.

A mutual fund sold without a commission or sales charge. The shares are distributed directly by the investment company.

Declared price for a futures or forward market used in place of a closing price when no recent trading has taken place in that particular delivery month. Typically it is an average of the bid and asked prices.

Declared price for a futures or forward market used in place of a closing price when no recent trading has taken place in that particular delivery month. Typically it is an average of the bid and asked prices.

The interest rate stated on the face of a financial obligation (such as a bond or promissory note).

Failure to disclose a material fact to a customer regarding an investment.

A governmental regulation, policy, or procedure other than a tariff that has the effect of restricting international trade.

When long-term debt instruments have higher yields than short-term debt instruments.

Adjusting to data, such as a price series, to put it within normal or more standard range. A technique sometimes used to develop a trading system.

A short-term debt security, usually maturing in five years or less. See also Treasury note.

See First Notice Day.

See Delivery Notice

1. Net Present Value. 2. No Par Value.

New York Futures Exchange

New York Mercantile Exchange

New York Stock Exchange Inc.

New York Stock Exchange. The largest stock exchange in the United States. It is a corporation, operated by a board of directors and it is responsible for administering the Exchange and member activities, listing securities, overseeing the transfer of members's seats on the Exchange and determining whether an aplicant is qualified to be a specialist.

The American Office of the Comptroller of the Currency. The U.S. regulatory body which has a role in the regulation of foreign banks operating in America.

Open Currency Position

An indication of willingness to sell at a given price, also referred to as an ask, or asking price. The opposite of bid.

Balance of Payments account that records changes in official reserves owned by a central bank.

Balance of Payments balance that measures changes in a country’s official reserves.

The liquidation of a purchase of futures, forward or other financial instrument through the sale of an equal number of the same delivery months, or the covering of a short sale of futures forward, or other financial instrument through the purchase of an equal number of the same delivery month. Either action transfers the obligation to make or take delivery of the actual financial instrument to someone else.

Agreement between a multinational corporation and a host government in which the multinational corporation agrees to provide economic benefit to the host government in return for purchase of a good or service by the host government.

A form of countertrade in which a portion of the exported good is produced in the importing country.

An account carried by one futures commission merchant or financial institution with another where the transactions of two or more persons are combined, rather than designated separately, and the identity of the individual accounts is not disclosed.

The period at the beginning of a trading session during which all transactions are considered made “at the open”.

(1) The net sum of the open currency spot position and the open currency forward position, being the measure of the foreign exchange risk. (2) The open currency position is the difference between assets and liabilities priced in foreign currency, plus the forward (conditional and unconditional) forex purchase and sales. The open currency position is the measure of the foreign exchange risk.

The total number of futures contracts or market position of a given commodity which have not yet been offset or fulfilled by delivery of the actual; the total number of open transactions where each transaction has a buyer and a seller.

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

The unrealized gain or loss on open positions.

The range of closely related prices at which transactions took place at the opening of the market; buying and selling orders at the opening might be filled at any point within such a range.

The day-to-day costs of running a business.

The profit realized from the operation of a business.

An agreement that represents the right to buy or sell a specified amount of an underlying security, a stock, bond, futures contract, etc. at a specified price within a specified time. The purchaser acquires a right, and the seller assumes an obligation. Stock options are traded on several exchanges, including the Chicago Board of Options Exchange, the American Stock Exchange, the Philadelphia Stock Exchange, the Pacific Stock Exchange and the New York Stock Exchange; futures options are traded on all U.S. futures exchanges; over-the-counter options are traded with a wide variety of financial institutions.

The party who pays a premium to obtain the rights under an option.

The right, but not the obligation, to buy sell a specific quantity of an underlying instrument on or before a specific date in the future. The seller of the option has the obligation to sell the underlying instrument (in the case of a put option) or buy it from the option buyer (in the case of a call option) at the excercise price if the option is excercised.

The product of an option's principal amount and it's respective delta calculated according to Black and Scholes.

