Equities Trading

ABCDS
A credit default swap based on an Asset-Backed Security itself based on relatively risky home equity loans (U.S.) In effect a type of insurance against default on the underlying ABS.
Advantest
Supplier of automatic test equipment to the semiconductor industry. Advantest's SoC, logic, memory, mixed-signal and RF testers and device handlers are integrated into the most advanced semiconductor fabrication lines in the world. Founded in Tokyo in 1954, Advantest established its North American subsidiary in 1982 and its European subsidiary in 1984. More information is available at www.advantest.com.
Arbitrage
Simultaneous sale and purchase of identical or equivalent financial instruments or commodity futures to benefit from a discrepancy in their prices.
At-the-money
Occurs if the strike price of the option is equal to the market price of underlying security.
Beauchamp
A platform to manage complex portfolios and satisfy investor and regulatory requirements. Supplied by Linedata
Capped-Style Option
Option with an established profit cap. The cap price is equal to the option's strike price plus a cap interval for a call option or the strike price minus a cap interval for a put option. Exercised automatically when the underlying security closes above or below the cap price, depending on whether it is a call or a put.
Common Criteria
Set of strict predefined requirements for security.
Compliance Hub
Post-trade automation derivative products. Examples are credit and equity swaps. Communicator Inc.
Covered Call Option Writing
Trading strategy involving simultaneously selling call options and owning an equivalent position in the underlying security. The reverse is to sells a put option and shorting the underlying security.
Equiduct
Multilateral trading facility majority owned by Borse Berlin and Burgundy. Nordic equities markets are the main target.
EquiLend
EquiLend is a provider of trading services for the securities finance industry. With its robust suite of automated trading tools, EquiLend enables its clients to scale their businesses with great efficiency on a global basis in all securities finance markets. Used by borrowers and lenders throughout the world, the EquiLend platform automates formerly manual trading and post-trade processes.
EVCA
Equity and Venture Capital Association
Fidessa Next Phase of European Multi-Asset Strategy
Fidessa group plc (LSE:FDSA), a leading global provider of multi-asset trading systems, market data and global connectivity solutions, has added an enhanced multi-asset, pre-trade risk module for account-based trading across equities, futures and contracts for difference (CFDs) to its European sell-side trading platform. The move marks the latest phase in Fidessa’s comprehensive multi-asset strategy, and is a direct response to increasing asset convergence seen in both the US and Europe.
Homeland Security Presidential Directive 12.
Directive from the U.S. Federal Government requiring all Federal employees and contractors be issued with a uniform card by October 2006 for access to facilities and computer systems.
Human Resource Management
Support activity in the value chain analysis. Included are recruitment, hiring, training, development, and compensation of all personnel required for the entity or company.
Initial Performance Bond
Also known as "Initial Margin". Funds required when a futures position is opened.
International Accounting Standards No.19
Accounting standard requiring listed companies account for the financial condition of their pension funds on the balance sheet, particularly in the case of defined pension pension schemes.
LEAPS
Long-Term Equity Anticipation Securities
Liquidnet
Electronic marketplace that facilitates institutional equities trading for asset management firms worldwide.
Livedoor
Japanese company at the centre of a corporate governance scandal. Can be seen as the equivalent of World-Com or Enron as it is used as evidence of the need for a Japanese Sarbanes-Oxley type legislation on internal controls over financial reporting.
Margin Requirement for Options
Amount an uncovered (naked) option writer is required to deposit and maintain to cover a position. Calculated
Market Timing
US illegal practice of trading in mutual fund companies after the daily fixed pric, profiting from knowledg of subsequent market moves that had not been in the price.
Marketplace Rules 4310(c)(4)
NASDAQ rule requiring companies to have a $1 share price to remain on the market.
NYSE Euronext
Parent company of exchanges including New York Stock Exchange, the world's largest cash equities market; Euronext, the Eurozone's largest cash equities market; Liffe, Europe's leading derivatives exchange by value of trading; and NYSE Arca Options, one of the fastest growing U.S. options trading platforms.
NYSE Euronext Advanced Trading Equities in a Box
NYSE Euronext Advanced Trading Solutions, a world leader in low latency trading technology and division of NYSE Euronext (NYX), today announced an innovative software based solution that has the capability to comfortably handle 10 major US equities feeds on a single server with potential headroom of 3x current market peak capacity.
Physical Controls
A type of control activity. They involve the physical security of assets. They ensure adequate safeguards over access to assets and records.
Private Equity Intelligence
Research group specialising in the private equity arena.
Quadriserv Investors
Quadriserv, Inc. today announced the addition of Susquehanna Private Equity Investments, LLLP, an affiliate of Susquehanna International Group, LLP, and Round Table Partners to its investor ranks. These investing partners join existing institutional investors Bessemer Venture Partners, Merrill Lynch and Renaissance Technologies, LLC to fund the ongoing development and commercialization of Quadriserv’s innovative securities lending platform.
Rule enforced by the SEC requiring U.S. to make available to the public that they make to securities analysts. If the disclosure is intentional the release has to be simultaneous. Unintentional disclosure has to be made available to the public within 24 hours.
RFID
Radio Frequency Identification
Section 104
Section of the Sarbanes-Oxley Act requiring the PCAOB to inspect registered public accounting firms on a regular basis
Section 302
Section of the Sarbanes-Oxley Act of 2002 requiring a certification to accompany each quarterly and annual report filed with the SEC.
Seibu Railway Co.
Japanese company at the centre of a corporate governance scandal. Can be seen as the equivalent of World-Com or Enron as it is used as evidence of the need for a Japanese Sarbanes-Oxley type legislation on internal controls over financial reporting.
SFAS 123R
FASB Statement of Financial Accounting Standards No. 123, Share-Based Payment. Requires companies to recognize compensation paid in the form of employee stock options as a cost in their financial statements.
Statement No. 123R
FASB Statement of Financial Accounting Standards No. 123, Share-Based Payment. Requires companies to recognize compensation paid in the form of employee stock options as a cost in their financial statements.
Information, data or a device to which an end-user or other device requires access
Terra Firma
UK private equity firm.
Tervela
Founded in 2004, Tervela delivers the next-generation communications infrastructure -- the message network -- designed and engineered to exceed the information dissemination and processing requirements of the world's most demanding financial services institutions. Addressing the challenges of market volume, volatility and visibility, Tervela invented the message switch to enable investment banks, hedge funds, exchanges and other data-intensive organizations to deliver consistent, outstanding and predictable performance -- even in the most demanding market conditions. The company is funded by Goldman Sachs, Sigma Partners, Acartha Group and North Hill Ventures. For more information, please visit http://www.tervela.com/.

