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Straight date
See fixed dates.
Strap
A combination of two calls and one put.
Strike price
Also called exercise price. The price at which an options holder
can buy or sell the underlying instrument.
Strip
A combination of two puts and one call.
Structural Unemployment
Unemployment levels inherent in an economic structure.
Supply side economics
The concept is that tax cuts will boost investment leading to an
increase in the supply of goods in the economy. To be compared
with demand led Keynesian economics.
Support levels
When an exchange rate depreciates or appreciates to a level
where (1) Technical analysis techniques suggest that the
currency will rebound, or not go below; (2) the monetary
authorities intervene to stop any further down ward movement.
See resistance point.
Swap as a percentage
Swaps expressed as an annualized percentage.
Swap margin
See forward margins.
Swap price
A price as a differential between two dates of the swap.
Swap rate
The price at which the currency is currently trading in the spot
market.
Swap
The simultaneous purchase and sale of the same amount of a given
currency for two different dates, against the sale and purchase
of another. A swap can be a swap against a forward. In essence,
swapping is somewhat similar to borrowing one currency and
lending another for the same period. However, any rate of return
or cost of funds is expressed in the price differential between
the two sides of the transaction.
Swaption
An option to enter into a swap contract.
SWIFT
Society for World-wide Interbank Telecommunications is Belgian
based company that provides the global electronic network for
settlement of most foreign exchange transactions.
Swissy
Market slang for Swiss Franc.
Switch
See Deposit Swap.
Synthetics
Options or futures that create a position that able to be
achieved directly but is generated by a combination of options
and futures in the relevant market. In foreign exchange a SAFE
combines two forward contracts into a single transaction where
settlement only involves the difference in values.
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A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
T-Bill
see Treasury Bills.
Tagesgeld
German term for money lent until the following day and
automatically repaid on the day.
Taegliches geld
automatically rolls over.
Talking up
Statements made normally by the central bank or government
minister designed to bolster market sentiment with respect to
the currency.
Tail
(1) In US Treasury cash auctions, refers to the differences
between the average " issue price" and the "stop out price". (2)
In the repo market, a dealer establishes a tail when it
deliberately makes the reverse repo for longer than the repo in
the hope that the interest rates will fall, lowering the cost of
the remaining part of the reverse repo.
Tap
UK term for a supply of Government stock available for sale
through the Government broker at a stated price.
Tau
Expresses the price change of a option for a percentage change
in the implied volatility. Technical AnalysisIs concerned with
past price and volume trends - often with the help of chart
analysis - in a market, in order to be able to make forecasts
about future price developments of the commodity being traded.
Technical Correction
An adjustment to price not based on market sentiment but
technical factors such as volume and charting.
Temporal Accounting
Method of determining accounting exposure which translates all
balance sheet items at the current rate of exchange, not the one
at the time the cost was incurred.
Tender
(1) a formal offer to supply or purchase goods or services. (2)
In the UK the term for the weekly Treasury Bill issue.
Tenor
Maturity or number of days to maturity normally on bills of
exchange.
Terme
French for period.
Terme sec
French for outright in forward foreign exchange transaction.
Termingeld
German term for money market operations of over one month.
Terms of Trade
The ratio between export and import price indices.
Theta
A measure of the sensitivity of the price of an option to a
change in its time to expiry.
Thin market
A market in which trading volume is low and in which
consequently bid and ask quotes are wide and the liquidity of
the instrument traded is low.
Thursday/Friday Dollars
A US foreign exchange technicality. If a foreign bank buys
dollars on Tuesday for Thursday delivery. If the bank leaves the
funds overnight and transfers them on Friday by means of a
clearing house cheque then clearance is not until Monday, the
next working day. Higher interest rates for this period are thus
available.
TIBOR
Tokyo Inter-bank Offered Rate.
Tick
A minimum change in price, up or down.
Ticket
See Deal Slip.
Tier One
A measure of a banks financial strength used by the BIS being
the shareholders' equity available to cover actual or potential
irredeemable and non-cumulative preference shares. It excludes,
hybrid forms of capital such as fixed term stock, goodwill, and
revaluation reserves. BIS has a minimum requirement of 4% on
risk weighted assets.
Tight Money
A condition where there is a shortage of credit as a result of
monetary policy restricting the supply of credit normally
through raising interest rates.
TIFFE
Tokio International Financial Futures Exchange.
Time decay
The decline in the time value of an option as the expiry
approaches.
Time deposit
Interest bearing deposits at a savings institution that has a
specific maturity.
Time value
That part of an option premium which reflects the length of time
remaining in the option prior to expiration. The longer the time
remaining until expiration, the higher the time value.
Today/Tomorrow
Simultaneous buying of a currency for delivery the following day
and selling for the spot day, or vice versa. Also referred to as
overnight.
Tombstone
Colloquial term for announcement in a publication that a loan or
bond has been arranged.
Tomorrow next (Tom next)
Simultaneous buying of a currency for delivery the following day
and selling for the spot day or vice versa.
Trade date
The date on which a trade occurs.