The purchase of a foreign currency for delivery between two future specified dates at a specific price.

The sale of foreign currency for delivery between two future specified dates at a specified price.

The period between the option start date and the expiry date of an option contract.

The money, securities or property the buyer pays to the writer (grantor) for granting an option contract, thus conveying the rights of the option to the buyer.

The party who is obligated to perform if an option is exercised by the option buyer.

The handling of a customer order by a broker, including receiving the order verbally or in writing from the customer, transmitting it to the trading floor of the exchange where the transaction takes place, and returning confirmation (fill price) of the completed order to the customer.

An instruction sent by a client, or his authorized representative, to buy a given quantity of an identified financial instrument under specific conditions.

An instruction sent by a client or his authorized representative, to sell a given quantity of an identified financial instrument under specified conditions.

See Limit Order, Market Order, Stop Order.

The term applied to the initial deposit of margin money required of clearing member firms by clearinghouse rules.

(Over-the-counter-market). Trading in financial instruments transacted off organized exchanges. OTC-trading includes transactions among market-makers and between market-makers and their customers. The OTC trading takes place often over computer and telephone networks that link brokers and dealers around the world.

A call option with a strike price higher, or a put option with a strike price lower than the current market value of the underlying asset. A put option is out of the money when the price of the underlying is above the option’s exercise price. An option contract is out-of-the-money when there is no benefit to be derived from exercising the option immediately.

Maximum allowed total open currency position on a particular point in time expressed in an agreed upon currency.

A technical analysis term that the market price has risen too steeply and too fast in relation to underlying fundamental or other factors.

U.S. government agency that promotes U.S. international business activities by providing political risk insurance.

A technical analysis term for a market price that has experienced much more and stronger selling than the fundamentals justify.

Negative open currency position.

Refer to OTC

A financial instrument, whose value is designed to track the return on commodity, stocks, bonds, currencies or some other benchmark, that is traded over-the-counter or off organized exchanges. Also called an OTC derivative.

Trading in financial instruments transacted off organized exchanges. OTC-trading includes transactions among market-makers and between market-makers and their customers. The OTC trading takes place often over computer and telephone networks that link brokers and dealers around the world.

When resources owned by a firm provide the firm a competitive advantage over its industry rivals.

Profit and Loss account.

See Purchase and Sale Statement.

Price/Earnings ratio.

See special drawing rights.

(1) 100 percent of principal value. (2) The dollar amount assigned to a security by the issuer.

Official price of a currency in terms of gold.

Equal standing.

A financial instrument which combines a forward foreign exchange deal with a put or call option.

A direct or indirect interest in the equity of a company. The active involvement in a market.

A form of business organization in which two or more individuals or entities manage a business and are equally and personally liable for its debts and liabilities.

Earnings received from a rental property, limited partnership or other enterprise in which the individual is not actively involved.

A loss incurred through a passive investment.

Stabilizing a country’s currency through its purchase or sale by the country’s Central Bank. The gold standard pegged the value of a country’s currency to gold.

The average income per person in a country.

A time period.

An individual’s total earnings from wages, passive business enterprises and investments.

Unit to express differences between exchange rates. The minimum incremental price change in the interbank markets.

A specially constructed arena on the trading floor of some exchanges where trading is conducted by open outcry. On other exchanges, the term “ring” designates the trading area.

The agreement in 1985 among Central Bankers to allow the U.S. dollar to fall in value.

Pledged amount is the whole or a part of the principal amount of a collateral that will be used as a security for a financial transaction.

The percentage of the principal amount of a collateral that will be used as security for a financial institution.

Pledging is the action of putting up anything as security for a loan or other financial transaction.

The minimum fluctuation in prices or options premiums. Also called ticks.

A statement prepared by Futures Commission Merchants or financial institutions to show profit or loss on all open positions by computing them to an official closing or settlement price.

Change in the political environment that may adversely affect the value of a firm.

The systematic analysis of the political risks when operating a foreign country or making an investment in a foreign financial instrument.