Exchanges Jargon

American-Style Option
Option contract which can be excercised at any time between the purchase date and the expiration date. Most commonly exchange-traded option in the U.S.
CME
Formerly Chicago Mercantile Exchange. Largest derivatives exchange, built through mergers with CBOT and NYMEX.
2) Bilateral agreement between buyer and seller (parties) of a futures or options on futures transaction. Defined by the exchange.
Cox, Christopher
Chairman of the Securities and Exchange Commission. Confirmed in 2005.
Donaldson, William
Former chairman of the Securities and Exchange Commission
ETF
Exchange-Traded Fund
Floor Broker
Licensed member of an Exchange, who is paid a fee for executing orders for Clearing Members or their customers.
Floor Trader
Also known as a "local". Exchange member who only trades for his own account.
FTSE All-Share
Index covering all the shares irrespective of size on the main London Stock Exchange
Futures
All contracts covering purchase and sale of financial instruments or physical commodities for future delivery on a commodity futures exchange.
Futures Commission Agent
Engages in soliciting or accepting handling orders for the purchase or sale of futures contracts , subject to the rules of a futures exchange and, who, in connection with solicitation or acceptance or orders, accepts any money or securities to margin any resulting trades or contracts. Can be a firm or person.
FXall
Foreign exchange platform
Hang Seng
Benchmark index of the Hong Kong Stock Exchange
Kopsi
Benchmark index of the Seoul Stock Exchange
Nikkei 225
Benchmark index of the Tokyo Stock Exchange
NYSE
New York Stock Exchange
NYSE Euronext
Parent company of exchanges including New York Stock Exchange, the world's largest cash equities market; Euronext, the Eurozone's largest cash equities market; Liffe, Europe's leading derivatives exchange by value of trading; and NYSE Arca Options, one of the fastest growing U.S. options trading platforms.
Options Industry Council
An industry cooperative funded by the American Stock Exchange, Boston Options Exchange, Chicago Board Options Exchange, International Securities Exchange, NASDAQ Options Market, NASDAQ OMX PHLX, NYSE Arca, and The Options Clearing Corporation.
SEC
Securities and Exchange Commission.
TietoEnator and SEB Enskilda
SEB Enskilda has selected TietoEnator’s capital market solution ProBroker to manage the company’s trading operation at the Oslo Stock Exchange. SEB Enskilda is the largest broker dealer at the Oslo Stock Exchange in terms of number of transactions as well as volumes. The implementation project has been running since vinter 2008 and 1st September SEB Enskilda went sucessfully into production with their new trading clearing and settlement solution.
TOCOM
Tokyo Commodity Exchange
TSE
Tokyo Stock Exchange
TTT Moneycorp Real-time Messaging
SMA Financial, SWIFT Regional partner for UK, Eire and Channel Islands today announced that TTT Moneycorp (Moneycorp), the leading international foreign exchange and payments specialist, has moved to real-time message processing over the SWIFT network using MQ Series.To cope with rapidly expanding business volumes and to automate its payment, banking and treasury services, Moneycorp initially implemented the SMA Bureau Service to send payment messages over the secure SWIFT network.

