| Glossary |
Top rating for bonds (primarily US corporate and municipal) awarded by ratings agencies Standard and Poor’s and Moody’s.
Asset Backed Security. A financial instrument collateralisd by one or more types of assets including property, mortgages, receivables etc.
Associate of the Chartered Association of Certified Accountants in UK.
The difference between IAS and IFRS There has been some misunderstanding over the status of International Accounting Standards (IAS) since the International Accounting Standards Board (IASB) announced the introduction of International Financial Reporting Standards (IFRS) in 2001.
The first body to set International Accounting Standards (IAS) was the International Accounting Standards Committee (IASC), which was set up in 1973. During its 28-year life, the IASC introduced 41IAS, some of which have been replaced or withdrawn. The IASB was created in 2001 as part of a restructuring of the IASC, designed to make the international standard-setting process more effective.
New standards released by the IASB are known as IFRS.
There are two main differences between IAS and IFRS:
The amount a company owes to its suppliers for goods and services purchased on credit.
一个公司因赊购商品和服务而欠供应商的账款金额。
The balance owed to a company for purchases. These normally take the form of sales invoices which have been issued, but are not yet paid.
其他方由于采购拖欠一个公司的账款余额。它的形式通常是已经开出、但还没有支付的销售发票。
Used to describe the process by which the principal amount on which a transaction is based increases by a pre-arranged factor over the life of the deal.
Automated Clearing House:
Associate of the Chartered Insurance Institute.
Automated Direct Debit Amendment and Cancellation Service: BACS UK-based automated system used by banks to advise the originator of amendments/cancellations of a direct debit instruction (DDI), either electronically or in paper form.
Amsterdam Stock Exchange. Now part of Euronext – with Brussels, Lisbon and Paris Stock Exchanges.
Association of Futures Brokers and Dealers.
Abbreviation of Aktiengesellschaft, used for German, Austrian and Swiss companies and comparable to the ‘plc’ abbreviation of 'public limited company’ used for UK companies.
Association of International Bond Dealers, a self-regulatory body based in Zurich, representing the primary and secondary Eurobond markets. Now known as ISMA.
Association of Insurance and Risk Managers. UK association; equivalent of RIMS in the US.
A German, Austrian, or Swiss Public Limited Company. (See also 'AG').
Agricultural Mortgage Corporation Ltd. Established in 1928 to provide medium- to long-term secured finance on agricultural land in the UK.
May be exercised any time prior to expiry, in contrast to European style option which can only be exercised on a pre-determined exercise date.
Annual Percentage Rate. The annual equivalent rate of return on a loan or investment, where the rate of interest specified is chargeable or payable more frequently than annually.
The simultaneous purchase sale of related products, with the intention of profiting from discrepancy in the relationship between the prices.
Abbreviation for arbitrageurs, or dealers specialising in arbitrage.
Adjustable Rate Mortgage. A mortgage which permits the lender to adjust the mortgage's interest rate, either up or down, periodically on the basis of a change in a specified index.
Adjustable-Rate Preferred Stock. US preferred stock whose dividend changes, usually quarterly, according to changes in the Treasury Bill rate or a similar benchmark rate issued with a collar.
Accounting rate of return or the net value expected from an investment, calculated as a percentage of the book value of the assets invested.
Austrian RTGS system linked to TARGET.
Automated Return of Unapplied Credits. A mechanism in the UK by which paying banks return unapplied credits to the originator.
Automated Return of Unpaid Direct Debits in the UK.
Accounting Standards Board. A UK body, set up in 1989, with the aim of improving standards of financial reporting by UK companies, some of which are enforceable in law.
Athens Stock Exchange.
Association of South East Asian Nations. Formed in 1967 to promote economic, social and cultural co-operation and development among the states of the South East Asian region. Headquartered in Jakarta, its members are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.
These come in a variety of different forms. However, the pay-off in all Asian options is determined by variations in the price of the underlying asset over the course of the contract. This contrasts with a European option, which can only be exercised on the option’s expiry date, and an American option, which can be exercised on any date up to the expiry date.
The buyer of an Asian option (also known as an average price option) will receive a cash settlement on expiry. Typically, the pay-off will be calculated by multiplying the principal amount by the difference between the average price of the underlying instrument and the option’s strike price over the course of the contract. This can be modified, perhaps by basing the pay-off on the differences between the two prices on a number of dates over the course of the contract, rather than the average over all dates.
The average price of an underlying instrument will always be less volatile than the price of the instrument itself. Because it is based on the less volatile average price, an Asian option is usually cheaper than its European or American style equivalent.
Automated screen trading. Electronic dealing using visual display units.
Australian Stock Exchange Ltd. Clearing and settlement house for Australia's equities, warrants and equity options markets. It operates two clearing houses, one for cash market securities and another for equity derivatives. ASX is a listed company with its ordinary shares publicly traded in Australia.
Automated Teller Machine. Also known as ‘cash dispenser’.
Aid and Trade Provision. A component of the British aid programme, which seeks to combine aid for developing countries with business opportunities for British companies.
Austrian Traded Index.
Automated Direct Debit Instruction, allowing users to send Direct Debit Instructions (DDIs) electronically to payers’ banks and building societies in the UK.
A guarantee by a third party, usually the purchaser’s bank, to assume payment of a debt in the event of a default. An aval can be added to a debt obligation such as a draft, bond or promissory note.
保付签字一种由第三方（通常是买方的银行）提供的担保，即担保方承诺在出现违约的情况下承担偿债责任。保付签字可以加签到汇票、债券或本票等债务票据上。
Formerly Bankers’ Automated Clearing Services Ltd. UK ACH responsible for bulk electronic clearing and the management and provision of related payment services to the UK banking industry.
Former commodity and freight-chartering exchange in the City of London. Most of its trade, including the Baltic International Freight Futures Exchange (BIFFEX) has been taken over by London FOX.
Bond Anticipatory Note, issued by US states and municipalities to provide interim finance for projects to be funded by bond issues.
The art of establishing and building good relationships with your banking providers to ensure that your company receives the best possible service at the most competitive price. Bank relationship management is an increasingly important part of the treasurer's role and treasurers should take care to monitor and review these relationships on a regular basis. This is particularly crucial for treasurers of Chinese companies, due to the rapid evolution of the Chinese banking sector.
与你的银行建立和建设良好关系的艺术，确保你的公司可以以最具有竞争力的价格获得最好的服务。银行关系管理是资金管理者的一项越来越重要的职责，资金管理者应该注意定期监督和总结与银行的关系。这项工作对于中国公司的资金管理者来说，显得尤其重要，因为中国银行业的发展非常迅速。
A promissory note, negotiated by companies to finance trade in physical goods. Payment is guaranteed for the note by a bank.
French term for a merchant bank or an issuing house as well as an investment bank.
One of the most common forms of exotic option is the barrier option.
Barrier options are similar to plain vanilla options. However, there also include trigger prices, or barriers, which, if reached before maturity, cause an option either to come into existence or cease to exist.
If an option comes into existence at the trigger price, this is known as a ‘knock-in’ option. If an option ceases to existence when the trigger price is reached, this is known as a ‘knock-out’ option.
A barrier option can have one or two trigger prices. A single barrier option will have a trigger on one side of the strike price. A double barrier option will have triggers on both sides of the strike price.
Barrier options are cheaper than plain vanilla options. However, just as with plain vanilla options, the price of barrier options increases with the likelihood of them being exercised. This means if the underlying price is volatile, a knock-in option will be more expensive (as there is more chance the trigger price will be reached) and a knock-out option will be cheaper for the same reason. See also 'Exotic options', 'Asian options'.
Business and Accounting Software Developers Association. A UK trade association and standards body for software vendors primarily in the accounting area.
Basel II is a revised version of the 1988 Capital Accord, written by the Basel Committee on Banking Supervision (BCBS). Its formal title is the International Convergence of Capital Measurement and Capital Standards: A Revised Framework. Basel II aims to produce greater consistency in the way banks and their regulators approach cross-border risk management. One of its main goals is to align regulatory capital with risk management, which was deemed one of the failings of the original Accord.
Basel II is based upon three ‘pillars’:
In China the CBRC will implement Basel II in stages, beginning in 2010.
新巴塞尔Ь议是1988年资本Ð-议的修订版，由巴塞尔银行监管委员会（BCBS）制定。它的正式名称是《统一资本计量和资本标准的国际Ð-议：修订框架》。新巴塞尔Ð-议旨在提高银行及其监管机构在跨境风险管理方式上的一致性。它的主要目标之一是将监管资本与风险管理相结合，这是Ô¬始Ь议的一个公认弱点。
新巴塞尔Ь议的基础是三个“支柱”：
中国银监会将从2010年起，在中国分阶段落实新巴塞尔Ь议。
This multinational committee provides a forum for members to discuss banking supervisory issues. Originally formed in 1974, its core objective is to ensure the stability of the international banking system. Under this remit, it has developed into a standard-setting body for the international banking community. The committee currently has 13 members – Belgium, Canada, France, Germany, Italy, Japan, Luxembourg, the Netherlands, Spain, Sweden, Switzerland, the United Kingdom and the United States. Member countries are represented by their central bank or, where there is no central bank, the authority with formal responsibility for banking supervision in that country. The committee has well established links with other banking supervisory authorities throughout the world; its recommendations are generally adopted as best practice by the banking authorities in all the major global economies. China has announced its intention to adopt the committee’s Basel II regulatory framework on banking capital by 2008.
这个多国委员会为成员提供了一个论坛，讨论银行监管的问题。它成立于1974年，核心目的是确保国际银行系统的稳定性。在这一宗旨下，它发展成了一个为国际银行业设立标准的机构。该委员会目前有13个成员国——比利时、加拿大、法国、德国、意大利、日本、卢森堡、荷兰、西班牙、瑞典、瑞士、英国和美国。各成员国由它们的中央银行代表，那些没有中央银行的国家则由该国正式承担银行监管责任的机构代表。该委员会还与全世界其他国家的银行监管机构建立了联系；全球所有主要经济体的银行监管机构普遍采纳这些建议作为最佳实践。中国宣布，打算在2008年前采用该委员会的新巴塞尔协议作为监管银行资本的政策框架。
One hundredth of one percent per annum. (0.01% p.a.)
The change in value of a security that will result from one basis point change in yield.
An interest rate swap in which the interest obligations are both floating point rates. They may be denominated in either the same or different currencies.
The processing of a number of individual payments in one batch containing all the individual payment instructions. For instance, if a company wanted to make payments to its suppliers on a set day each month it could submit a batch payment file to its bank for processing. The bank will make local currency payments in much the same way by submitting a bulk payment file to the local clearing system. The local clearing system then sorts out the instructions and sends them to each beneficiary bank in batch files containing all the individual payment instructions. The total amounts of the payment files are aggregated and the banks settle with each other at an agreed time. This is normally done on a net basis.
在一个批次中包含所有单独的支付指令，处理多笔单独的支付业务。例如，如果一家公司想在每月一个固定的日期向供应商进行支付，它就可以向银行提交一个批量支付文件，来处理这些支付。银行将用大致相同的方法，向本地的清算系统提交一个批量支付文件，完成本地的货币支付。然后，本地的清算系统把各种支付指令归类，用包含全部单独支付指令的批量文件把这些指令发送到每一家收款银行。所有支付文件的总金额被加总在一起，各家银行在商定的时间互相清算。通常是在净额基础上进行清算。
Address of the Toronto Stock Exchange, alternative term for the TSE itself.
British Bankers Association. Principal representative body for banks active in the UK with over 300 members.
Basel Committee on Banking Supervision. See also 'Basel Committee'.
A tool, developed by the Boston Consulting Group to assess a company's position relative to others in terms of product range using market share and expected market growth.
Banking Code Standards Board. Established in 1999 this UK board aims to ensure personal customers are treated fairly by banks and building societies.
Bolsa de Derivados do Porto. Portuguese derivatives exchange.
The reverse of a ‘bull spread’ is a ‘bear spread’ strategy. If a company believes that the value of an underlying instrument (perhaps a currency) will only depreciate by a small amount, it can reduce the cost of the protection against appreciation by adopting a bear spread strategy.
A bear spread strategy is a combination of either two call options or two put options on the same value and maturity of underlying instrument, but at different strike prices.
(See also ‘Bull spread strategies').
The Belgian Futures and Options Exchange, based in Brussels and set up in 1991 to trade in Belgian government bond futures and stock index options.
An option where early exercise is restricted to certain dates during its life. Neither an American option, or a European option, but somewhere between the two – hence the name.
Business Expansion Scheme. Introduced in the UK in 1984 as an incentive (via tax relief) to private investors to invest long-term equity capital in companies (particularly new and smaller ones).
Business Impact Analysis. An evaluation of a company's readiness for a disaster and the impact an interruption would have on a company.
Baltic International Freight Futures Market; now mostly superseded by London FOX.
Colloquial name for the New York Stock Exchange, on which the stocks of the largest US corporations are traded.
The four major accounting firms worldwide. Known as the ‘Big Five’ until the collapse of Arthur Andersen in the wake of the Enron scandal of 2000, Sometimes jokingly referred to as the ‘Final Four’.
A debt instrument with an original life of less than one year. Usually issued at a discount to face value (e.g. US Treasury Bill) and redeems at par.
Signed, written order by which one party instructs another to pay a specified sum to a third party.
In the UK the rate on the Discount Market at which Bills of Exchange are discounted (i.e. purchased for less than they are worth at maturity). See also Discount Rate.
Italian RTGS system linked to TARGET.
Bank for International Settlements. Central banks owned institution which fosters monetary and financial co-operation between central banks.
Block order exposure system, a system for buying or selling large blocks of securities on TOPIC (Teletext Output Price Information Computer).
Stock of a large, national company with a good trading and dividend record.
Bolsa de Mercadorias & Futures, the Brazilian futures and options exchange; the largest in Latin America and fifth biggest worldwide.
Brazil’s National Bank for Social and Economic Development.