See Commodity Pool

A selection of financial instruments held by a person or institution. Portfolios are often designed to spread investment risk.

The entity responsible for the investment strategy and managing day-to-day portfolio trading.

A market commitment. For example, a buyer of futures contracts is said to have a long position and, conversely, a seller of futures contracts is said to have a short position.

The maximum number of futures contracts that one can hold in certain regulated commodities, according to the provisions of the CFTC.

The managing of the various financial positions of a firm so that they do not exceed the established guidelines for the firm.

A trader who either buys or sells financial instruments and holds them for an extended period of time, as distinguished from the day trader, who will normally initiate and liquidate positions within a single trading session.

(1) The amount that an option buyer pays to an option seller. (2) The difference between the higher price paid for a financial instrument and the financial instrument’s face amount at issue. (3) The additional payment allowed by exchange regulations for delivery or higher-than-required standards or grades of a commodity against a futures contract. In speaking of price relationships between different delivery months of a given commodity, one is said to be trading at a premium over another when its price is greater than that of the other

Refer instead to interest premium.

The value of a future cash flow expressed as a today’s cash flow by discounting at the appropriate interest rate.

Maximum price advance or decline from the previous day settlement price permitted for a futures in one trading session by the rules of the exchange.

Comparing the prices of different common stocks by determining how much the market is willing to pay for a share of each corporation’s earnings. Calculated by dividing the market price stock by the earnings per share.

The principal market for the purchase and sale of a cash commodity.

The minimum interest rate that commercial banks charge their prime or most creditworthy customers.

A person that is a principal of an entity; 1) A principal may be a sole proprietary, general partner, officer or director, or person occupying a similar status or performing similar functions, having the power, to exercise a control over the activities of the entity; 2) Any holder or any beneficial owner of 10 percent or more of an entity.

See Comity, Principle of

Wires leased by various firms and news agencies for the transmission of information to branch offices and subscriber clients.

The sale of publicly owned property to private investors.

The member of the CFTC’s staff in the Office of Proceedings who maintains the Commission’s reparation docket, assigns reparation cases to an appropriate CFTC official, and acts as custodian of the records of proceedings.

A person or entity that produces (grows, mines, etc.) a commodity.

(1) A finished consumer good. (2) A “packaged” financial instrument, e.g. investment product.

A strategic alliance in which two or more firms manufacture products or provide services in a shared or facility.

The economic measure of efficiency summarizing the value of outputs relative to the value of inputs.

An agreement to pay an borrowed amount on a future date.

Grain storage facilities, licensed and regulated by state and federal agencies, in which space is rented out to whomever is willing to pay for it; some are also approved by the commodity exchanges for delivery of commodities against futures contracts.

A statement sent by a financial institution house to a customer when a futures or options position or other financial instrument has been liquidated or offset. The statement shows the number of positions bought or sold, the gross profit or loss, the commission, other fee charges, and the net profit or loss on the transaction. Sometimes combined with a confirmation statement.

The total actual cost paid by a person for entering into a financial transaction.

The theory stating prices of tradable goods, when expressed in a common currency, will tend to equalize across countries as a result of exchange-rate changes.

An option that gives the option buyer the right, but not the obligation, to sell the underlying financial instrument at a particular price on or before a particular date. e.g., the right but not an obligation to sell foreign currency at a certain rate.

The selling of a put(s) at a lower strike price to pay for a put(s) at a higher strike.

See Present Value

The use of profits on existing futures or forward positions as margin to increase the size of the position, normally in successively smaller increments.

The economic grouping of countries, consisting of Canada, the European Union, Japan and the United States.

A research technique that deals with factors that cannot be precisely measured such as employee morale and management expertise.

A research technique that deals with measurable assets such as the value of assets and the cost of capital.

The actual price or the bid or ask price of a security, commodity, futures, option, currency or other financial instrument at a particular time. Often called quote.

The actual price or the bid or ask price of a security, commodity, futures, option, currency or other financial instrument at a particular time.

