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ABCDS
A credit default swap based on an Asset-Backed Security itself based on relatively risky home equity loans (U.S.) In effect a type of insurance against default on the underlying ABS.
ABCP
Taiwan: Asset-Backed Commercial Paper
AICPA
American Institute of Certified Public Accountants
Alpha
Hedge Funds: the incremental return above the market that a manager generates.
American-Style Option
Option contract which can be excercised at any time between the purchase date and the expiration date. Most commonly exchange-traded option in the U.S.
Arbitrage
Simultaneous sale and purchase of identical or equivalent financial instruments or commodity futures to benefit from a discrepancy in their prices.
Assignment
Receipt of an exercise notice by an option writer (seller) that obligates him to sell (in the case of a call) or purchase (in the case of a put) the underlying security at the specified strike price.
At-the-money
Occurs if the strike price of the option is equal to the market price of underlying security.
Back-months
Futures or options on futures months being traded that are furthest from expiration.
BaFin
Germany: financial regulator
Bear
Person who believes prices will move lower
Bear Market
Market in which prices are moving lower.
Beta
Hedge Funds: market exposure
Bid
Price that market participants are willing to pay.
Bull
Person who believes prices will move higher
Bull Market
Market in which prices are moving higher.
Buy on Close
Buy at the end of a trading session at a price within the closing range.
Buy on Opening
Buy at the beginning of a trading session at a price within the opening range.
Call
An option contract giving the holder the right to buy the underlying security at a specified price for a certain, fixed period of time.
CFO
Chief Financial Officer
CIO
Chief Investment Officer
Covered Call Option Writing
Trading strategy involving simultaneously selling call options and owning an equivalent position in the underlying security. The reverse is to sells a put option and shorting the underlying security.
Cox, Christopher
Chairman of the Securities and Exchange Commission. Confirmed in 2005.
CPPI
Constant Proportion Portfolio Insurance
Day Order
Order placed for execution within one trading session. Automatically cancelled if it can not be executed within the day.
Day Trading
Within one day establishing and liquidating the same position or positions. No positions should be established at the days end.
Deferred
Back Months
Delivery
Tender and receipt of an actual commodity or financial instrument, or cash in settlement of a futures contract.
Derivative Security
Financial security whose value is determined in part from an another security's (the underlying security) value and characteristic.
Donaldson, William
Former chairman of the Securities and Exchange Commission
Dynamo
A public Constant Proportion Portfolio Insurance product BNP
EAI
Enhanced Analytics Initiative
ECB
European Central Bank
Enhanced Analytics Initiative
Group set up to promote better sell-side research about extra-financial issues such as overall strategy, corporate governance, human capital management and environmental management. Members are large European institutional investors such as pension funds.
EPS
Earnings Per Share
Equity Options
Options on shares of an individual common stock.
ERFRAG
European Financial Reporting Advisory Group
ETF
Exchange-Traded Fund
European-style Options
Option contracts that can only be exercised during a specified period of time just prior to their expiration.
Exercise Settlement Amount
Difference between the exercise price of the option and the exercise settlement value of the index on the day an exercise notice is tendered , multiplied by the index multiplier.
Expiration Cycle
The dates on which options on an underlying security expire. A given option is assigned to one of three cycles, January, February or March.
Expiration Date
Date on which an option and the right to exercise it, cease to exist.
FASAC
Financial Accounting Standards Advisory Council
FASB
Financial Accounting Standards Board
FFS
South Korea: Financial Supervisory Service
Financial Supervisory Commission
Taiwan: financial regulator
Floor Broker
Licensed member of an Exchange, who is paid a fee for executing orders for Clearing Members or their customers.
Floor Trader
Also known as a "local". Exchange member who only trades for his own account.
Futures
All contracts covering purchase and sale of financial instruments or physical commodities for future delivery on a commodity futures exchange.
3
Grant Date
Stock Options:- "The date at which an employer and an employee reach a mutual understanding of the key terms and conditions of a share-based payment award." Defined in SFAS No 123 (Revised 2004) (123R)
IFRS
International Financial Reporting Standards
IFRS 3
Accounting standard for "business combinations" or Merger and Acquisitions transactions. First standard written jointly by International Accounting Standards Board and the U.S. Financial Accounting Standards Board.
Initial Performance Bond
Also known as "Initial Margin". Funds required when a futures position is opened.
In-the-money
Occurs if the strike price of a call option is less than the market price of the underlying security. For put options the strike price has to be higher than the market price of the underlying security for it to be in-the money.
Intrinsic Value
Amount by which an option is in-the-money.
ISDA
International Swaps and Derivatives Association
KKR
Kohlberg Kravis Roberts
LEAPS
Long-Term Equity Anticipation Securities
Long Hedge
Purchase of a futures contract in anticipation of an actual purchase in the cash market.
Long Position
An investor holds more contracts than he has sold.
Margin Requirement for Options
Amount an uncovered (naked) option writer is required to deposit and maintain to cover a position. Calculated
Market Order
Order for immediate execution given to a broker to buy or sell at the best obtainable price.
Mark-To-Market
Daily adjustment of margin accounts to reflect profit and loss.
Mezzanine
When applied to finance refers to moderate risk or mid level.
NASPP
National Association of Stock Plan Professionals
NTS
South Korea: National Tax Service
NYSE
New York Stock Exchange
Offer
Price at which an investor is willing to sell a futures or options contract. Offset buying if one has sold, or selling if one has bought, a futures or options on futures contract.
Open Interest
Total number of futures or options on futures contracts that have not yet been offset or fulfilled by delivery. An indicator of the depth or liquidity of a market (the ability to buy or sell at or near a given price) and of the use of a market for risk and/or asset management.
PCAOB
Public Company Accounting Oversight Board
Portable Alpha
Hedge fund strategy seeking to invest in a manager who can generate alpha, while using derivatives such as index futures or swaps to hedge the beta.
Private Equity Intelligence
Research group specialising in the private equity arena.
Private Securities Litigation Reform Act of 1996
US legislation allowing companies avoid liability of inaccurate forward-looking statements as long as the statement is identified as forward-looking and are accompanied by "meaningful cautionary statements".
PSLRA
Private Securities Litigation Reform Act of 1996
Quiet Period
Period of time prior to a registered offering when rules apply over what companies and executives can and can not say.
Regulation FD
Regulation Fair Disclosure
Rule enforced by the SEC requiring U.S. to make available to the public that they make to securities analysts. If the disclosure is intentional the release has to be simultaneous. Unintentional disclosure has to be made available to the public within 24 hours.
SCSE
Society of Corporate Compliance and Ethics
SEC
Securities and Exchange Commission.
Section 104
Section of the Sarbanes-Oxley Act requiring the PCAOB to inspect registered public accounting firms on a regular basis
Section 302
Section of the Sarbanes-Oxley Act of 2002 requiring a certification to accompany each quarterly and annual report filed with the SEC.
SOX
Shorthand for Sarbanes-Oxley.
Structured Notes
Derivatives-linked bonds designed to deliver high returns over a fixed period.
Synthetic Collateralised Debt Obligations
Repackaged portfolios of credit derivatives.
TOCOM
Tokyo Commodity Exchange
TSE
Tokyo Stock Exchange
WKSI
Well-Known Seasoned Issuers
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