Turquoise Launched Formally

Turquoise, the pan-European equity trading platform backed by nine of Europe's leading investment banks, was officially launched at an 'Opening Bell' ceremony by Peter Gibbs, Chairman and Eli Lederman, Chief Executive in the Turquoise offices at 8am this morning.

The ringing of the Turquoise Bell, cast nearby at the Whitechapel Bell Foundry - Britain's oldest continuously operated manufacturing company - heralds Turquoise's formal opening. The bell symbolises the traditional values of reliability and integrity that have characterised successful exchanges through history, and informs the market that while Turquoise operates the most sophisticated modern technology it recognises its role at the centre of capital markets.

Over the last five weeks, Turquoise has added stocks and countries in a planned, deliberate process to ensure its orderly adoption by members and its integration with other components of market infrastructure. The formal opening today represents the end of this rollout, and the start of a new phase in the development of the Turquoise market. Turquoise's unique market model offers valuable liquidity to traders of small orders at high frequency and dark orders in institutional size.

Bailout Euphoria Fades

Euphoria in the financial markets about Hank Paulson's plan to buy toxic debts faded today with the Dow Jones falling 372 points or 3.27%. The S&P 500 dropped 3.8%.

The bailout has to be ratified by Congress where it has been met with incredulity and a desire to load up the legislation with additional items. Help for subprime mortgage holders and regulation on executive bonus are seen as hot items by many Democrats.

In other markets the oil price spiked to close $16 up at more than $!30.

Bank of America, Citigroup, Merrill Lynch and Wachovia all traded lower as investors continued to shun financials. Morgan Stanley kept above water following Mitsubishi UFJ taking a stake.

Goldman Sachs and Morgan Stanley both made the historic decision to become bank holding companies. This enables the banks to take deposits and have access to Federal funds.

Trading Today

The Dow Jones had a respite, closing 410 points or 3.86% on todays session. Standard & Poors 500 was up 4.1% as well. The good news did not extend to the FTSE 100 which saw a 0.7% drop.

There was no let up for the credit markets with a massive flow to Treasury bills, freezing the market for capital.

$180bn of loans from the Federal Reserve to other world central banks to improve money markets liquidity.

LIBOR, the rate at which banks loan money to each other is still very high.

UK banks were again in the spotlight. Now HBOS has been rescued, the wave of pessimism started on Bradford & Bingley. In the US Morgan Stanley was under the Microscope for its possible tie-up with Wachovia.

The FSA implemented its restrictions on short-selling of financial firms.