Bundesverband Öffentlicher Banken Deutschlands, representative body for Germany’s public sector banks.
Abbreviation for Bundesobligationen. These 5 year bonds issued by the German government are the underlying commodity for the futures and options contracts traded on LIFFE and DTB.
Finnish RTGS system linked to TARGET.
Spanish stock market, based in Madrid.
An investment evidenced by a certificate which will pay a defined amount to the holder. Bonds usually repay the principal amount at a defined date in the future and are transferable between individuals.
A method of interest calculation using a day count fraction equal to actual days divided by actual days in a year. Also called 'Day Count Basis'.
Board of Trade Clearing Corporation. The clearing house for the futures and options contracted on the CBOT.
A market with no overall direction. Markets are generally bracketed as trends are not necessarily evident. The statistics depend, of course, on the particular analysts and the definitions they employ.
A currency agreement, made in 1944, which set fixed exchange rates, provided for central bank intervention in currency markets and set the price of gold at US$35 per ounce.
The fee charged by brokers to their clients.
Global electronic brokerage for bonds, formed in June 1999 as a partnership between Citigroup, Credit Suisse First Boston, Deutsche Bank, Goldman Sachs, Lehman Brothers, Merrill Lynch and Morgan Stanley Dean Witter.
Building Society Association.
A common name for the Bundesbank, the German central bank.
In most cases, a company will act to protect its position by purchasing an option. However, if the company believes that the value of the underlying instrument (perhaps a currency) will only appreciate by a small amount, it can reduce the cost of the protection against depreciation by adopting a bull spread strategy.
A bull spread strategy is a combination of either two call options or two purchase options on the same value and maturity of underlying instrument but at different strike prices. In a call spread purchase, the company will purchase a call option, with a strike price of ‘A’. It will simultaneously sell a call option with a strike price of ‘B’. If the price of the underlying instrument is below ‘A’ on exercise day, the company will not exercise its call option, limiting its loss on the purchase call to the cost of the premium. This loss will be reduced by premium received from the unexercised call sale. If the price is above ‘A’, the company will exercise its right to purchase the quantity at the strike price, allowing it to make a profit by selling the purchased quantity at the market price. If the price rises above ‘B’, the company will continue to exercise its purchase option, but will have to use some of the purchased quantity to compensate its counterparty to the call sale, which will have the effect of limiting the company’s profit.
A similar effect can be achieved by combining two puts. (see also 'Call options', 'Call purchases', 'Put options' and 'Put purchases').
BEPS is a bilateral netting payments system in China. Based on the CNAPS infrastructure, it is used for the processing of low-value electronic payments (under RMB 20,000). Payments made via the BEPS system are arranged into batches, sorted by receiving bank. All payments destined for the same receiving bank are bundled together into a single batch which is subsequently submitted to the clearing system. These batches of payment instructions are delivered to the receiving bank, with final settlement occurring at the end of each clearing session, meaning that payments cleared through BEPS have same-day value. There are currently three BEPS clearing sessions per day. BEPS is currently being piloted in Beijing, Tianjin and Xiamen and will be rolled out nationwide on successful completion of the trial.
BEPS系统是中国的一个双边净额支付系统。它基于中国国家现代化支付系统(CNAPS)的基础设施，用来处理小额（低于20,000元人民币）的电子支付。通过BEPS系统完成的支付是批量进行的，按照收款银行进行分类。所有去往同一家收款银行的支付被打包成一个批次，然后提交给清算系统。这些支付批次指令被发往收款银行，最后的交割在每个清算期结束时进行，也就是说通过BEPS系统清算的支付可以当天到帐。现在每天有三个BEPS清算期。现在，BEPS正在北京、天津和厦门进行试点，试验成功完成后，将在全国范围内推行。
A package of Eurodollar strips composed of two, three, five, seven or ten year’s accumulation of quarterly contracts. Bundles are used to create Treasury/Eurodollar (TED) spreads and in the hedging of some IRS transactions. See Strip and Pack.
Abbreviation of Besloten Vennootscap, appearing after the name of a Dutch company and equivalent to the British designation of plc.
Cost and Freight. The seller must pay costs and freight necessary to bring goods to designated port. The buyer must pay all duties, taxes and other charges upon entry. Risks of loss or of damage to the goods pass from seller to buyer upon arrival at port of entry (see also CIF).
This term is used to denote the sterling US dollar exchange rate. Originates from the time when a cable was sent each day from London to New York advising the rate of exchange between the two countries' currencies.
Abbreviation for Cotation Assistée en Continu, the Paris Bourse’s electronic trading system.
The Paris Bourse’s general indicator, based on the shares of 250 leading companies.
Cash Against Documents (or Sight Drafts). Payment made when a commission house, or other intermediary, transfers title documents to the buyer when they receive cash.
A contract giving the buyer the right, but not the obligation, to buy at the strike price.
If a company purchases a call option, it buys the right, but not the obligation, to buy a quantity of the underlying instrument at the strike price. If the price of the underlying instrument rises above the strike price, the company will exercise the option and purchase the agreed quantity at the strike price. At the minimum, the company could then sell the purchased quantity at the market price making a profit. This profit will equal the market price less the strike price per instrument with a deduction for the premium. If the underlying price does not rise above the strike price, the company will lose the price of the premium.
If a bank writes a call option, it sells its counterparty the right to buy a quantity of the underlying instrument at the strike price. If the price of the underlying instrument rises above the strike price, the holder of the option will exercise it and purchase the agreed quantity at the strike price. The higher the market price above the strike price, the greater the loss felt by the bank. This loss will be mitigated by the premium the bank received when writing the option.
California Public Employees Retirement Fund, the largest public pension fund in the US.
Global electronic trading system for fixed income markets launched by US broker Cantor Fitzgerald in 1999.
A Cap provides the ability to limit exposure due to the upward movement of interest rates/foreign exchange prices whilst keeping the benefit of a possible downward movement. (See Collar and Floor).
This term describes the method that ensures that banks or financial institutions have sufficient capital to meet any obligations they may commit themselves to. An institution will usually be regulated to maintain minimum levels of capital if it is to be allowed to continue operating.
Government restrictions on cross-border flows of capital. Capital controls can apply to the rate of exchange of a currency, the amount of foreign capital a country's residents are entitled to hold or the size of the holding a foreign company/investor is permitted in a domestic company.
The intention of capital controls is for a country's foreign exchange markets to reflect accurately its level of international financial activity – developing and emerging economies often struggle to achieve this on the open market as they are susceptible to speculative foreign investment (so-called 'hot money') destabilising their exchange rates. The imposition of capital controls is a commonly used method of ensuring exchange rate stability. In the wake of the Asian financial crisis of 1997-1998, many countries in South East Asia introduced capital controls as a means of protecting their economies while they recovered from the crisis.
政府对跨境资本流通的限制。资本管制可以体现在货币的外汇汇率、一国国民有权持有的外资额度或允许外国公司/投资者在本国公司中所持有股份的规模。
资本管制旨在使国家的外汇市场准确反映其国际金融活动情况---发展中经济体及新兴经济体通常努力在公开市场上进行资本管制，因为它们容易受到投机外资（即所谓的“热钱”）的影响，使汇率受到动摇。实行资本管制是确保汇率稳定的常用方法。1997-1998年亚洲金融危机之后，很多东南亚国家在从危机恢复的过程中，引入资本管制来保护经济。
A method of calculating the stock market index. The price of each share component is multiplied by the number of outstanding shares, the sum of these result gives the index.
This is the name of an option giving the holder the right to buy or sell a cap.
Compound annual return; the total return available from an investment or deposit, in which the interest is used to augment the investment. CAR is usually quoted on a gross basis.
A banking structure which allows the balances on a number of separate accounts to be treated collectively for interest purposes. This concentration of balances optimises the amount of interest companies both pay and receive, as the bank will consider the pooled balance when calculating interest. Use of a cash pool can also help a company improve its liquidity management, as total cash balances are managed centrally rather than locally.
Cash pooling may be conducted on a physical basis, whereby funds are physically transferred from participant accounts into a master or header account at the end of each day, week or month. Alternatively, it may be conducted on a notional basis, in which case no physical movement of funds takes place. Instead, the bank offsets the debit and credit balances of participating accounts in order to calculate the pool's net interest position. Notional pooling is not permitted in China, but physical pooling may take place using an entrust loan structure.
一种出于对利率的考虑而允许公司多个分散帐户的余额被集中处理的银行结构。集中帐户余额优化了公司利息的支出及收益，因为银行在计算利息时会考虑集中后的余额。使用现金池还可以帮助公司改善其流动性管理，因为总现金余额是中央管理而非本地管理。
现金池可以采用实际余额转移的方式操作，每逢日末、周末或月末，资金会从参与帐户实际转移到主帐户。另外，现金池也可以是名义的，在这种情况下，资金不会发生实际转移。而银行将参与账户的借方余额和贷方余额进行抵消，以计算现金池的净利息头寸。中国不允许名义现金池方式，但利用委托贷款结构可以实施实际余额现金池。
Brazilian Clearing and Depository Corporation. Clearing house for the Brazilian securities markets (equities and debt instruments).
Chicago Board Options Exchange.
Chicago Board of Trade; the world's largest financial futures exchange until 1999, when it was displaced by Eurex.
The China Banking Regulatory Commission (CBRC) is responsible for supervising and regulating Chinese banking institutions. It has a number of responsibilities which include:
中国银行业监督管理委员会（CBRC）负责监督和管理中国的银行机构。它的职责包括：
Correspondent Central Banking Model. Formed by the European Central Bank in 1998 to facilitate cross-border use of collateral. For more detail see www.ecb.int
The Cheque and Credit Clearing Company, responsible for the bulk clearing of chequers and paper credits throughout the UK.
The China Commodities Futures Exchange of Hainan.
Association formed in 2001 dedicated to the improving global clearing of financial markets. Members are Australian Stock Exchange(ASX), The Brazilian Clearing Corporation(CBLC), Sao Paolo, The Canadian Depository for Securities Limited(CDS), Toronto, Clearnet, Paris, The Depository Trust and Clearing Corporation, New York, Eurex Clearing AG, Frankfurt, Hong Kong Exchanges and Clearing Limited(HKEx), S.D.Indeval, Mexico, London Clearing House(LCH), The Options Clearing Corporation(OCC), Chicago, Singapore Exchange Limited(SGX)/The Central Depository(Pte)Limited, Tokyo Stock Exchange(TSE), Chicago Mercantile Exchange Inc(CME), which joined in July 2001.
This a negotiable bearer document issued by a bank, or possibly a building society for funding, trading and liquidity. (Essentially a transferable bank deposit). Each certificate will state the amount of money that has been deposited with the issuer, the rate of interest to be paid on it and the date of maturity.
Collateralised Debt Obligations. Structured fixed income securities with cash flows linked to the performance of debt instruments.
Canadian Depository for Securities Ltd. Canada's national securities clearing and depository service, established in 1970.
Comité des Etablissements de Crédit et des Enterprises d’Investissement, the French banking regulator.
Central de Livraison de Valeurs Mobilières; Luxembourg-based computerised clearing system for Eurobonds, which merged with the Frankfurt-based clearer, Deutsche Börse Clearing, in 1999. Now Known as Clearstream. Main competitor to Euroclear.
A wholly owned subsidiary of SGX which provides clearing and settlement for securities traded on SGX-ST.
Clearing House Automated Payments System. UK, Bank of England operated TARGET Real Time Gross Settlement (RTGS) electronic payments and receipts system. Introduced in 1996 to replace the old system whereby payments were processed by a single net transfer at the end of the day, payments are now processed individually and continuously throughout the day. With the advent, in 1999, of the euro the UK RTGS system was developed to accommodate euro accounts so that members could make domestic and cross-border euro payments. Since August 2001 known as NewCHAPS using the SWIFT network.
Clearing House Inter-Bank Payments System. US, bank owned and privately run, Real Time Gross Settlement System (RTGS) electronic payments and receipts system for banks in New York. At the end of each day, member banks are informed of their position, whether debit or credit. Those with a debit position settle by sending funds to CHIPS via FEDWIRE. CHIPS then sends funds out to those with a credit position. Along with FEDWIRE handles most large US dollar transfers. Transactions outside New York are undertaken through FEDWIRE.
Cost, Insurance, Freight. As with C&F but also includes insurance premiums.
Chartered Institute of Management Accountants in the UK.
The Chinese inter-bank electronic clearing system. CNAPS, constructed and owned by the PBOC, was rolled out across China in June 2005. CNAPS comprises two payments systems: a High-Value Payment System (HVPS) and a Bulk Electronic Payment System (BEPS) – see above.
HVPS is designed for the processing of one-off high-value payments (defined as those over RMB20,000 in value). Payments made via HVPS are processed on a real-time gross settlement (RTGS) basis – as the paying bank’s account is debited, the receiving bank’s account is simultaneously credited.
是中国的银行间电子清算系统。CNAPS由中国人民银行建立和所有，于2005年6月在中国全面推行。CNAPS由两个支付系统构成：大额支付系统 (High-Value Payment System, HVPS) 和上面介绍过的小额批量电子支付系统 (BEPS)。
HVPS用来处理一次性的大额支付（价值在20,000元人民币以上的支付）。通过HVPS完成的支付是在一个实时全额支付系统 (RTGS) 的基础上进行的——在借记支付行账户的同时，贷记收款行的账户。
This term is used to designate the price of a security excluding the accrued interest since the previous dividend payment.
The settlement of a transaction. A ‘cleared’ cheque is one that has been successfully debited to the payee’s account.
Traders use clearing agents to deal with the paperwork and the clearing house involved in making exchange traded contracts.
The affiliate or subsidiary of a futures or securities exchange in the US which handles settlement and clearing of trades.
UK term for a centralised and computerised system for settling indebtedness between members. See BACS and APACS.
The clearing house for Euronext.
Clearing and settlement service for bonds and equities formed, in 1999, by a merger between Cedel and Deutsche Borse Clearing. Major competitor to Euroclear.