An upward movement of prices

The point where a rally stalls. A bull move will usually make several intermediate rally tops over its life.

The theory that the past movement or direction of the price of a stock or other market cannot be used to predict its future movement or direction.

The difference between the high and low price during a given period, a single trading session, a week, a month, etc.

A percentage or measure of value. See also interest rate and cross rate.

A short term countertrend movement of prices.

A trust which invests in a variety of real estate. REITs are managed by one or more trustees.

Current, as with quotes or news. Opposite of delayed.

A situation, such as bankruptcy, in which a receiver has been appointed. A receiver is a person appointed by a court to take custody and to control, and to manage the property or funds, pending judicial action.

A downturn in economic activity, lasting from six to eighteen months. Generally two consecutive quarters of decline in a nation’s gross domestic product.

The date on which a shareholder must own a company’s stock to be entitled to receive a dividend.

An upward movement of prices following a decline. In a business cycle, the period after a recession when the gross domestic product increases.

The process of importation of a good into a country for immediate exportation.

A charting technique. Relative strength index is used to identify price tops and bottoms by identifying specific levels usually 30 and 70 on a scale of 0 to 100 on a price chart.

The currency in which the financial accounts and statements of the reporting entity are maintained/expressed.

Sizes of futures positions set by the exchange and/or by the CFTC at or above which commodity traders must make daily reports to the exchange and/or the CFTC as to the size of the position by commodity, by delivery month, and according to the purpose of trading, i.e., speculative or hedging.

See Broker or Associated Person (AP)

The date a financial contract or agreement with a floating rate ends.

In the technical analysis, the price level where a trend stalls. Prices must build momentum to move through resistance. It is the opposite of a support level.

The individuals or firms against which the complaint has filed and a reparations award is sought.

The right of holders of futures contracts who have been tendered a delivery notice through the clearinghouse to offer the notice for sale on the open market, liquidating their obligation to take delivery under the contract; it is applicable only to certain commodities and only within a specified period of time.

In technical analysis, price movement in the opposite direction of the prevailing trend. Also described as a Correction.

A calculation of a corporation’s profitability, specifically its return on assets, calculated by dividing after-tax income by tangible assets.

The profit or loss resulting from a financial transaction, often expressed as an annual percentage rate.

Determining the value or replacement costs of positions at the market prices on a particular moment in time. Revaluation may be required due to changes in currencies, interest rates, or the market value of a collateral.

Money a firm takes in, including interest earned and receipts from sales, services provided, rents and royalties.

A letter of credit that can be changed by a financial institution without the consent of the buyer and the seller.

A circular area on the trading floor of an exchange where traders and brokers stand while executing trades. Some exchanges use pits rather than rings.

The potential of loosing money.

The management engaged to control and monitor the risks of the bank, financial institution, business entity or individual.

A system of settling exchange transactions where each trade has to be paid for in full at the end of the settlement period. The alternative settlement method is called trading account settlement.

A quantity of a commodity equal in size to the corresponding futures contract for the commodity, as distinguished from a job lot, which may be larger or smaller than the contract.

The combination of an initiating purchase or sale of a futures contract or other financial instrument and offsetting sale or purchase of an equal number of futures contracts or other financial instruments, of the same specifications. Commissions and fees for transactions are charged on the round turn.

compensation paid by a licensee to a licenser.

Society for World-wide Interbank Financial Telecommunication. A private international telecommunication service for member banks and qualified participants.

The account in which securities are deposited or withdrawn.

In commodities, usually the lowest quality acceptable for delivery in satisfaction of futures contracts.

Government-imposed restraints or restriction against commerce with a foreign country.

A speculator on the trading floor of an exchange who buys and sells rapidly, with small profit or losses, holding positions for only a short time during a trading session. Typically, a scalper will stand ready to buy at a fraction below the last transaction price and to sell at a fraction above, thus creating market liquidity.

American Securities and Exchange Commission.

A market for financial instruments which have been previously issued.

Secured amount is the amount of a facility which is secured by one or more collateral.