Trading Tools

Trade Suite / CNS Interface
Application used to streamline trade processing and reduce risk to executing broker and the prime broker. Supplied by National Securities Clearing Corporation
NSCC
National Securities Clearing Corporation
TRM-Prime Broker (TRM-PB)
Management of the entire post-trade, pre-booking process in prime brokerage. Supplied by Traiana.
Beauchamp
A platform to manage complex portfolios and satisfy investor and regulatory requirements. Supplied by Linedata
T Zero Prime Brokerage
Prime brokers use T Zero to automate the give up process. Vendor is T Zero
Geneva
Application for client portfolio accounting, general ledger accounting, performance measurement and portfolio reporting. Geneva's tool vendor is Advent
Swaps Pricing Platform
Accessing security quotes generated by broker-dealers that prime brokers use for calculating client's net asset values (NAV). Tool vendor is SQX.

Wizetrade Releases CommandTRADE

The Wizetrade Group has released CommandTRADE(R) FX, a trend recognition software program designed to help individual investors leverage the enormous power of automation when it comes to trading foreign currencies in the (spot) FOREX market. This groundbreaking software is truly unique in that it can automatically scan, find, and execute ideal currency trades -- based on traders' specific entry and exit points -- through an integrated broker, all while traders are away from their computers and living their lives.

Traders can take advantage of the extended hours of the (spot) FOREX market now that CommandTRADE FX can scout the market and execute trades, in conjunction with an integrated broker, even while the trader is fast asleep. Additionally, the automation of the software further enables individual traders to take their emotions out of their trading endeavors, one of the greatest challenges many traders face.

"CommandTRADE FX promises to revolutionize the way individuals trade currencies and further empowers individual investors," said John Dankovchik, president of The Wizetrade Group. "CommandTRADE FX permits traders to run strategies in a 24/7 environment, while taking advantage of optimal entry and exit points that normally could have been missed when trading manually. CommandTRADE FX truly offers that distinct trading advantage that traders dream about."

Wizetrade offers completely free online demos to all prospective traders who call the company at 888.348.0023. "These demos are an excellent way for individuals to introduce themselves to this great technology platform," Dankovchik said. "Additionally, individuals can get answers to any questions they may have about creating their own home- or office-based currency trading command center."

CommandTRADE FX is the latest software released by Wizetrade, the investor software and education company that instills confidence through innovative training and tools, thus enabling people to be actively involved in their financial future and successful on their own terms.

Derivatives D - I

Day Order
Order placed for execution within one trading session. Automatically cancelled if it can not be executed within the day.
Day Trading
Within one day establishing and liquidating the same position or positions. No positions should be established at the days end.
Deferred
Back Months
Delivery
Tender and receipt of an actual commodity or financial instrument, or cash in settlement of a futures contract.
Derivative Security
Financial security whose value is determined in part from an another security's (the underlying security) value and characteristic.
Direct Edge
US-based multilateral trading faciltiy or trading platform.
Equiduct
Multilateral trading facility majority owned by Borse Berlin and Burgundy. Nordic equities markets are the main target.
ETF
Exchange-Traded Fund
European Multilateral Clearing Facility
Clearing unit set up by Fortis for European alternative trading systems.
European-style Options
Option contracts that can only be exercised during a specified period of time just prior to their expiration.
Exercise Settlement Amount
Difference between the exercise price of the option and the exercise settlement value of the index on the day an exercise notice is tendered , multiplied by the index multiplier.
Expiration Cycle
The dates on which options on an underlying security expire. A given option is assigned to one of three cycles, January, February or March.
Expiration Date
Date on which an option and the right to exercise it, cease to exist.
FASAC
Financial Accounting Standards Advisory Council
FinAnalytica
Vendor of portfolio construction and risk management analytics
Financial Supervisory Commission
Taiwan: financial regulator
Floor Broker
Licensed member of an Exchange, who is paid a fee for executing orders for Clearing Members or their customers.
Floor Trader
Also known as a "local". Exchange member who only trades for his own account.
Futures
All contracts covering purchase and sale of financial instruments or physical commodities for future delivery on a commodity futures exchange.
Futures Commission Agent
Engages in soliciting or accepting handling orders for the purchase or sale of futures contracts , subject to the rules of a futures exchange and, who, in connection with solicitation or acceptance or orders, accepts any money or securities to margin any resulting trades or contracts. Can be a firm or person.
Grant Date
Stock Options:- "The date at which an employer and an employee reach a mutual understanding of the key terms and conditions of a share-based payment award." Defined in SFAS No 123 (Revised 2004) (123R)
Holder
Purchaser of an option
IFRS
International Financial Reporting Standards
IFRS 3
Accounting standard for "business combinations" or Merger and Acquisitions transactions. First standard written jointly by International Accounting Standards Board and the U.S. Financial Accounting Standards Board.
In-the-money
Occurs if the strike price of a call option is less than the market price of the underlying security. For put options the strike price has to be higher than the market price of the underlying security for it to be in-the money.
Intrinsic Value
Amount by which an option is in-the-money.
ISDA
International Swaps and Derivatives Association
iTraxx Crossover Index
Tracks the cost of insuring the debt of mostly junk-rated European companies.