Continuous Linked Settlement. A global system for instant settlement of foreign exchange deals.
Continuous Linked Settlement Bank, which acts as an intermediary in FX transactions in order to eliminate settlement risk. CLS settles both legs of an FX transaction simultaneously through the use of Settlement Members, which are banks holding accounts at CLS Bank. Members’ accounts are simultaneously debited the currency being sold and credited with the currency being received. As required currencies are paid in, CLS releases currencies that are owed to that Settlement Member, which in turn debits and credits their client’s account.
持续联系结算银行在外汇交易中充当中间人，以消除结算风险。持续联系结算通过使用结算会员（在持续联系结算银行开户的银行），同时对一笔外汇交易的双边业务进行结算，并同时将出售的货币记入会员银行账户的借方，将收到的货币记入其贷方。会员银行将所需货币支付后，持续联系结算银行就会将应付给该银行的货币付清，而该银行也将对客户账户进行借记和贷记。
Chicago Mercantile Exchange. Futures and Options Exchange in four basic areas:
Conseil des Marchés Financiers, the French financial markets regulator.
Constant Maturity Swap. A variation on the fixed for floating IRS. The rate on one side of the CMS is either fixed or reset periodically at or relative to LIBOR. The constant maturity side, which gives the swap its name, is reset each period relative to a regularly available fixed maturity market rate e.g. yields on two-year to five-year sovereign debt. Hence parties in a CMS have exposure to changes in a longer-term market rate.
Constant Maturity Treasury. One of any yield indexes which equals the yield on a specific maturity of a Treasury instrument. Derivative instruments such as CMS are often linked to CMT indexes.
A Collar provides the ability to limit exposure due to the downward movement of interest rates/foreign exchange prices whilst keeping the benefit of a possible upward movement. (See Cap and Floor).
A short-term method of borrowing, whereby creditworthy institutions issue unsecured short-term (up to one year) promissory notes which are bought by investors.
是一种短期的借贷方法，由信用良好的机构发行并由投资者购买的无担保短期期票（不超过1年）。
It is common to use the terms committed and uncommitted applied to sources of finance used both in the short-term and for longer periods.
Committed facilities are so called because a bank, or other party, has made a firm commitment to lend funds to a company. This commitment can be made in a variety of forms, but the typical commitment is in the form of a loan. The key feature of this arrangement is that both parties (or more if the loan is syndicated) are subject to agreement before the commitment term begins. This agreement will set terms and conditions within which the company must keep for the funds to stay committed for the full term.
From the company’s perspective, the real benefit of committed facilities is that they provide a guaranteed source of funding for the duration of the agreement. Although the terms and conditions can place some restriction on how these funds are to be used, the existence of the facilities provides the treasurer with a base funding position. This is useful, whether the funds are to be used to fund a particular project when the commitment means that funds will not be withdrawn part way through (as long as the terms and conditions continue to be met) or they are used as a reserve fund, to be used when needed.
Those companies that use the committed facilities as a reserve should expect to pay a commitment fee on those funds in the facility that remain undrawn. The level of this fee will be part of the initial agreement and is designed to compensate the bank for having to hold capital to meet its commitment. See also 'Uncommitted facilities'.
A physical good typically produced in agriculture or mining, which can be the object of commercial transactions. e.g. grain, coffee, rubber etc.
This term designates the risk of a loss due to adverse movements in commodity prices.
A compound option is an option on an option, such as a put on a call, a call on a put, or a call on a call. These options are used primarily in fixed income and currency markets when the need for the risk protection afforded by an option is not certain and the buyer of the option would like to pay a reduced premium.
A compound option is an ‘option on an option’. A common example is to give the holder the right to buy a six month option with pre-determined characteristics in one month’s time. The holder pays an initial premium for the ‘option of an option’ and then a second premium if they take out the option in full.
These are useful for companies which are bidding for tenders, who need to protect themselves against adverse price movements after a tender is submitted. If they win the tender, they will be committed to fulfilling the terms of the contract at the price they submitted. However, an adverse currency or commodity price since the submission of the tender could make the contract unprofitable for the company.
A compound option allows the company to protect themselves against adverse price movements without committing themselves to purchasing a plain vanilla option. If the company does not win the tender, it has only had to pay the initial premium, rather having to pay the premium on the full option. If the company does win the tender, it can take out the second option and gain full project protection.
An Interest Rate Swap with a notional principal amount which fluctuates periodically or in response to a change initiated by one of the counterparties.
A charge made to a stock purchaser who wishes to delay delivery of and payment for his shares. The charge is based on interest on the amount of the transaction from the scheduled settlement date until the ultimate settlement.
An agreement between two parties to exchange, at the close of the contract, the difference between the opening price of the contract, multiplied by the number of shares specified within the contract.
The share price at which the principal amount of a convertible bond may be used to acquire shares in or owned by the issuing company or shares in a related company.
A bond which gives the holder the privilege of exchange for other securities of the issuing company at a future date.
The management of a company’s financial structure (eg policy, strategy, budgeting, funding, acquisition, investment, taxation and financial modelling). More specifically, it is used to describe the establishment of credit lines and other borrowing facilities, such as commercial paper or bonds.
公司财务结构（例如政策、战略、预算、融资、收购、投资、税务以及财务模型）的管理。更具体地说，它描述了信用额度和商业票据或债券等借款工具的建立。
The system by which a corporation is directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation (eg the Board, managers, shareholders, auditors and other stakeholders). Corporate governance rules also determine the procedures for making decisions, setting objectives, and monitoring performance.
对公司进行指导和控制的系统。公司治理结构规定了公司中不同参与者（例如-事会、管理层、股东、审计人员以及其他的利益相关人）之间权利和责任的分配。公司治理规则还确定了制定决策、设立目标和监控绩效的程序。
The interest rate stated on a bond at its time of issue. Originally these were physical coupons attached to bond certificates which would be cut off and delivered to an agent for payment but these are now registered electronically.
债券发行时指定的利率。最初，它们是以实际票据的形式附在债券上，在兑付时剪下并交给代理商，但现在已采用电子形式。
See IRS.
If a bank writes a call option, it is exposed to an increasing loss should the price of the underlying instrument rise above the strike price. However, the bank could purchase a quantity of the underlying instrument at the market price (MP) when it writes the option. If the market price depreciates, the value of the bank’s holding falls and vice versa. If the market price falls below the purchase price, the bank’s loss will be mitigated by the receipt of the premium. If the price rises above the market price, the bank will see its holding of the underlying instrument appreciate in value. Once the strike price is reached, any increase in the underlying price will be cancelled out, capping the potential profit.
If a bank writes a put option, it is exposed to an increasing loss should it be forced to buy the underlying instrument when the holder exercises the option. The counterparty would exercise the option if the market price dropped below the strike price. In order to protect itself against such a loss, the writer may sell the agreed quantity of the underlying instrument short at the market price (MP) for delivery on the maturity date. If the market price of the underlying instrument is above the fixed price on maturity day, the bank will have to buy the instrument on the open market at a loss. The total of the loss will be reduced by the amount of the size of the premium received when the option was written. If the market price falls below the fixed price, the bank will make a profit by buying the instrument at the lower market price and then reselling it at the fixed price. If the market price falls below the strike price, the holder will exercise the option. This will limit the profit on the transaction.
Bilateral financial contracts which isolate aspects of credit risk from an underlying instrument and transfer it. (See Credit Risk).
The risk that a debtor or counterparty will be unable or unwilling to repay or may otherwise default on a financial obligation of some kind.
债务人或交易对手不能或不愿意偿还或履行某种财务义务的风险。
RTGS system for UK and Ireland corporate securities. Settlement system for London Stock Exchange.
Central Securities Depository. An institution which dematerialises or eliminates physical and settlement of securities transactions. Following this, transactions can be settled electronically.
Discounted cash flow. A method of calculating the rate of return of a project. The actual net cash flow back is discounted annually until the present worth of the discounted cash flow over the life of the project is equal to the cost of the project.
Direct Debit Instruction.
Danish RTGS system linked to TARGET.
In the case of an Interest Rate Swap, one with a forward start date. In the case of Options, any which are traded before their effective lives commence.
A financial instrument whose value in whole, or in part, is determined directly or indirectly by reference to the price of an underlying security or asset. This asset may be a commodity, a currency or a security.
A digital option pays the holder a fixed amount if the option is ‘in-the-money’ when it expires. The holder of the option receives either a fixed payment (if it is ‘in-the-money’) or nothing (if it is not). This is why digital options are sometimes called binary options. They can be seen as a ‘bet’ on the future value of the underlying instrument.
They can be structured in a number of different ways. One touch digital options trigger payment if the currency reaches the strike price. A double no touch digital option triggers payment if the currency stays between an upper and lower value through the life of the contract. They can be structured as European-style options, where exercise depends only on the price on expiry, or as American-style options, where the option can be exercised at any point up to expiry.
The price of a bond adjusted to take account of the accrued interest that is to be paid to the seller.
Facility provided by the Federal Reserve enabling member banks to borrow reserves against collateral.
The distribution of corporate earnings to shareholders.
Dow Jones Industrial Average; US stock market index.
Abbreviation for Dual Listed Company. A company whose share price is quoted on the stock market of two countries.
Abbreviation for Debt Management Office. Agency of the UK Treasury with two main functions.
The Deutsche Terminborse; Germany’s Frankfurt-based derivatives exchange.
Depository Trust Company. US company. The world's largest securities depository and clearing house for institutional post-trade processing and settlement.
The Depository Trust and Clearing Corporation. US company, established in 1999 this is the holding company which oversees two subsidiaries:
Delivery versus payment. This is where cash and securities are exchanged simultaneously between counterparties.
Euro-Access Frankfurt. German same day payments settlements system which merged with the RTGS system ELS to form RTGSplus.
The exercise of an option before it is set to expire.
European Association of Securities Dealers Automated Quotation. Brussels-based electronic stock market, established in 1996, and modelled on the Nasdaq.
European Banking Association. Formed in 1985 by eighteen commercial banks and the European Investment Bank to promote and develop the Ecu and to facilitate its use by developing and managing the Ecu Clearing System. Further developments to payments clearing systems were EURO1 and STEP1.
European Central Bank.
Electronic Communication Network. Market participants use an ECN to avoid having to use an intermediary when trading, whether on an exchange or OTC.
Extendible Commercial Notes. These were created in response to the reduced availability and increased cost of arranging backup lines for commercial paper. ECNs operate essentially in the same way as CP, but without the need for backup lines. On the note's maturity, the issuer will either pay off the note or exercise the right to extend the maturity date of the note, then paying a higher rate of interest.
Electronic Data Interchange.
Enterprise Earnings Protection Insurance. An insurance policy designed to protect publicly held companies against earnings disruption, volatility and adverse results.
Software which enables companies to manage and monitor their bank accounts electronically via a direct link telephone link to the bank. Companies using an electronic banking system can move cash between accounts, make payments and monitor account balances automatically and in real-time. This has been the preferred means of electronic communication between banks and their corporate customers for many years and is only slowly being replaced by internet web portals.
一种使公司通过直线电话与银行建立连接，从而可以对公司银行帐户进行电子管理和监控的软件。使用电子银行系统的公司可以周转不同帐户中的现金、自动实时结算并监控帐户余额。这是多年以来较受欢迎的一种银行和公司客户间的电子沟通方式，只是现在正慢慢被互联网门户取代。
Belgian RTGS system linked to TARGET.
German RTGS system linked to TARGET. Now replaced by RTGSplus.
What is energy price risk?
This is the risk that a change in energy prices will impose additional costs on a company’s operations. Unlike weather risk which affects volumes (e.g. of demand or consumption) energy risk derives from the changes in the price of oil, gas and electricity. There is, of course, a connection between the two. Energy prices are more volatile than the prices of other commodities. The price volatility is caused by shifts in the supply and demand for the commodity. Natural gas and wholesale electricity prices are particularly volatile as demand for these commodities increases quickly in response to weather changes. Furthermore, storage of gas or electricity is limited and it is difficult to move it quickly to where it is needed.
Managing energy price risk
Standard financial derivatives have been adapted to provide protection for companies against the impact of energy price fluctuations. The financial instruments to hedge energy risk can vary slightly depending on whether oil, gas or electricity is traded but there are four general categories: forwards, futures, options and swaps.
Forward Price Contracts.
A forward is a customised supply contract between a buyer and a seller of energy which delays delivery to a specified date in the future. The transaction includes the obligation for the buyer to purchase and for the supplier to supply a fixed amount of energy at a pre-determined price. Payment is due at or after delivery. While usually prices are fixed, forward contracts can also include floors, caps or inflation rate changes (escalators).
Futures Contracts.
Futures contracts are standardised fixed price contracts for the delivery or receipt of a certain quantity of energy at some time in the future. The difference between forwards and futures is that while forwards are traded over the counter, futures can only be traded at regulated exchanges. With that comes a higher degree of standardisation, but also a lower counterparty risk for futures contracts.
Options contract.
Both parties to an energy contract can purchase instruments to limit their exposure to adverse price movements. An option gives the buyer the right to buy (call option) or sell (put option) a commodity at a specified price (the “strike” price) over a specified period of time. It differs from a futures contract in that the option includes the right but lacks the obligation to actually make the transaction.
An option guarantees a maximum purchase price (call) or minimum sales price (put), whilst retaining the opportunity to benefit from a price movement in the other direction. This comes at a cost in the form of the premium payable.
The premium can be at least partially offset by agreeing a collar, which is the simultaneous purchase of a call and sale of a put, or vice versa, with identical quantities and expiry dates but at a different price. This will guarantee a price for the underlying commodity between the strike prices of the put and the call. The premium payable on one is then partially offset by the premium reserved for the other.
Swaps contract.
Another way to fix the price of energy is to enter into a swap agreement. In effect one party in a swap contract agrees to exchange a fixed price for a floating price. The fixed price of the swaps is usually set off against an official commodity index and the differences between the fixed price and the floating price (average price of the index) are settled in cash. A physical delivery of the commodity does not take place.