Trade deficit/Surplus
The difference between the value of imports and exports. Often
only reported in visible trade terms.
Trade weighted Exchange
rate
The changes in the exchange rate against a trade weighted basket
including the currencies of the county's principal trading
partners.
Traded options
Transferable options with the right to buy and sell a
standardized amount of a currency at a fixed price within a
specified period.
Tradeable amount
Smallest transaction size acceptable.
Trade Ticket
See deal ticket.
Transaction date
The date on which a trade occurs.
Tranche
A portion of, specifically used for borrowings from the IMF.
Transaction
The buying or selling of securities resulting from the execution
of an order.
Translation loss/profit
The calculation of loss or profit resulting from the valuation
of foreign assets and liabilities for balance sheet purposes,
when consolidating into the base currency.
Treasury bills
Short-term obligations of a Government issued for periods of one
year or less. Treasury bills do not carry a rate of interest and
are issued at a discount on the par value. Treasury bills are
repaid at par on the due date. In the UK they are normally for
91 days, and are offered at weekly tenders. In the US they are
auctioned.
Treasury bonds
Government obligations with maturities of ten years or more.
Treasury notes
Government obligations with maturities more than one year but
less than ten years.
Treasury stock
Previously issued stock that has been repurchased by, or donated
to, or otherwise are acquired by the issuing firm. Treasury
stocks pay no dividends and have no voting privileges.
Treaty of Rome
Founding treaty of the EU, most recently modified by the
Maastricht Treaty.
Troc, troquer
French FX term for swap.
Turnover
The total money value of currency contracts traded is calculated
by multiplying size by the number of contracts traded.
Two Tier market
A dual exchange rate system where normally only one rate is open
to market pressure, e.g. South Africa.
Two-Way quotation
When a dealer quotes both buying and selling rates for foreign
exchange transactions.
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A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Ultimo
Continental term for month or year end.
Uncovered
Another term for an open position.
Under reference (Order)
Before finalizing a transaction all the details should be
submitted for approval to the order giver, who has the right to
turn down the proposal.
Under-valuation
An exchange rate is normally considered to be undervalued when
it is below its purchasing power parity.
Undo
A colloquial term for reversing a transaction. e.g. a spot sale
by means of a forward purchase or if done in error a spot
purchase.
Uniform Price Auction
See Dutch Auction.
Unit of Account
A device designed to provide a consistent value with varying
currencies. e.g. ECU and SDR.
Unload
Term for sale of assets or unwinding positions either to limit
loss or to undermine other market participants positions.
Unmatched Book
If the average maturity of a banks liabilities is less than that
of its assets, it said to be running an unmatched book.
Unwind
Selling of assets and or instruments to square a position.
Up tick
A transaction executed at a price greater than the previous
transaction.
US Quote
Exchange rate quotation on a reciprocal basis. See domestic
quote.
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A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Valeur Compensee
Payments are said to be " valeur compensee" when payment by one
party in one centre and settlement by the other party in another
centre takes place on the same day.
Value Date
For exchange contracts it is the day on which the two
contracting parties exchange the currencies which are being
bought or sold. For complete description see the chapter on
trading. For a spot transaction it is two business banking days
forward in the country of the bank providing quotations which
determine the spot value date. The only exception to this
general rule is the spot day in the quoting centre coinciding
with a banking holiday in the country(ies) of the foreign
currency(ies). The value date then moves forward a day. The
enquirer is the party who must make sure that his spot day
coincides with the one applied by the respondent. The forward
months maturity must fall on the corresponding date in the
relevant calendar month If the one month date falls on a
non-banking day in one of the centers then the operative date
would be the next business day that is common. The adjustment of
the maturity for a particular month does not effect the other
maturities that will continue to fall on the original
corresponding date if they meet the open day requirement. If the
last spot date falls on the last business day of a month, the
forward dates will match this date by also falling due on the
last business day. Also referred to as maturity date.
Value Spot
Normally settlement for two working days from today. See value
date.
Value Today
Transaction executed for same day settlement; sometimes also
referred to as "cash transaction"
Vanilla
A simple option whose terms and conditions do not include any
provisions other than exercise style, expiry and strike. To
compare with exotic options which have additional terms.
Variation margin
Profits or losses on open positions in futures and options
contracts which are paid or collected daily.
Vega
Expresses the price change of an option for a one per cent
change in the implied volatility.
Velocity of Money
The speed with which money circulates or turnover in the
economy. It is calculated as the annual national income: average
money stock in the period.
Vertical (bear or bull) spread
The sale of an option with a high exercise price and the
purchase (in the case of a bull) or the sale (in the case of a
bear) of an option with a lower exercise price. Both options
will have the same expiration date.
VDU1
Video display unit, sometimes a computer terminal or vendor
screen.
VIBOR
Vienna Inter-bank Offered Rate.
Visible Trade
Trade in merchandise goods as compared with capital flows and
invisible trade.
Volatility
A measure of the amount by which an asset price is expected to
fluctuate over a given period. Normally m