The Federal agency created by Congress to regulate the securities markets and protect investors. It has five commissioners appointed by the President of the United States and approved by the Senate. The SEC enforces, the Securities Act of 1933, the Securities Exchange Act of 1934, the Trust Indenture Act of 1939, the Investment Company Act of 1940 and the Investment Advisers Act of 1940.

A nonprofit membership corporation created by an act of Congress to protect clients of brokerage firms that are forced into bankruptcy. Membership is composed of all brokers and dealers registered under the Securities Exchange Act of 1934, all members of national securities exchanges and most NASD members. SIPC provides customers of these firms up to $500,000 coverage for cash and securities held by the firms (although coverage of cash is limited to $100,000).

Under the Securities Exchange Act of 1934, this includes any note, stock, bond, investment contract, debenture, certificate of interest in profit-sharing or partnership agreement, certificate of deposit, collateral trust certificate, preorganization certificate, option on a security, or other instrument of investment. Also categorized as securities are interests in oil and gas drilling programs, real estate condominiums and cooperatives, farmland or animals, commodity option contracts, whiskey warehouse receipts, multilevel distributorship arrangements, and merchandising marketing programs.

See margin

A special account used to hold and separate customer’s assets from those of the broker or firm.

To convey ownership of a security or other asset for money or value.

Selling futures contracts to protect against possible decreased prices of the underlying cash market which will be sold in the future.

A period of intensified selling in a market that pushes prices sharply lower.

The trade involving intangible products between residents of different countries.

Functions or tasks that have value.

(1) The closing price, or a price within the range of closing prices, which is used as the official price in determining net gains or losses at the close of each trading session. (2) Payment of any amount of money under a contract.

One who has sold a cash commodity, a commodity futures contract or other financial instrument; a long, in contrast, is one who has bought a cash commodity or futures contract.

Trades that reverse, or close out, short-sale positions.

Selling futures to protect against possible decreasing prices of an underlying cash market. See also Hedging.

Total number of shares of a given stock that have been sold short and not yet repurchased.

In the stock market, a trading strategy that anticipates a drop in a share’s price. Stock or another financial instrument is borrowed from a broker and then sold, creating a short position.

Occurs when the price of a financial instrument rises sharply, causing many short sellers to buy the security to cover their positions and limit losses.

A product having a lifetime as stipulated by a regulating authority, usually a Central bank.

Portfolio investments with maturities of one year or less.

Singapore International Monetary Exchange.

A futures contract where the underlying deliverable is the common stock of a publicly traded corporation.

See inconvertible currencies.

Loans made by the World Bank Group that are not expected to be repaid.

Credits granted by the IMP that can be used to settle transactions among central banks; also called paper gold.

A tax assessed as a specific amount per unit of weight or other standard measure.

One who attempts to anticipate price changes and make profits through the sale and/or purchase of financial instrument. A speculator with a forecast of advancing prices hopes to profit by buying futures contracts and then liquidating at a higher price. A speculator with a forecast of declining prices hopes to profit by selling then buying at a lower price in the future.

Market for the immediate delivery of the product and immediate payment. May also refer to the nearest delivery month of a futures contract.

See Cash Commodity.

Contract with a present delivery date.

A market for buying or selling commodities or foreign exchange for immediate delivery and for cash payment.

The maturity date is spot date.

The actual price at which a particular cash commodity or financial instrument can be bought or sold immediately.

Exchange rate for delivery on spot date.

(1) The purchase of one futures or forward delivery month against the sale of another futures or forward delivery month of the same commodity. The purchase of one delivery month of one futures or forward against the sale of the same delivery month of a different futures or forward. The purchase of one future or forward in one market against the sale of that future or forward in another market, to take advantage of and profit from the distortions from the normal price relationships that sometimes occur. (2) In a quotation, the difference between the bid and the ask prices of a market (3)The difference between two or more prices.

The pricing policy of a firm that charges the same price for its products and services regardless of where they are sold.