Derivatives - T

Terra Firma
UK private equity firm.
TOCOM
Tokyo Commodity Exchange
Trichet, Jean-Claude
President of the European Central Bank
TSE
Tokyo Stock Exchange
Turquoise
Alternative trading platform in dark liquidity. Developed following MiFiD. Founder banks are : BNP Paribas, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, Merrill Lynch, Morgan Stanley, Société Générale.

Tbricks Connects to Chi-X Europe

Tbricks, the provider of next generation automated trading systems, today announced that it has added Chi-X Europe to its list of certified trading venues.

The Tbricks solution has been devised for automated proprietary trading and targets prop trading firms, trading users at investment banks and high-tech hedge funds. They can now leverage Tbricks connectivity to ensure minimal latency to the Chi-X Europe trading venue.

Jonas Hansbo, CEO of Tbricks, says: “We see a huge market interest in Chi-X Europe—particularly from the growing number of proprietary traders who depend on the lowest latency performance. That's why we've ensured that our customers can connect to Chi-X Europe and provide integration to the Tbricks Genesis strategy engines with a latency of less than a millisecond.”

“Through our streamlined business model, institutional investors are able to trade a wide range of European equities and achieve low-cost, high-speed trade execution, as well as potential price improvement. We are pleased to provide access to our market through Tbricks’ advanced automated trading solution, and welcome Tbricks to our growing list of certified vendors.” comments Hirander Misra, chief operating officer, Chi-X Europe.

Trading Glossary

aMembers or their customers.

Floor Trader
Also known as a "local". Exchange member who only trades for his own account.

Futures
All contracts covering purchase and sale of financial instruments or physical commodities for future delivery on a commodity futures exchange.

3

GAAP
Generally Accepted Accounting Principles.

Hedge
Strategy to limit investment loss by effecting a transaction which offsets an existing position.

Holder
Purchaser of an option

IFRS
International Financial Reporting Standards

IFRS 3
Accounting standard for "business combinations" or Merger and Acquisitions transactions. First standard written jointly by International Accounting Standards Board and the U.S. Financial Accounting Standards Board.

Initial Performance Bond
Also known as "Initial Margin". Funds required when a futures position is opened.

Integrity and Ethics
Reside under the Control Environment. The senior management need to set the tone for the company. Whilst they might be considered "soft" and "intangible" concepts, they affect the design, administration and monitoring of

Negative examples of integrity and ethics are the infamous Enron and WorldCom scandals.

A positive example is BP which sets a high bar for ethical behaviour by employees. To back this policy up they make mention of it and its effectiveness in financial reports.

In-the-money
Occurs if the strike price of a call option is less than the market price of the underlying security. For put options the strike price has to be higher than the market price of the underlying security for it to be in-the money.p>Intrinsic Value
Amount by which an option is in-the-money.

ISDA
International Swaps and Derivatives Association

LTCM
Long Term Capital Management

Margin Requirement for Options
Amount an uncovered (naked) option writer is required to deposit and maintain to cover a position. Calculated

Market Order
Order for immediate execution given to a broker to buy or sell at the best obtainable price.

Mark-To-Market
Daily adjustment of margin accounts to reflect profit and loss.

MD&A
Management's Disclosure and Analysis

Mezzanine
When applied to finance refers to moderate risk or mid level.