Coming into effect on 1 January 2008, the new EIT law removed the advantageous tax rates that FIEs were previously able to enjoy over domestic companies. The new tax rate will, after a steady migration over a period of five years, be fixed at 25% for both foreign and domestic companies. Incentives will, however, be available for companies in particular industries.
新的企业所得税法于2008年1月1日开始生效，它取消了先前外商投资企业相对于中国境内公司所享有的优惠税率。在五年的平稳过渡期之后，中外公司的所得税税率都将被固定在25%。不过，特定行业的公司仍将享有优惠政策。
Chinese regulations currently prohibit lending between non-financial organisations – including inter-company lending. Entrust loans – also known as entrusted or entrustment loans – provide an alternative as they allow companies to become, in effect, lenders by providing funding to a financial intermediary. The intermediary – a bank/financial institution known as the 'entrustee' – grants loans to the borrower according to the lender's specific conditions (eg loan purpose, amount, loan period and interest rate) as well as supervising and collecting the loan on the lender's behalf.
目前中国的法规禁止非金融机构之间包括公司间的借贷。委托贷款提供了另一选择，它允许公司通过向金融中介提供资金成为事实上的贷款人。中介机构一般是银行或其他金融机构，叫做受托人，会根据贷款人提出的具体条件（例如贷款目的、数额、贷款期限以及利率）向借款人发放贷款，同时代表贷款人收回贷款。
ERP systems are accounting-oriented information systems for identifying and planning the business-wide resources needed to handle all aspects of a business. ERP systems are designed to provide one single controlling, recording and accounting system for all the business processes of medium- and large-sized businesses.
ERP系统是一个以会计职能为导向的信息系统，可以在整个企业范围内识别和规划处理一个企业所有方面所需要的资源。设计ERP系统的目的是，为大中型企业的所有业务流程提供一个单一的控制、记录和会计系统。
European Options Exchange which merged with the Financiele Termijnmart Amsterdam to form the AEX.
Derivatives that involve stocks or shares.
An option involving a stock or share. It may alternatively involve a basket or index of these.
Financial risk of uncertainty in the future market value of a stock portfolio.
A swap with payments on one or both sides linked to the performance of equities.
Swedish RTGS system linked to TARGET.
European System of Central Banks. Composed of ECB and the central banks of the other member nations. Tasks:
For more information, please see www.ecb.int
European Securities Clearing Corporation. The clearing house for European Government debt securities.
European Options and Financial Futures Exchange. A jointly owned subsidiary of the SWX Swiss exchange and the Deutsche Borse AG. Electronic derivatives exchange created in 1998.
Eurex Clearing AG acts as the clearing house for Eurex.
The EBA's cross-border euro payment system developed by EBA for larger amounts operated by SWIFT.
A bond issued in a Eurocurrency.
Brussels-based settlement system for securities transactions covering both bonds and equities.
A currency deposited or banked outside the country of origin. For example Eurodollars are US dollar deposits or CDs accepted by commercial banks in centres such as London or Paris. Interest on such deposits is paid in dollars.
A market which emerged in the 1950s for financing international trade. Principal participants are commercial banks, large companies and central banks trading in Eurocurrencies, Eurobonds etc.
Cross-border European market for equities, bonds, derivatives and commodities formed by the merger of the exchanges in Amsterdam, Brussels and Paris.
May be exercised only on the expiry date, in contrast to an American Option.
Economic Value Added. This is calculated by taking after tax cash flow generated by a business and deducting the cost of the capital it has deployed to generate that cash flow.
The risk that a long or short foreign exchange position might, due to an adverse movement in the relevant exchange rate, generate a loss E.g: A trader purchases US dollars in the hope that the dollar will strengthen. The exchange rate risk is the possibility that the dollar might weaken.
Instruments and commodities are said to be exchange-traded when they are available for sale on a stock, derivatives or other exchange. There is a wide range of financial instruments and commodities that can be traded on an exchange. Most people are aware of instruments such as shares in companies traded on exchanges such as Euronext, the London Stock Exchange, the NYSE or Nasdaq. In addition, some companies have their debt securities listed for sale on these exchanges.
Other exchanges include derivatives exchanges such as Liffe and the Chicago Mercantile Exchange. Instruments for sale on these exchanges include both futures and options. Finally there are also commodity exchanges, which tend to focus on specific commodities, for example oil or grain.
As can be seen, a range of instruments and commodities are available for trade on an exchange. In all cases, the nature of an exchange-traded transaction means that the instrument or commodity is available for sale in a standard form. For instance, this means that shares in companies are available in a standard form. Other financial instruments that can be exchange-traded, such as futures or options, are quoted for standard terms (one week, one month etc.) and in standard currencies.
Because they are exchange-traded, the accompanying documentation is standardised reducing the associated costs and the price can be seen as it is openly quoted by traders or brokers on the exchange. However the downside is that the standard form being traded may not exactly match what is required.
The introduction of multi-bank FX portals has lead to speculation that FX may become an exchange traded product. If it does, the method of getting a FX price would change fundamentally. At present, each bank provides its own price for a currency transaction. For the common currency pairs, there is only a marginal difference between banks. For the less common pairs, different banks will quote a different price depending on their positions in the relevant currencies. This can lead to some significant differences in the quoted rates.
If FX became exchange-traded, dealing prices for all currencies would be quoted on an exchange (not a physical exchange, but on a series of connected rate screens). This would improve the liquidity for the less common currency pairs. There will also be changes in the FX settlement process as traders will act as prime brokers on behalf of their clients.
Taking up the right of an option to buy or sell granted under the terms of a listed options contract.
Most option contracts entered into by corporate treasurers are known as ‘plain vanilla’ options. These give the buyer of the option the right, but not the obligation, to exchange a quantity of one currency, interest rate or other instrument for an agreed quantity of another on or before (depending on the terms of the option agreement) a given date in the future.
Exotic options come in two main forms:
Exotic options are primarily available in the foreign exchange market, although they have been constructed in other asset classes. See also: Asian options, Barrier options and Vanilla options.
The point in time when a transaction reaches maturity. The point at which the holder ceases to have any rights under the agreed contract. In options terms the date after which the option is void. The option buyer must decide whether or not to exercise on or before this date. See American and European style options.
The price of an option less its intrinsic value. See Intrinsic Value.
The amount the issuer of, for example, a bond agrees to pay upon maturity.
In Futures terms the computation of the cost of a Futures contract based on the current market prices of the stocks in the index, current interest rates, how long until the contract expires etc. In Options terms the fair value of an Option is the price or premium at which both the buyer and the writer can expect to break even.
Colloquial name for the U.S. Federal National Mortgage Association (FNMA).
The U.S. Financial Accounting Standards Board. Quasi-regulatory organisation responsible for the setting of financial reporting standards.
Federal Deposit Insurance Corporation. An independent US Federal executive agency designed to promote public confidence in banks and to provide insurance cover for bank deposits up to US$100,000. Originally established (1933) to prevent a repetition of losses incurred in the Great Depression.
US Federal Reserve System.
Excess funds held by the Federal Reserve Banking System on behalf of depository institutions. These institutions lend to each other usually on an overnight basis. See Fed Funds Rate.
Federal Funds Rate. The rate at which US banks lend to each other overnight. It is a market rate but is controlled by the Fed through Open Market Operations. See Open Market Operations.
12 US banks, situated in Atlanta, Boston, Chicago, Cleveland, Dallas, Kansas City, Minneapolis, New York, Philadelphia, Richmond, San Francisco and St.Louis. These, together with the Board of Governors in Washington, make up the Federal Reserve System (FED).
US Central Bank created by Congress in 1914 and largely responsible for the monetary policy of the US.
US Federal Reserve Bank run RTGS payments and receipts transfer system for transactions outside New York. It connects the 12 US Federal Reserve Banks, the Treasury and other government agencies. Along with CHIPS, which deals with transactions in New York, handles most large dollar transfers.
Futures Industry Association. The representative association of organisations with an interest in the US Futures Markets.
When dealing in Financial Futures a Buy or Sell order, when completed, is said to be Filled.
Fitch Investor Services. One of the major US rating agencies. These agencies evaluate an individual's or a company's credit history and capability of repaying obligations. They assign credit ratings to assist investors to analyse credit risks. See Moody's and S&P's.
A loan on which the rate paid by the borrower is fixed for the duration of the loan.
Term denoting a trader as neither long nor short in his positions.
This denotes an interest rate that is periodically refixed according to a reference index rate e.g.LIBOR.
The process of launching a public company for the first time by inviting the public to subscribe in its shares. Also known as 'Going Public'.
Futures and Options Association. Commodity Exchange trading in Futures Contracts. London version known as FOX.
‘Free on board’. ‘Fob Southampton’, for example, would be a price quoted as including the cost of goods and all additional expenses up to the point when they have been loaded onto the cargo vessel at Southampton.
US 12-member body consisting of the seven members of the Federal Reserve Board and five of the 12 Federal Reserve Bank residents. The primary policy making body which determines the objectives for growth of money and credit in the US. Meets eight times per year to set the Fed Funds Rate.
An enterprise established in China backed by investments from both Chinese and foreign parties. The rights and obligations of all parties involved in the enterprise are defined in contracts signed at the outset of the venture. Normally these contracts specify that when a pre-determined co-operation period ends, all the assets of the new enterprise will be owned solely by the Chinese party. The foreign party will generally have recouped its initial investment during the co-operative period.
在中国建立的、由中外双方联合投资的企业。各方在企业中的权力和义务由各方在企业成立时签署的合同约定。通常，合同中会约定，当预先确定的合作期限终止时，新企业的所有资产将完全归中方所有。外方一般会在合作期间收回它的初始投资。
The potential impact of foreign exchange rate fluctuations on a company’s profitability.
外汇汇率波动对公司收益性的潜在影响。
An enterprise established in China which has some degree of backing from foreign investors. Depending on the nature of this foreign investment, an FIE is either classed as being a foreign co-operative joint venture (see above) or a wholly owned foreign enterprise (see below).
在中国建立、在某种程度上有外国投资者支持的企业。根据外国投资的不同性质，外商投资企业可以分为中外合作企业（见35页）和外商独资企业（参见下面）两种类型。
A foreign investment enterprise (FIE) is a type of company owned at least in part by foreign investors. In China FIEs are usually funded by a minimum of 25% foreign investment. WFOEs, JVs and FICLSs are all legal structures that can be used to establish FIEs.
外商投资企业（FIE）是至少部分由外国投资者拥有的公司。在中国，外商投资企业中的外方出资比例通常不得低于25%。外商独资企业（WFOEs）、合资企业（JVs）和外商投资股份有限公司（FICLSs）都是可以用于成立外商投资企业的法人结构。
A less common example of a foreign investment enterprise, FICLS are companies limited by shares. They must have at least five shareholders, with at least 25% of shares held by foreign investors.
FICLS属于股份有限公司，是一种不太常见的外商投资企业。它的股东人数至少是5人，外国投资者持股比例不得低于25%。
A contractual obligation between two parties to exchange a particular good or instrument at a set price on a future date.
Forward Rate Agreement. A contract determining an interest rate to be paid or received on a specific obligation beginning at a start date in the future.
Forward Rate Agreement British Bankers Association. Terms and conditions for trading in FRAs, as laid down by the BBA.
Fixed Rate Mortgage.
Floating Rate Note. A fixed principal financial instrument whose yield is periodically reset relative to a reference index rate to reflect changes in short-term interest rates.
In the context of a treasury department, the front office performs procedures such as cash investment and foreign exchange. Front office staff are those directly involved in dealing and agreeing financial transactions. Larger treasury organisations are divided into front and back office for control and process purposes with the back office checking what the front office has done. Some have a middle office as well. Smaller treasury organisations have to find other ways to establish appropriate check and control procedures.
在资金管理部门中，前台执行诸如现金投资和外汇交易等流程。前台员工直接参与金融交易的办理和确认。出于控制和流程的目的，规模较大的资金管理组织被划分为前台和后台，后台负责核对前台完成的工作。一些组织还设有中台。规模较小的资金管理组织只得寻找其它的方式来建立适当的核对和控制流程。
Financial Services Authority. An independent body whose board is appointed by the UK Treasury and which regulates the financial services industry in the UK.
Financial Stability Forum. An international forum for finance ministers, central banks and financial supervisors set up in 1999 by G7 to promote international financial stability through information exchange and international co-operation in financial supervision.
Fungible is a term used to describe a situation when one instrument is identical to, and therefore interchangeable with another. A fungible bond is a new issue which is attached to an existing issue in the sense that it has the same specifications, other than price. If a bond is fungible, it can be exchanged for an existing bond with the same characteristics.
A cash transaction where a buyer and a seller agree upon the price and quantity of a commodity or index on a date in the future. These contracts must be exercised.
Organised exchange where standardised contracts for the future delivery of various commodities and financial instruments are traded according to established rules and regulations.
A forward is an agreement whereby the purchaser agrees to buy a particular asset at a future date, but fixes the price at the time the agreement is made. In the context of FX, the purchaser would agree to buy a fixed amount of a foreign currency at some point in the future, but at a price based on the current exchange rate and the interest rate difference between the two currencies. This enables the purchaser to budget precisely as the uncertainty resulting from exchange rate fluctuations has been eliminated. However, by using making such an agreement, the purchaser loses the chance to profit if the exchange rate is more favourable on the delivery date than the agreed forward rate.
远期交易是指一种协议，根据该协议买方同意在未来某个日期买进某项特定的资产，但价格在协议签订时确定。在外汇远期交易中，买方会同意在未来某时买进一笔固定数额的外汇，但价格根据当前汇率和两种货币之间的利率差来确定。这种方式使买方能够进行精确的预算，因为汇率波动带来的不确定性已被消除。但是，签订这种协议后，如果交割日的汇率比议定的远期汇率更为有利，买方就会丧失获利机会。
The use of techniques or instruments to reduce a company’s existing exposure to foreign currency movements. The effectiveness of a ‘hedge’ is measured in terms of the residual gain or loss that results from a rate, price, or currency movement after taking any hedging into account.