A statement sent by a firm which has accepted one or several orders to buy and/or sell financial instrument which identifies those orders, that have not been executed.

Index of market prices of a particular group of stocks, such as the S&P 500, the Dow Jones and the NASDAQ Composite Index.

Based on stock market indexes, including Standard & Poor’s 500, Value Line, NYSE composite, Nikkei 225, the Major Market Index, and Over-the-Counter Index, these instruments are used by investors concerned with price changes in a large number of stocks, or with major long-term funds in the stock market indexes. Stock Index Futures are settled in cash and are generally quoted in ticks of .05. To determine the contract value, the quote is generally multiplied by $500.

A risk management technique used to close out a losing position at a given point. A stop loss order is placed at the given point.

An order that becomes a market order when a particular price level is reached. A sell stop is placed below the market, a buy stop is placed above the market. Sometimes referred to as a stop loss order.

A business arrangement in which two or more firms choose to cooperate for mutual benefit.

The major objectives of a firm pursuing a particular course of action.

The process of developing a international strategy.

Making and carrying out plans to achieve a goal. More of an art than a science.

A specified price at which an investor can buy or sell an option’s underlying financial instrument. The exchange rate, interest rate, or market price that is guaranteed by an option transaction.

A loan to a customer that is subordinated to (comes after or is junior to) other claims.

A separately incorporated overseas banking operation.

A trade-law provision under which the U.S. identifies trade practices it considers unfair and can apply sanctions.

The total amount of a good or service available for purchase by consumers.

A price level at which a declining market has stopped falling. Once this level is reached, the market trades sideways for a period of time or rebounds. It is the opposite of a resistance price range.

An agreement, or contract that exchanges one financial instrument return for another’s return.

The international capital market in which two firms can exchange financial obligations.

Price for a swap contract expressed as the difference between the two rates involved, respectively spot/forward and forward, measured in pips.

Transactions involving the simultaneous purchase and sale of a foreign currency with delivery at two different points in time.

Liquidation of a position in one delivery month of a futures or forward and simultaneous initiation of a similar position in another delivery month of the same market. When used by hedgers, this tactic is referred to as “rolling forward” the hedge.

A tax placed on an imported good.

Countries that charge low, often zero, taxes on incomes and offer an attractive business climate.

An approach to analysis of markets and anticipated trends of market prices. It examines the technical factors of market activity. Technicians normally examine patterns of price range, rates of change, changes in volume of trading, and open interest. There data are often charted to show trends and formations which serve as indicators of likely future price movements.

The difference, or spread, between yields on Treasury bills and those on Eurodollars.

The act on the part of the seller of futures contracts of giving notice to the clearinghouse, that he or she intends to deliver the physical commodity in satisfaction of the futures contract.

In finance this normally means a distinction is made according to the general criteria original and remaining. A further distinction is made according to the special criteria longest and average.

The private-sector arm of the World Bank.

See Absolute Advantage, Theory of

See Comparative Advantage, Theory of

See National Competitive Advantage, Theory of

See Purchasing Power Parity

Measures the change in the theoretical value of an option when the outstanding time before it expires is changed.

See Depth of the market

An arbitrage based upon exploiting difference between the direct rate of exchange between two currencies and their cross-rate of exchange using a third currency.

A minimum upward or downward movement in the price of a security, futures or other financial instrument.

Any amount by which an option premium exceeds the option’s intrinsic value.

The laws covering wrongful acts, damages, and injuries.

The sum of the absolute values of the open currency positions expressed in an agreed upon currency.

An investment’s total return reflected not only the income that it pays out from interest or dividends but also any change in its share price or principal value.

The exchange of goods, services, or assets between one person or organization and another.

The day and, the place (e.g. stock exchange or other market) where the deal was agreed/ executed.

British term for trade in services.

British term for to merchandise trade.

People who negotiate prices and execute buy and sell orders, either on behalf of an investor or for their own account.

A pause in the trading of a particular security on one or more exchanges, usually in anticipation of a news announcement or to correct an order imbalance.