Minimum Price Fluctuation
Smallest increment of price movement possible in trading a given contract. It is also referred to as "lead month".

MUST
Multi-Underlying Structured Trade

NASPP
National Association of Stock Plan Professionals

Nearby
Nearest active trading month of a futures or options on futures contract.

NYSE
New York Stock Exchange

Offer
Price at which an investor is willing to sell a futures or options contract. Offset buying if one has sold, or selling if one has bought, a futures or options on futures contract.

Omgeo
Vendor of post-execution trade management solutions.

Omgeo TradeSuite
US trade confirmation service from Omgeo

Open Interest
Total number of futures or options on futures contracts that have not yet been offset or fulfilled by delivery. An indicator of the depth or liquidity of a market (the ability to buy or sell at or near a given price) and of the

Private Equity Intelligence
Research group specialising in the private equity arena.

Private File Creator
Private File Creator from Accuity allows users to create and maintain personalized lists of relevant business entities for use in their enhanced due diligence and Know Your Customer programs.

Prodiance
Provider of enterprise spreadsheet management

Public Company Accounting Oversight Board
Organization set up under Sarbanes-Oxley Act 2002 to regulate auditing of public companies and auditors.

Quantifi
provider of analytics and risk management solutions for the global credit markets.

Regulation FD
Regulation Fair Disclosure

Rule enforced by the SEC requiring U.S. to make available to the public that they make to securities analysts. If the disclosure is intentional the release has to be simultaneous. Unintentional

Repo
The practice of loaning out shares in return for cash.

Risk Assessment
One of five components of internal control according to the COSO Internal Control Framework

Risks faced by the company have to be recognized. Objectives have to be set, integrated into the value-chain. To achieve the objectives, risks have to be identified, analyzed and develop methods to manage them.

Rule 13a-15 (e)
SEC rule which defines Disclosure Controls and Procedures.

Rule 13a-15 (f)
SEC rule which defines Internal Control over Financial Reporting

SCSE
Society of Corporate Compliance and Ethics

SEC
Securities and Exchange Commission.

SOX
Shorthand for Sarbanes-Oxley.

Structured Notes
Derivatives-linked bonds designed to deliver high returns over a fixed period.

Synthetic Collateralised Debt Obligations
Repackaged portfolios of credit derivatives.

TOCOM
Tokyo Commodity Exchange

TS2
System proprosed by the ECB for a single securities settlements across the Eurozone.

TSE
Tokyo Stock Exchange

Trading Glossary

ABCDS
A credit default swap based on an Asset-Backed Security itself based on relatively risky home equity loans (U.S.) In effect a type of insurance against default on the underlying ABS.

ABCP
Taiwan: Asset-Backed Commercial Paper

AICPA
American Institute of Certified Public Accountants

Alpha
Hedge Funds: the incremental return above the market that a manager generates.

American-Style Option
Option contract which can be excercised at any time between the purchase date and the expiration date. Most commonly exchange-traded option in the U.S.

Arbitrage
Simultaneous sale and purchase of identical or equivalent financial instruments or commodity futures to benefit from a discrepancy in their prices.

Assignment
Receipt of an exercise notice by an option writer (seller) that obligates him to sell (in the case of a call) or purchase (in the case of a put) the underlying security at the specified strike price.

At-the-money
Occurs if the strike price of the option is equal to the market price of underlying security.

Back-months
Futures or options on futures months being traded that are furthest from expiration.

BaFin
Germany: financial regulator

Bank Of England
UK Central Bank

Bear
Person who believes prices will move lower

Bear Market
Market in which prices are moving lower.

Beta
Hedge Funds: market exposure

Bid
Price that market participants are willing to pay.

Bull
Person who believes prices will move higher

Bull Market
Market in which prices are moving higher.

Buy on Close
Buy at the end of a trading session at a price within the closing range.

Buy on Opening
Buy at the beginning of a trading session at a price within the opening range.

Call
An option contract giving the holder the right to buy the underlying security at a specified price for a certain, fixed period of time.