利用技术或工具帮助企业减少汇率变动带来的风险。衡量套期保值效益的标准是，考虑套期之后，利率、价格或货币汇率变动导致的剩余收益或损失。
Foreign exchange risk is the danger that a change in exchange rates will affect a company’s profits and/or the value of its assets and liabilities. All companies which engage in foreign trade will be exposed to a certain amount of foreign exchange risk. Companies which only operate in one country can also be exposed to FX risk, albeit indirectly.
外汇风险是汇率的变化将影响公司的利润和/或资产及负债价值的危险。所有进行国外贸易的公司都会面临一定程度的外汇风险。但是，只在一个国家开展经营活动的公司也可能面临外汇风险，虽然是间接风险。
FX risk management is concerned with controlling a company’s exposure to FX risk.
外汇风险管理涉及控制公司面临的外汇风险。
Organisation of 11 Central Banks (US, Japan, Germany, UK, France, Italy, Canada, Netherlands, Belgium, Sweden and Switzerland) linked to BIS by concern for payments systems.
The Group of 30. Private organisation sponsored by central banks and major commercial and investment banks aiming to develop plans for faster, standardised clearance and settlement of domestic and international securities transactions.
Group of countries (US, Japan, Germany, UK, France, Italy and Canada) committed to working out economic and currency exchange rate issues.
Global Business Dialogue on Electronic Commerce. A body set up in 1999 made up of international business representatives from the internet industry to address conflicting rules and regulations concerning global electronic commerce.
German name for a Limited Company. See Aktiengesellschaft.
Bonds issued by the UK government. Named after the gilded edge on the bond certificate.
An electronic Futures and Options trading system started in 1992 by Reuters, CME and CBOT. Joined by MATIF and Deutsche Terminborse but weakened by the decision in 1994 of LIFFE not to join and the withdrawal of CBOT.
Gesellschaft mit beschränkter Haftung. German equivalent of the British 'PLC'.
See Flotation and IPO.
An arrangement whereby an old rule continues to be applicable in some circumstances even when a new rule is in place.
一种即使新规则已¾¬生效，Ô¬有规则在某些条件下仍继续适用的安排。
Greek letters are used to describe the level of sensitivity of the value of an option. Examples include: Delta, gamma, theta, rho and vega.
The settlement of the full amount due rather than taking any account of what is due back to the remitter from the same counterparty.
对应付的全额进行结算，而不考虑同一个交易对手应该返还给汇款人的金额。
‘Good till cancelled’. This is used to describe any order that is good until it is either filled or cancelled.
A bank account which acts as a central depository for the funds of several other bank accounts. For example, in a cash pooling arrangement, a company may have several operating subsidiaries, each with their own bank account. These operating accounts could all be arranged to feed into a central header account, which would contain all of the company’s money.
一个为其他几个银行账户的资金担任中央存管处的银行账户。例如，在一个现金池协议中，一家公司可能有几家运营子公司，每一家都有自己的银行账户。可以安排这些运营账户都向一个中央的主账户提供资金，而这个主账户将持有公司的全部资金。
A widely varied pool of assets managed intensely for which managers are paid a percentage of any profits. Despite the name such funds do little or no hedging.
A ratio of the number of Options contracts needed to hedge a position in the underlying instrument.
Greek RTGS system linked to TARGET.
An alternative term for settlement risk in FX transactions. The name derives from the collapse in 1974 of the German Herstatt Bank.
外汇交易结算风险的另一种称谓，得名于1974年德国赫斯塔特银行的破产。
Hong Kong Exchanges and Clearing Ltd. HKEx wholly owns The Stock Exchange of Hong Kong Limited, Hong Kong Futures Exchange Limited and Hong Kong Securities Clearing Company Limited.
Hong Kong Futures Exchange.
Hong Kong Monetary Authority. Established in 1993 by merging the offices of the Exchange Fund with the Office of The Commissioner of Banknotes. The Government authority in Hong Kong responsible for maintaining monetary and banking stability.
Hong Kong Stock Exchange.
A company that controls one or more other companies which are then described as subsidiaries of the holding company.
控制一家或多家其它公司的公司，这些被控制的公司被称为控股公司的子公司。
The difference between IAS and IFRS
There has been some misunderstanding over the status of International Accounting Standards (IAS) since the International Accounting Standards Board (IASB) announced the introduction of International Financial Reporting Standards (IFRS) in 2001.
The first body to set International Accounting Standards (IAS) was the International Accounting Standards Committee (IASC), which was set up in 1973. During its 28-year life, the IASC introduced 41IAS, some of which have been replaced or withdrawn. The IASB was created in 2001 as part of a restructuring of the IASC, designed to make the international standard-setting process more effective.
New standards released by the IASB are known as IFRS.
There are two main differences between IAS and IFRS:
Inter-Bank Data Exchange, a secure data exchange network utilised in the cheque clearing process.
Institute of Chartered Accountants of England and Wales.
Institute of Chartered Accountants of Scotland.
International Commodities Clearing House. See LCH.
International Central Securities Depositories. See Euroclear and Clearstream.
Industrial Development Agency of Ireland. Government agency responsible for securing new investment from overseas in the manufacturing and international services sector.
International Financial Services Centre. Dublin, Ireland, base for International Mutual Funds, Banking, Life Assurance Treasury and Insurance businesses for non residents. EU approved tax regime of no withholding taxes on interest payments made to non residents and ten per cent corporation tax for trading operations.
Inheritance tax. Tax payable on inherited wealth.
An asset not readily convertible into cash quickly and at a low cost.
International Monetary Fund. International organisation established in 1944 as part of the Bretton Woods Agreement with the authority to lend funds to member countries conditioned on their pursuit of sound economic policies. Funded by members' contributions of gold and currency.
International Monetary Market. The financial futures market sector of the CME.
Referring to an Option which has Intrinsic Value.
Exposure to loss as a result of a change in interest rates.
The term denoting a favourable difference between the strike price of an option and the current price of the commodity, asset or instrument on which it is based. This is said to be the amount by which it is ‘in the money’.
A public limited company which uses the funds provided by its shareholders to invest in other companies.
International Petroleum Exchange. London-based exchange, formed in 1980, trading in Energy Futures and Options.
Initial Public Offering; when a company achieves a stock market listing for the first time. US equivalent of a UK Flotation. See also Going Public.
‘Interest Rate Guarantee’. This is the term used to denote an option on a forward-rate agreement.
Irish RTGS system linked to TARGET.
Interest Rate Swap. An agreement to exchange a fixed rate interest stream for a floating rate interest stream in the same currency based on an agreed notional principal amount. Sometimes referred to as a Vanilla or Coupon Swap.
The International Swaps and Derivatives Association. Principal derivatives industry trade organisation. ISDA develops and publishes master agreements for IRSs and other derivative contracts. ISDA agreements serve as industry standard documentation for a variety of financial instruments.
International Securities Market Association. Formerly known as AIBD. Regulatory body monitoring the increasing range of financial products and setting rules governing good market practice.
Internet service provider.
The establishment of a business enterprise by two or more parties, who agree to share the enterprise’s profits and losses. In China a JV can take the form of an Equity Joint Venture (which is taxable separately and profits are shared according to capital contributions) or a Co-operative Joint Venture (profits shared according to contractual agreement).
由两方或多方建立的企业，各方同意在企业中共享利润、共担损失。在中国，合资企业可以采取股权合资企业（独立缴税，利润根据出资额进行分配）或合作企业（利润根据合同协议的规定进行分配）的形式。
Johannesburg Stock Exchange.
A Key Performance Indicator (KPI) is a quantifiable measurement of an organisation’s objectives. By determining a set of KPIs, a company can monitor and measure its progress towards achieving particular goals and targets. For instance, a school may set the percentage of its students who progress to further education as a KPI. The reasoning behind identifying and measuring KPIs is for organisations to be able to measure how well it is achieving its goals.
关键绩效指标(KPI)是衡量组织目标的定量指标。通过确定一系列关键绩效指标，公司可以监控和衡量自己实现特定目的和目标的进展。例如，一所学校可能把升学率作为一个关键绩效指标。界定和衡量关键绩效是为了保证组织能够衡量自己实现目标的程度。
The Kuala Lumpur Commodity Exchange.
German state central banks.
Leveraged buyout, in which a small company with limited assets borrows heavily on these and the assets of the target company to finance the takeover of a larger company.
London Clearing House. Established in 1888 and known until 1991 as the International Commodities Clearing House (ICCH). Central clearing system for most exchange traded Futures and Options contracts in the UK.
Letters of credit are used in trade transactions to protect both purchasers and suppliers from counterparty risk. A letter of credit is issued by a bank, which guarantees the credit of its customer for a particular amount as long as the conditions of the letter of credit have been met.
The purchasing company cannot claim the goods until payment has been authorised, while the supplier cannot be guaranteed payment until certain documentary conditions have been fulfilled. Letters of credit therefore provide both parties with a high level of security. However, they are also associated with extensive paperwork and documentation is often rejected in the first instance, resulting in potentially expensive delays.
在贸易中使用信用证的目的是帮助买卖双方防范交易对手违约风险。信用证由银行签发，在信用证条款得到满足的前提下，银行为其客户提供一定数额的信用担保。
买方公司只有在授权付款之后才能提货，而供应商只有在满足特定的单据条件后，才能得到付款担保。因此，信用证为双方都提供了高度的安全保障。不过，信用证的使用还伴随着大量的书面工作，而且一开始单据常常会遭到拒付，由此而造成的延迟可能会导致高昂成本。
London Investment Banking Association.
London Inter-bank Bid Rate. The rate at which banks in London are prepared to accept short-term money deposits.
London Inter-Bank Offered Rate. The primary fixed income index reference rates used in the Euromarkets. Most international floating rates are quoted as LIBOR.
The London International Financial Futures and Options Exchange. Financial Futures market, opened in 1982, trading in Financial, Equity and Commodities Futures contracts.
London Inter-bank Mean Rate. The median average between LIBOR and LIBID.
Luxembourg's RTGS system and link to TARGET.
This term is used to denote a market in which large deals make little difference to price movement. This is usually a market in which there are high volumes of trade and participants.
These funds are a type of mutual fund used by investors as an alternative to bank deposits. Liquidity funds invest in a diversified portfolio of high-grade, short-term debt instruments. Investors in this type of fund deposit money for short periods and earn a short–term rate of interest in return. Liquidity funds come in many different forms and offer different credit and maturity profiles. If carefully chosen, they offer diversification of risk, are highly secure (the safest being 'AAA' rated) and may offer same-day availability of funds.
The use of liquidity funds by corporates in Asia is increasing. The large global fund managers generally offer highly rated liquidity funds denominated in EUR, GBP and USD, with the USD-denominated funds being the most popular. There are also a growing number of local currency opportunities available – the Australian, Hong Kong, Indian, Indonesian, Japanese and Singaporean markets now have local currency liquidity funds available.
这些基金是一种共同基金，是投资者除银行存款外的另一种投资选择。流动基金投资于由各种高评级短期债务工具所组成的多元化投资组合。这种类型基金的投资者只做短期存款，并获得短期利息回报。流动基金形式多样，提供不同信用度和期限。如果精心选择的话，流动基金可以分散风险、具有高度安全（最安全的为“AAA”评级）、并且可以提供当日可用资金。
亚洲公司正在愈来愈多地使用流动基金。大型全球基金经理人通常提供欧元、英镑、美元面额的高评级流动基金，而又以美元面额的基金最为流行。此外，流动基金也有越来越多的机会使用本国货币---澳大利亚、香港、印度、印度尼西亚、日本、及新加坡的市场现在就有本国货币的流动基金。
The set of strategies and measures that aim to ensure that short-term funding needs are met and short-term cash surpluses are invested.
一套旨在确保短期资金需求得以满足、短期现金赢余得以投资的策略与方法。
Liquidity Risk occurs when there is a change of perception of an instrument's value in the market, thus making sale difficult.
Loan Market Association. An organisation started in 1996 with the objective of developing a secondary market for loans within the Euromarkets.
London Metal Exchange. Established in 1877, the London-based non-ferrous metal exchange is used by metals industry participants for hedging against adverse fluctuations in prices of metals such as copper, aluminium, lead, zinc, nickel, tin and silver.
The Exchange changed its name to London Stock Exchange Limited on 9 December 1995 following separation of the Irish Stock Exchange. It has since become a plc (8 June 2000), following shareholders approval of the demutualisation proposals, and became a listed company on 20 July 2001. The London Stock Exchange plc is now a fully commercial public company, and provides the markets a means of raising capital for UK and international companies through equity, debt and depositary receipt issues. Further details can be found at: www.londonstockexchange.com
An investment position which will benefit from a rising market. For example, if a trader buys US dollars in the hope that the US currency will strengthen, he is said to be 'long' of dollars.
A lookback option is exercised at the end of the option contract. It gives the holder of the option the right to buy or sell the underlying instrument at its lowest or highest price within the contract period.
These are expensive as they give the holder the option to select the exercise price which will be most advantageous to them. The cost will be based on the underlying volatility of the price over time.
London Stock Exchange. Market, in London, started in the 17th century for dealings in securities. In 1986 it became the International Stock Exchange of the United Kingdom and Republic of Ireland. See ISE and London Stock Exchange.
Long-Term Capital Management; a US hedge fund revealed as the most active user globally of interest rate swaps which had to be rescued when it ran into financial difficulties, August/September 1998.
Low-value payment.
Treaty, signed in 1991 at Maastricht in the Netherlands amongst Western European countries to promote economic co-operation and to establish a single European currency.
A sum required to be paid by an investor in securities when the price suddenly drops. Failure to do this would result in liquidation of the securities in order to pay back the loan to the broker.
A dealer who undertakes to buy and sell securities as a principal and is therefore obliged to declare buying and selling prices for a particular security at a particular time. This ensures that securities can always be traded.
