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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 a