Capped-Style Option
Option with an established profit cap. The cap price is equal to the option's strike price plus a cap interval for a call option or the strike price minus a cap interval for a put option. Exercised automatically when the underlying security closes above or below the cap price, depending on whether it is a call or a put.

CEO
Chief Executive Officer

CFO
Chief Financial Officer

CII
Council of Institutional Investors

CIO
Chief Investment Officer

Close
End of trading session period. Also called the Closing Range. The official close is designated as the high and low prices or bids and offers recorded during the period.

Closing Purchase
Transaction entered into to reduce or eliminate a short position in a given series of options.

Commission
One off fee brokerage fee to a customer when a futures or options on futures position is liquidated either by offset or delivery.

Contract
1) Unit of trading for a financial or commodity future.

2) Bilateral agreement between buyer and seller (parties) of a futures or options on futures transaction. Defined by the exchange.

Contract Month
The month in which futures contracts may be satisfied by making or accepting delivery.

Covered Call Option Writing
Trading strategy involving simultaneously selling call options and owning an equivalent position in the underlying security. The reverse is to sells a put option and shorting the underlying security.

Day Order
Order placed for execution within one trading session. Automatically cancelled if it can not be executed within the day.

Day Trading
Within one day establishing and liquidating the same position or positions. No positions should be established at the days end.

Deferred
Back Months

Delivery
Tender and receipt of an actual commodity or financial instrument, or cash in settlement of a futures contract.

Derivative Security
Financial security whose value is determined in part from an another security's (the underlying security) value and characteristic.

Dow Joines Industrial Average
US Index made up of 30 picked stocks. Weighted by share price

EAI
Enhanced Analytics Initiative

ECB
European Central Bank

EPS
Earnings Per Share

Equity Options
Options on shares of an individual common stock.

ERFRAG
European Financial Reporting Advisory Group

ERM
Enterprise Risk Management

ETF
Exchange-Traded Fund

European-style Options
Option contracts that can only be exercised during a specified period of time just prior to their expiration.

Exercise Settlement Amount
Difference between the exercise price of the option and the exercise settlement value of the index on the day an exercise notice is tendered , multiplied by the index multiplier.

Expiration Cycle
The dates on which options on an underlying security expire. A given option is assigned to one of three cycles, January, February or March.

Expiration Date
Date on which an option and the right to exercise it, cease to exist.

FASAC
Financial Accounting Standards Advisory Council

FASB
Financial Accounting Standards Board

Financial Accounting Standards Advisory Council
Overseer of the Financial Accounting Standards Board.

Financial Reporting
Defined by the COSO Framework as:-

The preparation of reliable published financial statements, including interim and condensed financial statements and selected financial data derived from such statements, such as earnings releases, reported publicly.

Financial Supervisory Commission
Taiwan: financial regulator

Floor Broker
Licensed member of an Exchange, who is paid a fee for executing orders for Clearing Members or their customers.

Floor Trader
Also known as a "local". Exchange member who only trades for his own account.

Futures
All contracts covering purchase and sale of financial instruments or physical commodities for future delivery on a commodity futures exchange.

3

GAAP
Generally Accepted Accounting Principles.

Hedge
Strategy to limit investment loss by effecting a transaction which offsets an existing position.

Holder
Purchaser of an option

IFRS
International Financial Reporting Standards

IFRS 3
Accounting standard for "business combinations" or Merger and Acquisitions transactions. First standard written jointly by International Accounting Standards Board and the U.S. Financial Accounting Standards Board.

Initial Performance Bond
Also known as "Initial Margin". Funds required when a futures position is opened.

Integrity and Ethics
Reside under the Control Environment. The senior management need to set the tone for the company. Whilst they might be considered "soft" and "intangible" concepts, they affect the design, administration and monitoring of other internal controls. According to COSO, the actions of management is more important than having them written down.

Negative examples of integrity and ethics are the infamous Enron and WorldCom scandals.

A positive example is BP which sets a high bar for ethical behaviour by employees. To back this policy up they make mention of it and its effectiveness in financial reports.

In-the-money
Occurs if the strike price of a call option is less than the market price of the underlying security. For put options the strike price has to be higher than the market price of the underlying security for it to be in-the money.

Intrinsic Value
Amount by which an option is in-the-money.