The risk that changes in the markets in which the company operates will affect its operating profit. This includes price changes and the inability to deliver.
公司所在的市场中的变化会影响经营利润的风险。包括价格的变化和无法交货的风险。
The value of an asset based on the price it would sell for under current market conditions.
根据某项资产在当前市场条件下的售价而确定的资产价值。
Marche A Terme International de France. French derivatives exchange, established in 1986, trading in Financial Futures and Options contracts. Since 1997 sole shareholder has been Paris Bourse SA. Operational management body is Euronext Paris SA.
The date on which the life of a financial instrument ends through cash or physical settlement.
Whereby one or more of the management employees acquire part or all of the ownership of a company.
Mercado Oficial Espanol de Opciones y Futuros Financieros. Spain's Financial Futures and Options market.
Market on Close Order. This is the order given to traders to execute trade at the prevailing price at the end of the day.
Ministry of Commerce of the People’s Republic of China, a government body which is responsible for the formulation of policies and guidelines relating to domestic and foreign trade, foreign investment, imports and exports.
中华人民共和国商务部，一个负责制定有关境内外贸易、外商投资及进出口的政策和指导方针的政府机构。
A day count fraction equal to actual days divided by 360, except in the UK and several commonwealth countries where the denominator is 365(or actual days).
One of the major US rating agencies. These agencies evaluate an individual's or a company's credit history and capability of repaying obligations. They assign credit ratings to assist investors to analyse credit risks. See Fitch and S&P's.
Abbreviation of mobile payments, which are transactions initiated using a wireless mobile device such as a mobile phone or PDA.
使用手机或个掌上电脑（PDA）等无线移动设备启动的交易。
A large company with subsidiaries in many countries.
在多个国家拥有附属子公司的一家大型公司。
The National Association of Financial Market Institutional Investors (NAFMII) was created in August 2007 to implement its own Master Agreement, a China-specific version of the International Swaps and Derivatives Association (ISDA) Master Agreements. The Master Agreement is designed to be a standard basis for the documentation of financial derivatives transactions. NAFMII is a self-regulatory body that works under the direction of the People’s Bank of China (PBC) for Chinese inter-bank market participants. Its main objectives are:
• To perform self-regulatory administration within the inter-bank market. • To safeguard members’ rights. • To ensure fair competition in such a way that will develop China’s inter-bank market.2007年8月，中国银行间市场交易商Ь会（NAFMII）成立，并开始制定其主Ь议。该Ь议是国际掉期及衍生工具Ь会（ISDA）主Ð-议的中国版本，其目的是为金融衍生工具交易的文件提供一个标准的范本。NAFMII是一个自律性机构，在中国人民银行（PBC）的指导下为中国的银行间市场交易商提供服务。它的主要目标是：
• 在银行间市场进行自律管理； • 保护成员的权利； • 确保公平竞争，推进中国银行间市场的发展National Association of Securities Dealers Inc; US self-regulating organisation of the securities industry, responsible for operating the NASDAQ and over the counter securities markets.
US computer system for trading in over the counter securities, which has developed into the second-largest US stock market since its inception in 1971.
A form of wireless communication enabling mobile devices such as mobile phones and PDAs to communicate when in close proximity of one another.
一种无线通信手段，可以使手机和掌上电脑（PDA）等移动设备在相互接近时进行通信。
Contractual offsetting of payables against receivables to reduce credit exposure to a counterparty. On a payment date each party will aggregate the amounts of currency to be delivered by it and only the difference in the aggregate amounts will be delivered by the party with the larger aggregate obligation.
Frankfurt-based stock exchange, similar to Nasdaq and Easdaq; i.e. specifically for higher growth and technology companies.
See CHAPS.
An agreed offsetting of positions or obligations by trading partners or participants. Netting can be used to reduce the number of cross-border payments and/or foreign exchange transactions amongst a group of companies. This is achieved by offsetting and consolidating individual transactions.
交易伙伴或参与者之间一致同意的对头寸或债务进行的抵消。扎差可以被用来减少一组公司间的跨境支付或/及外汇交易的数量。这是通过抵消及整合单个交易而实现的。
Neutral Hedge Ratio. The fraction of a point by which the price of an Options contract is expected to change in response to a one point change in the price of the underlying instrument.
Notional Principal Amount. Nominal value used to calculate IRS payments. In a swap agreement (see ISDA) each period's rates will be multiplied by the NPA to determine the value of each counterparty's payments.
Net Present Value. The expected or certain value of a future cash flow discounted to the present at an appropriate interest rate.
National Securities Clearing Corporation. US organisation, established in 1977 from the merger of clearing facilities owned by the New York and American Stock Exchanges and the National Clearing Corp for the National Association of Securities Dealers.
New York Board of Trade. Exchange market comprising the Coffee, Sugar and Cocoa Exchanges, plus the New York Commodities Exchange.
New York Futures Clearing Corporation. Clearing system for Financial Futures and Options transactions for the exchanges and subsidiaries of the NYBOT.
New York Futures Exchange, established in August 1979 and a subsidiary of the NYSE.
New York Mercantile Exchange. A commodity futures exchange for energy and precious metals.
New York Stock Exchange. Main US stock exchange founded in 1792.
Options Clearing Corporation. Founded in 1973 this is the largest clearing house in the world for financial derivative instruments. Operates under the jurisdiction of the SEC (Securities and Exchange Commission) and is jointly owned by the American Stock Exchange, Chicago Board Options Exchange, International Securities Exchange and Philadelphia Stock Exchange.
Organisation for Economic Co-operation and Development. Established in 1961 to assist member countries in policies designed to achieve high economic growth whilst maintaining financial stability.
Open-ended investment company. A regulated investment company with variable capital which is not fixed so that, like a Unit Trust, it can issue and redeem shares on demand.
Open account is a payment arrangement whereby goods are delivered without guarantee of payment. The seller delivers the goods to the buyer and then issues an invoice. This method of payment leaves the seller exposed to the risk that the purchaser will pay late or default on payment.
在赊账的支付方式中，供应商在没有付款担保的情况下，先给买方发货，然后开具发票。这种支付手段使卖方承担风险，因为买方可能会拖欠货款或拒绝付款。
The means by which the Fed keeps the rate set by the Federal Open Market Committee. The Fed adds liquidity to the market if demand requires. If the Fed does not add liquidity as necessary, the rate will rise. The converse, naturally, would apply.
Word of mouth trading in, for example, a Commodity or Financial Futures market transacted on a floor. See Floor.
The risk of operational failures such as systems (technological or infrastructure) breakdown, employee fraud or misconduct, natural or man-made disasters or other external factors, adversely affecting a company’s operating profit.
经营失败的风险，例如发生（技术上的或基础设施的）系统崩溃、员工欺诈或渎职、天灾人祸、或其它对公司的经营利润产生不利影响的外部因素的风险。
The holder of an option has the right, but not the obligation to buy or sell an agreed amount of a commodity, asset or financial instrument at an agreed price. Options have a maturity date which may be either the date at which the option may be exercised, or alternatively the date up to which the option may be exercised.
A market in which financial products are traded outside a registered stock exchange through a dealer network either electronically or by telephone. This occurs in many financial markets and for many types of financial instrument. The International Swaps and Derivatives Association (ISDA) has developed a set of standard master agreements as well as documentation setting out the legal framework for a wide range of OTC instruments.
通过交易商网络在注册外汇交易市场以外，以电子手段或电话进行金融产品交易的市场。场外交易发生在很多金融市场，可进行很多种金融工具的交易。国际互换与衍生金融产品协会 (ISDA) 已开发出了一套标准的主协议及文本，为更多的场外交易工具建立了一个法律框架。
Over the Counter Bulletin Board; introduced by Nasdaq in 1990 to provide investors with information on, and access to, securities not listed on Nasdaq.
The abbreviation used to denote the Austrian Futures & Open Exchange.
An Option which has no Intrinsic Value. A Call is Out of the Money if its Strike Price is higher than the current price. A Put is Out of the Money if the Strike Price is lower than the current price.
A foreign exchange transaction which takes place on a set date in the future. Usually only dealt by banks.
An operational approach based on the principle that it is sometimes better to buy a product or service from another company rather than doing everything yourself. For example, outsourcing treasury operations such as some aspects of payments processing might help to save money and improve the efficiency of the treasury.
一种运营方法，它基于的原则是，有时候从另一家公司购买产品或服务要好于自己做每一件事情。例如，把资金管理的操作如支付处理的某些方面外包出去，可能有助于节约成本和提高资金管理的效率。
An Over the Counter (OTC) instrument is one that is structured by the seller and sold directly (or 'over the counter') to the buyer. There is technically no limit to the nature of the instrument that can be arranged over the counter. This is because the transaction is simply between the buyer and the seller and is not subject to the limitations of any exchange. The advantage for the buyer is that the instrument can be tailored to meet its specific needs.
In Financial Futures terms this is a package of four consecutive three month Eurodollar contracts used to create a synthetic one year Eurodollar Strip. Used in the hedging of some IRS transactions. See Strip and Bundle.
The nominal price of a share or other security.
The French Stock Exchange. Since 1991 the only stock exchange in France, incorporating the six provincial stock exchanges in Bordeaux, Lille, Lyon, Marseilles, Nancy and Nantes.
Such an option depends for its value on the price fluctuations of the commodity, asset or instrument upon which it is based, over the life of the option. This differs from a traditional Option the price of which depends upon the price of the underlying commodity etc. only on the day of exercise or expiration.
The value of an option at expiration.
Announced by the PBOC on the 13th April 2006, the PBOC six measures are a set of amendments to China’s regulations concerning foreign currency (FCY) administration:
中国人民银行的六项措施于2006年4月13日公布，对中国的外汇管理政策进行了一系列调整：
Paperless Direct Debit. Service which enables organisations to sign up customers for Direct Debit collections by telephone, internet or face to face. The service is, however, only available to organisations using the AUDDIS service. See also BACS.
The central bank of China. The PBOC macro-manages the Chinese economy, with particular responsibility for formulating and implementing monetary policy.
中国的中央银行。中国人民银行对中国的经济进行宏观调控，其具体职责是制定和执行货币政策。
Private Finance Initiative. UK government scheme to attract private investment in the public sector.
The Philadelphia Stock Exchange. The oldest stock exchange in the US, founded in 1790.
The last decimal places of a price. For example if the USD/GBP foreign exchange rate moves by one pip it moves as follows; 1.4300 to 1.4301.
The area of the floor of a derivatives exchange within which certain contracts are traded.
The extent to which someone is committed to a market through having bought or sold securities, commodities, currencies and so on.
Public Private Partnership. Public and private sectors combining to provide funding for various projects.
Markets where new issues of securities take place. Any subsequent resale or purchase of such securities is described as being in the secondary market. This would be a stock exchange for many quoted companies.
Originally developed for hedge fund managers, the concept of prime brokerage is of increasing interest to corporate treasurers as a result of the development of foreign exchange trading over the Internet.
Prime brokerage allowed hedge fund managers to transact with a number of different brokers, through the prime broker, to get the best price for a particular asset. Fund managers could also consolidate the administration and execution of those transactions with the prime broker thus reducing back office costs.
In the foreign exchange context, prime brokerage will allow a company to trade its foreign exchange through one bank (known as the ‘hub’ bank). All administration and execution of those transactions will be consolidated via the ‘hub’ bank. Communication with the ‘hub’ bank may either be direct or through a foreign exchange portal.
The ‘hub’ bank will offset each corporate transaction with other banks in the market (‘spoke’ banks). Effectively this means that a company will have access to all the foreign exchange banks that its ‘hub’ bank can access. This should result in cheaper pricing for the company’s foreign exchange.
The company will have a credit relationship with the ‘hub’ bank, which assumes the credit/counterparty risk. The ‘hub’ bank will then transfer the market risk to the ‘spoke’ banks.
A corporate treasury will benefit from prime brokerage in a number of ways:
Although prime brokerage may not be in common use yet in the corporate market, the twin attractions of improved pricing and lower administrative costs suggest it soon will be. The problem will be that the ’hub’ banks will want to charge for providing the credit. If that is the case, will banks start to charge for providing credit lines for all foreign exchange?
An enterprise which is wholly owned by private individuals.
完全由私人所有的企业。
An unconditional promise in writing, signed by the debtor, undertaking to pay a specific sum on demand or at a fixed or determinable date.
Pacific Stock Exchange. US west coast stock exchange, with trading floors in Los Angeles and San Francisco and links with the Taiwan stock exchange and others in the Pacific region.
A set of nine measures specifically aimed at large MNCs based in the Pudong financial district:
The Pudong Nine Measures were announced in October 2005 and introduced in December 2005. Whilst these measures have been introduced on an experimental basis, it is likely that if they prove successful they may well be rolled out to the whole of China. Widespread adoption of the Pudong Nine Measures would have exciting consequences for treasurers working in China as they open up increased cash, liquidity and wealth management opportunities.
这是九项专门针对设立在浦东金融区的大型跨国公司的措施：
浦东的九项措施公布于2005年10月，从2005年12月开始推行。虽然这些措施都是在试验的基础上推行的，但是如果成功的话，很可能在全国推广。浦东九项措施的广泛实施会令在中国工作的资金管理者非常振奋，因为这些措施开放了更多管理现金、流动性和资产的机会。
A contract giving the buyer the right, but not the obligation, to sell at the Strike Price.
If a company purchases a put option, it buys the right, but not the obligation, to sell a quantity of the underlying instrument at the strike price. If the market price is below the strike price, the holder of the option will decide to exercise the option, selling the agreed quantity at the strike price. In this case, the company holding the option will receive an additional return equal to the difference in strike price less the market price per instrument with a deduction for the premium. If the strike price is below the underlying price, the holder of the put option will choose to sell the instrument at the market price. In this case, the loss will be limited to the price of the premium.
If a bank writes a put option, it sells its counterparty the right to sell a quantity of the underlying instrument at the strike price. If the market price falls below price, the holder of the option will decide to exercise the option, selling the agreed quantity at the strike price. The lower the market price, the greater the loss felt by the bank. Unlike the call sale, the potential loss is limited by the fact that the market price of the underlying instrument cannot fall below zero.