An established set of price boundaries with a high and a low price within which a market will spend a marked period of time.

(1) The costs of negotiating, monitoring, and enforcing a contract. (2) All the costs of executing a financial transaction.

The currency in which an international transaction is denominated.

The financial risks of an international transaction affecting exchange rate movements after the firm is legally obligated to the transaction.

A fee charged for transaction activity.

A tax levied on goods as they pass through one country on route for another.

The process of transforming the accounting statements of a foreign subsidiary into the home country’s currency.

A marketable U.S. Treasury debt security with a maturity of less than one year.

A marketable, fixed-interest U.S. Treasury debt security with a maturity of more than ten years.

The management of financial flows and their currency and interest-rate risks.

A marketable, fixed-interest U.S. Treasury debt security with a maturity of between one and ten years.

The treaty signed in 1957 that established the European Economic Community.

The treaty signed in 1992 to furthering economic and political integration of the EC’s members. Commonly known as the Maastricht Treaty.

The general direction, or tendency, of a market.

A line drawn that connects either a series of highs or lows in trend. The trend line can represent either support (as in an uptrend line) or resistance (as in a downtrend line). Consolidations are marked by horizontal trend lines.

The grouping of countries that dominate the world economy, consisting of the European Union, Japan, and the United States.

The paradox resulting from reliance on the U.S. dollar as the primary source of liquidity in the Bretton Woods system. For trade to grow, foreigners needed to hold more dollars; the more dollars they held, the less faith they had in the U.S. dollar, thereby undermining the Bretton Woods system.

Slang for the quarterly expiration of stock-index futures, stock-index options and options on individual stocks. Trading associated with the expirations inflates stock market volume and can cause volatility in prices. Occurs on the third Friday of March, June, September and December.

The end or bottom of a period of declining business activity throughout the economy.

The purchase of an investment product in one geographic market for immediate resale in a second geographic market in order to profit from price difference between the markets. Also called geographic arbitrage.

The pricing policy of a firm setting one price for domestic sales and a second price for international sales.

Purchase or sale of commodity futures, options, or other financial instruments for a customer’s account without the customer’s permission.

The specific futures contract that the option conveys the right to buy (in the case of a call) or sell (in the case of a put).

(1) The date on which the funds are at the disposal of the receiver. (2) Date when funds due from a financial transaction are required to be delivered. (3) The date when the amount relating to a financial transaction is actually to effect the balance of the account.

A price system that allows price movements for larger than normally allowed price movements under certain conditions. In periods of extreme volatility, some exchanges permit trading and price levels to exceed regular daily limits. At such time, margins may be automatically increased.

A mid-session call by the clearinghouse on a clearing member requiring the deposit of additional funds to bring clearing margin monies up to minimum levels in relation to changing prices and the clearing member’s net position.

(1) A measure by which an exchange rate is expected to fluctuate over a given period. (2) A measure of a commodity’s tendency to move up and down in price based on its daily price history over a period of time.

The number of contracts, shares, or other financial instruments traded during a specified period of time.

The promise by a country to limit its exports of a good to another country.

Document guaranteeing the existence and availability of a given quantity and quality of a commodity in storage; it is commonly used as the instrument of transfer of ownership in both cash and futures transactions.

An unexpected profit because of favorable changes in the market price, exchange rate, or interest rates.

A financial Institution for fostering economic development, especially in the second and third worlds. Also known as International Bank for Reconstruction and Development.

The organization consisting of the World Bank and its affiliated organizations.

The successor organization to the GATT founded in 1995; it oversees international trade issues, resolves trade disputes and enforces the GATT trade pact.

See Grantor

The annual rate of return on an investment, as paid in dividends or interest. It is expressed as a percentage.

Is comprised of the market yields to maturity of a specific category of debt markets.

The difference of the yield between various debt markets.

The internal rate of return yielded by a financial instrument held to maturity.

There is a substantial risk of loss in trading commodity futures, options and foreign exchange products. Past performance is not indicative of future results.