ISDA
International Swaps and Derivatives Association

LTCM
Long Term Capital Management

Margin Requirement for Options
Amount an uncovered (naked) option writer is required to deposit and maintain to cover a position. Calculated

Market Order
Order for immediate execution given to a broker to buy or sell at the best obtainable price.

Mark-To-Market
Daily adjustment of margin accounts to reflect profit and loss.

MD&A
Management's Disclosure and Analysis

Mezzanine
When applied to finance refers to moderate risk or mid level.

Minimum Price Fluctuation
Smallest increment of price movement possible in trading a given contract. It is also referred to as "lead month".

NASPP
National Association of Stock Plan Professionals

Nearby
Nearest active trading month of a futures or options on futures contract.

NYSE
New York Stock Exchange

Offer
Price at which an investor is willing to sell a futures or options contract. Offset buying if one has sold, or selling if one has bought, a futures or options on futures contract.

Open Interest
Total number of futures or options on futures contracts that have not yet been offset or fulfilled by delivery. An indicator of the depth or liquidity of a market (the ability to buy or sell at or near a given price) and of the use of a market for risk and/or asset management.

Private Equity Intelligence
Research group specialising in the private equity arena.

Public Company Accounting Oversight Board
Organization set up under Sarbanes-Oxley Act 2002 to regulate auditing of public companies and auditors.

Regulation FD
Regulation Fair Disclosure

Rule enforced by the SEC requiring U.S. to make available to the public that they make to securities analysts. If the disclosure is intentional the release has to be simultaneous. Unintentional disclosure has to be made available to the public within 24 hours.

Repo
The practice of loaning out shares in return for cash.

Risk Assessment
One of five components of internal control according to the COSO Internal Control Framework

Risks faced by the company have to be recognized. Objectives have to be set, integrated into the value-chain. To achieve the objectives, risks have to be identified, analyzed and develop methods to manage them.

Rule 13a-15 (e)
SEC rule which defines Disclosure Controls and Procedures.

Rule 13a-15 (f)
SEC rule which defines Internal Control over Financial Reporting

SCSE
Society of Corporate Compliance and Ethics

SEC
Securities and Exchange Commission.

SOX
Shorthand for Sarbanes-Oxley.

Structured Notes
Derivatives-linked bonds designed to deliver high returns over a fixed period.

Synthetic Collateralised Debt Obligations
Repackaged portfolios of credit derivatives.

TOCOM
Tokyo Commodity Exchange

TS2
System proprosed by the ECB for a single securities settlements across the Eurozone.

TSE
Tokyo Stock Exchange

Bank Of New York Mellon Awards

The Bank of New York Mellon has received first-place rankings in all major categories in Global Investor magazine's 2008 Foreign Exchange Survey, including Best FX Service Overall. Survey respondents represent a broad sampling of global asset managers and hedge funds. Results of this year's survey appear in the March issue of Global Investor.


The Bank of New York Mellon received an unprecedented 24 first-place rankings in this year's survey across all principal areas of FX service, including best FX service overall for real money and hedge fund investors; best research and trading in developed, Asia-Pacific and emerging markets; best FX strategy solutions; best sales coverage; best risk management; and best portfolio management technology.

"When we introduced ourselves as a new company last year, we asked the question, 'Who's helping you?'," said Jorge Rodriguez, managing director and head of global foreign exchange sales for The Bank of New York Mellon. "As this year's survey results indicate, we're redefining the notion of helping our clients. By successfully executing our integration plan, we're moving our business to entirely new levels of capability and performance."

Examples of FX product and service innovations introduced since the debut of The Bank of New York Mellon's Global Markets division last year include the daily distribution of currency research focused on new geographies, the development of a proprietary on-line hedging platform, and a significant expansion of trading activities involving frontier market currencies.

The Global Markets division encompasses The Bank of New York Mellon's foreign exchange, interest-rate and equity risk management businesses. Maintaining nine sales and trading desk locations around the world and active in more than 100 currency markets, Global Markets is a major presence in world financial centers and provides a full array of trading, research and e- commerce products to institutional fund managers, corporations and government entities throughout the world. Additional information is available at www.bnymellon.com/globalmarkets.