The Chinese Qualified Domestic Institutional Investors (QDII) scheme was introduced in 2006 as an extension of the QFII scheme. It allows Chinese investors access to certain foreign markets through Chinese commercial banks. Investments can only be made in certain ranges of products, such as fixed-income, money market and stocks and shares.
中国的合格境内机构投资者（QDII）方案于2006年出台，它是QFII 方案的延伸。它允许境内投资者通过中国的商业银行投资于特定的境外市场。QDII投资只限于特定的产品，例如固定收益产品、货币市场产品以及股票。
The Chinese Qualified Foreign Institutional Investors (QFII) scheme was introduced in 2002 as a means of allowing foreign capital access to Chinese financial markets. It enables qualifying foreign institutions to invest in renminbi equity and bond markets subject to certain restrictions.
中国的合格境外机构投资者（QFII）方案于2002年出台，从而允许境外资本进入中国的金融市场。它使合格的境外机构能够在特定的限制下投资于人民币股票和债券市场。
Quanto options are designed to eliminate currency risk when an investor purchases an asset which is not denominated in their operating currency. They allow the investor to concentrate on managing the asset price risk.
To illustrate how they work, consider an investor who owns an asset denominated in a foreign currency. To get protection against an adverse movement in the foreign currency, the investor buys a quanto option. This defines an exercise price in the foreign currency. In other words the option sets a fixed exchange rate which will apply when the option is exercised. The amount will depend on the value of the investment at the time the option is exercised.
At exercise, the investor will receive payment in their operating currency. The amount of the payoff will be equal to the value (in foreign currency) of the asset at exercise translated into the operating currency at the pre-agreed exchange rate.
Time period equivalent to zero seconds (bar propagation delay). Data described as being real-time are available as soon as they are received by the system. Similarly, real-time payments are settled at the instant the payment instruction is made.
（除了传输延时）相当于0秒的时间段。实时数据一被系统接收就可以使用。同样，实时支付在支付指令下达的即刻就进行了结算。
RTGS systems process and settle the total amount of each individual payment in real-time. In other words, when a bank sends a payment instruction through an RTGS system, the transaction is simultaneously settled in full.
实时全额结算系统实时处理和结算每一笔单独支付款项的总金额。换句话说，当一家银行通过一个实时全额结算系统发送了一个支付指令时，交易在同时就被全额结算了。
The responsibilities of a regional headquarters in China may differ according to location, however they essentially act as the sole regional head office of a multinational company within a region. Regulations enable an RHQ to engage in a number of activities, such as importing and selling products of its parent company, engaging in commercial or financial leasing and more. Specific rules, restrictions and advantages apply to RHQs in Shanghai, Beijing, Guangzhou and Guangdong.
在中国，地区总部的职责可能因所处地点而异，不过，它们的基本职能是充当一家跨国公司在一个区域内唯一的地域性总部。根据监管规则的规定，地区总部可以从事多种活动，例如进口和销售其母公司的产品，从事商业租赁或金融租赁等等。上海、北京、广州和广东的地区总部分别有特定的规则、限制和优势。
A structure used by multinational companies to manage inter-company payments. A re-invoicing centre acts as an internal clearing house for all inter-company transactions. For instance, a group’s production entity could sell its output to the re-invoicing centre, which in turn sells it to the sales offices. While the goods are physically transferred directly from the production entity’s factory to the sales office’s depot, the legal title of the goods will pass through the re-invoicing centre.
跨国公司用来管理公司内部支付的结构。再开票中心相当于一个内部的清算部门，处理所有的公司内部交易。例如，一个集团的生产部门可以把产品卖给再开票中心，而再开票中心再把产品卖给销售部门。虽然商品实际上是从生产部门的工厂直接转移到销售部门的仓库，但是商品的法律所有权要通过再开票中心转移。
Financial arrangement whereby securities are sold with an agreement to repurchase them at an agreed future date at an agreed price.
A document prepared by a company addressed to one or more banks (or other suppliers) asking for a formal response for cash management or other services. The document should include a detailed description of the company’s requirements, as well as a timetable for the evaluation process. Responses are evaluated in order to choose the successful bank or supplier.
一个公司制作的文件，发送给一家或多家银行（或其他供应商），要求它们就现金管理或其他服务作出正式的响应。招标书应该详细描述该公司的需求，以及评标过程的时间表。对投标书的评价是为了选择成功的银行或供应商。
The application of financial analysis and financial instruments to control and reduce selected types of risk.
The difference between the rate of return on a risk-free asset and on an asset with risk attached. The rate of return is higher if more risk is taken on.
无风险资产同有风险资产之间回报率的差额。风险越高，回报率越高。
Return On Equity. Calculated by taking one year's earnings and dividing by the average shareholder's equity for that year. The most fundamental indication of a company's ability to increase its earnings per share.
Return On Investment. A measure of the value of capital fund outlays. For example, if US$1,000 was invested on Jan 1st, returning US$1,200 on Dec 31st, the ROI is 20%.
See Concertina Swap.
Retail Price Index. The principal price index used in the UK. Carried out monthly by the government measuring price changes of goods and services consumed by the average family. See PPI and CPI.
Real-time Gross Settlement. Electronic payments system for same day settlement, taking place continuously throughout the day. See TARGET.
RTGS payments system launched in Nov 2001 by the Deutsche Bundesbank to replace EAF and ELS for large euro amounts and using only SWIFT standards.
Standard & Poor’s. One of the major US rating agencies. These agencies evaluate an individual's or a company's credit history and capability of repaying obligations. They assign credit ratings to assist investors to analyse credit risks. See Fitch and Moody's.
The Mexican Central Securities Depository which provides custody, administration, clearing, settlement and book entry transfer services for the Mexican Financial industry.
Société Anonyme, appearing after the name of a French, Belgian or Luxembourg company and equivalent to the British ‘plc’. Also an abbreviation for Sociedad Anónima appearing after the name of Spanish public companies and Sociedade Anónima for Portuguese public companies.
South African Futures Exchange.
The Sarbanes-Oxley (SOX) Act of 2002 is a piece of US legislation. It was introduced in response to high-profile financial scandals (notably Enron and WorldCom). It aims to protect shareholders and the general public from accounting errors and fraudulent practices. Administered by the Securities and Exchange Commission (SEC), the act defines what company records must be stored and for how long. It sets rules for the certification of financial reports by CEOs and CFOs, in addition to a number of other provisions.
2002年的萨班斯-奥克斯利法案是一项美国立法。它的推出是对沸沸扬扬的财务丑闻（例如安然和世通公司）做出的回应。其目的在于保护股东以及公众，避免会计失误和欺诈性的操作。由美国证券交易委员会（SEC）执行的这一法案规定了必须存放的公司记录的种类以及存放期限。除了众多其它条款的规定外，它还为首席执行官和首席财务官对财务报告的认可制定了规则。
The State-owned Assets Supervision and Administration Commission (SASAC) was set up by the State Council to distance the Chinese government from the administration and management of its state-owned enterprises. Its responsibilities include:
国有资产监督管理委员会（SASAC）由国务院成立，目的是使对国有企业的监督管理权同从中国政府分离。它的职责包括：
Société des Bourses Françaises. Regulatory agency for the French financial markets.
When traders scalp they open and close a position in a short period of time, coming in and out of a market with the intention of securing some profit.
Special Drawing Rights, created by the IMF in 1969 to supplement existing reserve assets and used by it for book-keeping purposes. SDRs can be used for a range of purposes among holders, including loans, swap arrangements and forward operations.
Stock Exchange Automated Quotations System. Computerised system used on the UK Stock Exchange to record prices at which transactions have been struck, thus establishing the market prices for these securities; these prices are made available to brokers through TOPIC.
Securities and Exchange Commission. The regulatory agency charged with regulation of securities and securities options markets in the US.
The (London) Stock Exchange Electronic Trading Service. Electronic share trading system introduced in 1997 initially for trading solely on the shares of the FTSE100.
Sydney Futures Exchange.
Singapore Exchange Limited (SGX) was formed, in 1999, by the merger of the Stock Exchange of Singapore (SES) and the Singapore International Monetary Exchange (SIMEX). It was the first de-mutualised securities and derivatives exchange in Asia Pacific.
A market division of SGX for trading of derivatives in Singapore.
A market division of SGX for trading of securities in Singapore.
A share buy-back is a company’s repurchase of some of its own outstanding shares. This has the effect of increasing the value of the remaining shares.
股票回购是指一家公司对一部分自己已发行股票的回购。这种做法能起到提高剩余股票价值的效果。
A single department providing common services to a number of operating subsidiaries within a country or within a region. The SSC can perform a broad range of finance activities - such as raising invoicing, handling accounts receivable and making domestic and international payments. Various treasury functions may also be incorporated into such a structure.
为一个国家或一个区域内的多个经营分支机构提供统一服务的一个单独的部门。共享服务中心可以从事很多财务活动——例如开发票、处理应收账款和进行国内和国际支付等。许多资金管理职能也都可以合并到这样的结构中来。
An investment position which will benefit from a decline in price.
Securities and Investment Board. A UK body with overall responsibility for policing financial dealings in London. An umbrella organisation to such self-regulating bodies as the Stock Exchange. Formally changed its name in Oct 1997 to the FSA.
Société d'Investissement à Capital Variable. A SICAV is an open-ended investment trust; there are a number of different types of SICAV. These vary according to the nature of the investments it makes and to whether any profits are distributed or reinvested.
Singapore International Monetary Exchange.
Service Level Agreement. A contract covering the expected level of service to be provided. Typically used when services are outsourced.
Spanish RTGS system linked to TARGET.
Small and Medium Enterprises.
Stable Net Asset Value. A lot of money funds value the price of their individual shares at a constant price of one unit - $1 or €1 or £1. This is known as SNAV or stable net asset value accounting. So 1,000 shares of a $ money fund would represent an investment of $1,000, and the 'dividends' on these shares are the return - or yield - on that investment. Most corporate and institutional investors who use money funds for investment of short-term cash choose SNAV funds. This fits better with the idea of depositing cash to earn interest.
Swiss Options & Financial Futures Exchange.
Societa Per Azioni. This appears after the name of a public limited company in Italy, being the equivalent of the UK plc. See also Sarl.
Portuguese RTGS system linked to TARGET.
The date at which a transaction is soonest settled. A spot transaction will be settled as soon as the market allows. In the Eurodollar market this is two business days after the official date of the deal.
The current market rate for a foreign currency. Spot rates are used to determine the price of foreign currency transactions for 'immediate' execution – in practice, a spot transaction is usually settled two working days in the future.
一种外汇在当前市场上的汇率。即期汇率被用来决定“立即”执行的外汇交易价格---在实践中，即期交易通常在未来的两个工作日内结算。
The difference between buying and selling rates for currencies.
A Special Purpose Vehicle (SPV) is also sometimes known as a Special Purpose Entity (SPE). It is an entity similar in structure to a company that is set up to manage a particular transaction or series of transactions. It can be used as an intermediary in a securitisation to remove assets from the company’s balance sheet.
有时，特殊目的机构（SPV）也被称为特殊目的实体（SPE）。它在结构上类似于一家为管理一笔特定交易或一系列交易而成立的公司。它可以作为一个中介机构，将证券化的资产从公司资产负债表中转出。
Smaller Quoted Company. Term for companies listed on the London Stock Exchange which are not large enough to qualify for inclusion in the main share indices.
SAFE regulates foreign exchange controls and approves foreign exchange expenditures and outward remittances. SAFE is also responsible for the management of China’s external debt.
中国国家外汇管理局负责外汇管制，审批外汇开支以及对外汇款。中国国家外汇管理局还负责中国外债的管理。
Short-term interest rate.
Straight through processing. Fully automated flow of information through all stages of the trading cycle.
This is the price at which the holder of an option has the right to buy or sell the commodity, instrument, currency or asset upon which the option is based.
Separately traded registered interest and principal securities. Zero coupon notes and bonds are created by trading note and bond coupon and principal payments stripped from treasury securities. See also Bundle and Pack.
Statement of Total Recognised Gains and Losses. Generic term in accounting for items that affect a company’s value, but which do not reflect its trading performance.
Also known as ‘reverse factoring’. Supplier finance is a means of financing the supply chain when suppliers need additional finance. The buyer initiates the process through its own bank, which will offer the supplier finance on the basis of the buyer’s credit rating. The bank will pay the supplier a percentage of the due payment upfront and the remainder later. This method tends to provide the supplier with cheaper financing than more traditional receivables financing techniques.
供应商融资也叫做“反向保理”，是在供应商需要额外融资时为供应链提供融资的一种手段。这一过程由买方通过其银行发起，该银行会以买方的信用评级为基础提供供应商融资，先将货款的一部分预付给供应商，稍后再支付余额。与传统的应收账款融资技术相比，供应商使用这种方法进行融资往往成本较低。
The management process of examining a company's supply and demand needs such that maximum efficiency is achieved. Activities such as sourcing, procurement, supply logistics and sales processes are reviewed and controlled in such a way that they are viewed as processes in a chain rather than as discrete activities. The aim is to produce synergies and identify and eliminate inefficiencies in the underlying processes.
检验一个公司的供需需求，以获得最大效率的管理流程。对供应商选择、采购、供应物流及销售过程等活动进行检查和控制时，是把它们看作供应链中的一部分，而非单独活动。这样做的目的是产生协同增效、确认并剔除相关过程中的低效率。
This term denotes transactions that involve the exchange of one instrument, currency or obligation for another.
Society for Worldwide Inter-bank Financial Telecommunications. A secure, codified electronic method of communication between banks which subscribe to its system. Widely used by member banks to confirm payment details, request transfer of funds etc. Helping to facilitate STP.
An advanced messaging service from SWIFT (the Society of Worldwide Interbank Financial Telecommunication) enabling secure standardised messages to be transferred between financial institutions (and their customers) around the world.
环球同业银行金融电讯协会（SWIFT）提供的一种先进的信息服务，使安全的标准化信息能够在全球金融机构（和它们的客户）之间传递。
This describes the risk that if one participant in a system of payments fails to pay the knock-on effect will result in all other participants being unable to pay.
Trans-European Automated Real-time Gross settlement Express Transfer system. A euro payment system consisting of one RTGS system in each of the member states.
French RTGS system linked to TARGET.
A negotiable, coupon-bearing debt obligation issued and backed by the US government with a maturity of more than seven years. Interest is paid semi-annually.
Index specifically for technology stock, launched by the London Stock Exchange in November 1999 to compete with Nasdaq and the Neuer Markt.
The yield differential between Treasury Bill and Eurodollar Futures Contracts.
If a company is thinly capitalised, its capital structure consists of a level of debt that is considered to be too high. Many countries have thin capitalisation rules restricting the level of debt financing by foreign shareholders. This is designed to encourage an appropriate level of capital in the company and restrict financing of subsidiaries by inter-company loans, which otherwise enables interest to be deducted as an expense for tax purposes.
如果一家公司出现资本弱化，它的资本结构中债务水平就会过高。许多国家都制定了资本弱化规则，对来自外国股东的债务融资比例加以限制。这样做的目的是鼓励公司保持适当水平的资本，并限制子公司通过公司间借贷的方式融资，因为这种融资做法可以使利息作为费用被扣除，从而达到公司避税的目的。
The minimum price fluctuation available in a financial market place.
Tradepoint Investment Exchange. Electronic trading system for UK shares. Launched in 1995 to facilitate the secondary market trading of equities and other securities market instruments.
Tokyo International Financial Futures Exchange.
A negotiable debt obligation issued and backed by the US government with a maturity of between one and seven years.
Dutch RTGS system linked to TARGET.
Teletext Output Price Information Computer, a computerised communication system providing brokers and market makers on the London Stock Exchange with information on share price movements and bargains as they are transacted. Input derived from Stock Exchange Automated Quotations System (SEAQ).
A complex piece of software used to automate, record and control many core treasury functions.
一种复杂的软件，用来自动操作、记录和控制多种资金管理职能。
Also known as an ‘escrow’ account. An account maintained by a professional body that is kept separate from the main business and that is used to hold money on behalf of clients.
也叫做“托管”账户，由一个同主要营业机构分离的专业机构持有，用于代表客户保管资金。
Tokyo Stock Exchange. Not only the leading Asian equities and derivatives exchange but also the clearing organisation for transactions executed at its market.
The price an individual or institution will quote to buy and sell a currency, commodity, asset or instrument.
These are so-called because the bank has not committed itself to providing a company with any finance. The bank has just agreed that it probably will. Because the facilities are uncommitted, there will not be, and there is no need for, any prior agreement over all the terms and conditions in the way that is necessary for committed facilities. Uncommitted facilities are typically arranged for short-term purposes such as overdraft facilities (as used in some countries) or some other forms of overnight borrowing.
From the company’s perspective, uncommitted facilities are usually easier and cheaper to agree. Because the bank does not record them as a commitment to lend there is no need to allocate capital to the facility. This means that there is no need for a commitment fee as there is no commitment. This does not stop most banks trying to charge an arrangement fee — something bigger companies resist.
There is a tendency to assume these credit lines will stay in place but you should always remember that an uncommitted facility can be withdrawn at any time. If the borrower or the borrower’s industry has unexpected problems, you can expect the bank to withdraw or temporarily suspend uncommitted facilities. The telecoms industry has faced these sorts of problems over the last few years.
The problem for the company is that uncommitted facilities do not offer the certainty of funding which is sometimes needed. The treasurer should, therefore, ensure that the uncommitted facilities are arranged to match the underlying funding requirement. For example, the maturity of a short-term loan should match, as closely as possible, the timing of receipts.
Overdraft facilities (which are not available in all countries) are normally uncommitted and can, like any other uncommitted credit facility, be withdrawn at any time. An overdraft facility allows a company to make payments from an account when there are no funds available. This ‘overdraws’ the bank account and creates debit balances thus using the bank’s funds. In recent years, a number of banks have started to offer overdraft lines committed for a period but they will charge for this sort of commitment.
United Nations Conference on Trade and Development, established in 1964. Promotes improved international trading conditions for developing countries with a view to accelerating economic development.
A collective investment scheme under which the stocks and shares of the fund are held on trust for the investors.
Uniform Resource Locator. The standard address for a website e.g. www.treasurytoday.com
Unlisted Securities Market. Market established in 1980 by the Stock Exchange for small companies for whom a full listing was not suitable. Replaced in 1995 by the AIM.
Most option contracts entered into by corporate treasurers are known as ‘plain vanilla’ options. These give the buyer of the option the right, but not the obligation, to exchange a quantity of one currency, interest rate or other instrument for an agreed quantity of another on or before (depending on the terms of the option agreement) a given date in the future.
Exotic options come in two main forms:
Exotic options are primarily available in the foreign exchange market, although they have been constructed in other asset classes. (See also, Exotic options, Barrier Options, Asian Options and Options).
Value at risk. The maximum loss that an institution is likely to face within a given time period with a given probability. Variation Margin Payments made to or required from customers dealing in the Financial Futures Markets. The amount paid or requested depends upon the daily movement of the customers' position and is calculated based on the movement and the size of the position.
Value Added Tax. A tax levied on the value added at each stage of production in contrast to a sales tax or consumption tax levied only on the final sale price.
Venture Capital Trust. An investment trust on the UK Stock Exchange designed to provide start up or expansion capital for unquoted companies.
A statistical measure of the tendency of a market price or yield to vary over time. Volatility is said to be high if the price/yield changes dramatically in a short period of time. Used in VaR analysis.
The number of shares, bonds, notes or contracts traded in a market.
There has always been the option to take out insurance to cover low probability weather risks (e.g. storms and floods). Weather derivatives were developed to provide protection against the effects of high probability adverse weather conditions, such as wetter than expected summers or warmer than expected winters. A weather derivative is a financial instrument that derives its value from underlying weather data, such as average temperature, level of precipitation or wind speed at a specified location. The most widely traded weather derivatives are based on the accumulated average temperature over a given period. This is generally measured in degree days, which is the average daily temperature relative to 18C (65F). A company that decides to hedge weather risk can purchase a variety of weather derivatives, most commonly caps, floors, collars and swaps.
Caps – a cap or call option will protect the buyer if the weather variable exceeds a pre-determined level. Example: Too much snow. A local authority has a budget for snow removal and gritting which will cover 10 days of snowfall of more than 3 cm. A call option could guarantee that from day 10 of snowfall of more than 3 cm (strike level) the local authority will receive a specified sum for every day of snowfall.
Floors - a floor or put option protects the buyer if the weather variable falls below a pre-determined level. Example: A cool summer. A brewery could purchase a floor to hedge the risk that a cooler than average summer could affect beer sales. Based on the historical average number of cooling degree days for the region, the brewery can determine the strike point for the floor. The brewery would receive a pre-determined payment (the tick) for every degree day below the strike point, thus compensating for lower sales. In general, the buyer of a cap or a floor hedges the risk of adverse weather conditions but retains the potential to benefit from better than expected weather. The cost (premium) of a weather derivate depends among others on the strike level in relation to historical weather data for the region and the size of the potential payout. The fact that the counterparty assumes the entire weather risk in return for an upfront premium can make caps and floors a sometimes expensive way of hedging weather risk. To minimise the cost of purchasing protection, it is possible to agree a collar.
Collars - In effect, this is a combination of buying a cap and selling a floor (or vice versa) with different strike levels. The collar still protects against the adverse weather effects but gives up upside potential and thereby reduces the premium. By calculating the two strike prices, it is possible to agree a zero-cost collar although this does mean the counterparty writing the contracts will expect to be making a profit by taking more upside potential than downside.
Swaps - A third alternative strategy is a swap, which is the equivalent of buying a cap and selling a floor (or vice-versa) that have the same strike level and premium. In this sort of swap deal, one party gets paid if the weather exceeds the strike level, and the counterparty receives payment if the weather variable falls below the strike level.
Weather risk is the financial exposure to a change in the weather over a certain period of time. Weather risk is mostly volume-related, as opposed to price-related - such as ‘energy risk’. This means that a change in temperature, precipitation or wind speed will have a direct impact on a company’s volume of revenues, sales, costs or production figures. Weather creates volatility in cash flow and earnings in a variety of industries, ranging from utilities, agriculture and construction to transportation, leisure, amongst others. A mild winter, for example, will affect the demand for gas and electricity. Similarly, a rainy summer will decrease the profitability of a theme park or holiday resort.
A WOFE (pronounced ’woofy’) is an enterprise established in China by foreign companies or financial institutions in accordance with Chinese law. The enterprise must be deemed to be conducive to the development of the Chinese economy and must meet one of the following requirements – that internationally advanced technology and equipment is used and that all or most of the products will be export-oriented.
发音为woofy，是外国公司或金融机构依据中国的法律，在中国建立的企业。它必须被中国政府认定，有益于中国经济的发展，并且必须满足下列要求之一：使用国际领先的技术和设备；或大部分产品是出口导向型的。
A general term for any tax which is deducted at source. That is, the tax being levied is deducted from the taxable income and given directly to the relevant tax authorities by the party paying, with the payee only receiving the net after-tax amount. In certain countries, China included, withholding tax is levied on interest payments made by borrowers to lenders under inter-company loan arrangements. Interest payments made to banks are not normally subject to withholding tax, but interest payments from banks to depositors may be subject to such taxes. This can depend on whether the interest is payable to a resident or non-resident. Withholding tax can be applied to interest paid or received on cross-border inter-company loans.
在源头进行扣除的所有税项的一个总称。即由支付方将所征税额从计税收入中扣除，并直接上缴相关税务部门，收款方只收到税后净额。包括中国在内的一些国家，对公司间借贷安排中，由借方向贷方支付的利息征收预提税。向银行支付的利息通常不征收预提税，但由银行向存款方支付的利息则可能需要征收预提税。这要看利息是支付给居民还是非居民。跨境的公司间贷款的利息收支要征收预提税。
Stock markets around the world use indices of leading shares to illustrate how the market has moved over the measurable past. These indices are increasingly used as the underlying reference instruments in a range of options and futures contracts.
This is a brief guide to the major stock market indices around, with an explanation of each one’s constituent parts. The constituent stocks in all these indices are periodically changed as the values of individual stocks change.
Amsterdam
AEX — this is a weighted index consisting of the share price of 25 leading Dutch companies, traded on Euronext Amsterdam. Shares are selected on the basis of turnover on Euronext Amsterdam and weighted according to market capitalisation. Its base is 100 in 1983.
Brussels
Bel 20 — this is an index of the twenty most important Belgian companies, determined by market capitalisation and turnover, listed on Euronext Brussels. Its base is 1000 on 31st December 1990.
Frankfurt
DAX — this is an index of thirty top German companies, on the basis of order book volume and market capitalisation, listed on the Deutsche Börse. Its base is 1000 on 30th December 1987.
London
FTSE 100 — this is an index of the one hundred top UK companies, on the basis of market capitalisation, listed on the London Stock Exchange. Its base is 1000 on 31st December 1983.
Paris
CAC 40 — this is an index of forty shares, weighted by free float market capitalisation, selected from the top 100 shares listed on Euronext Paris. Its base is 1000 on 31st December 1987.
United States
S&P 500 — this is an index of the 500 leading US companies, in terms of market capitalisation. Its base is 10 in 1941.
Dow Jones Industrial Average — this is the oldest US stock market index. It is a price-weighted and contains 30 ‘blue chip’ industrial stocks, selected by the Wall Street Journal. Its first average was an actual average of twelve stocks of 40.94 on 26th May 1896. It is now a weighted average.
NASDAQ-100 — this is an index of the largest, US and international, non-financial companies by market capitalisation, listed on NASDAQ. Its base was 250 on 31st January 1985. This was recalibrated to 125 when it was divided by 2 on 1st January 1994.
Hong Kong
Hang Seng — this is an index of 33 leading shares with a primary listing on the Hong Kong Stock Exchange. Its base is 100 on 31st July 1964.
Tokyo
Nikkei — this is a price-weighted index of 225 leading shares listed on the Tokyo Stock Exchange. It started being calculated in September 1950, retrospectively to 16th May 1949. It has been calculated by Nihon Keizai Shimbun, a Japanese business newspaper commonly known as ‘Nikkei’, since 1971.
The international global organisation which deals with the rules of trade between nations. The WTO’s goal is to help the producers of goods and services, exporters and importers conduct their business. The basis of the WTO’s power are the WTO agreements which are negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. China signed its WTO agreement in December 2001 and the full terms of the agreement came into effect in December 2006.
是处理国与国之间贸易规则的国际性全球组织。世界贸易组织的目的是帮助商品和服务的制造商以及出口商和进口商做生意。世界贸易组织的权力来自世界上大多数贸易国家谈判、签署、并由各国政府认可的协议。中国在2001年12月签署了一份WTO协议，2006年12月这份协议的全部条款生效。
In Options, an investor who sells Options collateralised by a portfolio.
Ex-dividend. Shares are called ex-dividend when buyers are no longer entitled to receive the last declared dividend.
XML is a data transfer language in which individual pieces of data are each given a descriptive tag, which identifies them as, for example, a retail price or a book title. Once the data has a descriptive tag, customer information, purchase orders, bill payments and other messages can all be communicated between workstations both within an intranet and across the Internet. As long as both the sender and the recipient can decode the descriptive tag then they can process and view the data in any number of applications simultaneously and, crucially, without re-inputting the data itself.
A percentage rate of return.
A line that plots interest rates of bonds with equal credit quality but different maturity dates. The curve is frequently used to predict changes in interest rates and economic activity.
一种曲线，能绘制出信用质量相同、到期日不同的债券的利率。收益率曲线常常用来预测利率和经济活动的变化。