|
Fast market |
Rapid movement in a market caused by strong interest from
buyers and/or sellers. In such circumstances, price levels
may be omitted and bid and offer quotations may occur too
rapidly to be fully reported. |
|
Fair Market Value |
The price for a financial instrument that is determined in
an open market environment between a willing buyer and
seller. |
|
Fed Fund Rate |
The interest rate on Fed funds. This is a closely watched
short-term interest rate as it signals the Fed's view
about the state of the money supply. |
|
Federal Deposit Insurance Corporation (FDIC) |
The regulatory agency responsible for administering bank
depository insurance in the US. |
|
Federal Reserve (Fed) |
The Central Bank of the United States. |
|
Fill or Kill |
An order which must be entered for trading, normally in a
pit three times. If not filled it is immediately canceled. |
|
Filled Trade |
A trade that is fully executed on behalf of a customer’s
account pursuant to an order. Once filled, an order cannot
be canceled, amended or waived by the customer. |
|
Fixed Exchange Rate |
Official rate set by monetary authorities for one or more
currencies. In practice, even fixed exchange rates are
allowed to fluctuate between definite upper and lower
bands, leading to intervention. |
|
Flat / Square |
To be neither long nor short is the same as to be flat or
square. One would have a flat book if one has no positions
or if all the positions cancel each other out. |
|
Flexible exchange rate |
Exchange rates with a fixed parity against one or more
currencies with frequent revaluations. A form of managed
float. |
|
Floating exchange rate |
An exchange rate where the value is determined by market
forces. Even floating currencies are subject to
intervention by the monetary authorities. When such
activity is frequent the float is known as a dirty float. |
|
Floating profit (loss) |
Unrealized profit (loss) in an open position. |
|
Floating Rate Interest |
As opposed to a fixed rate, the interest rate on this type
of deal will fluctuate with market rates or benchmark
rates. One example of a floating rate interest is a
standard mortgage. |
|
FOMC |
Federal Open Market Committee, the committee that sets
money supply targets in the US, which tend to be
implemented through Fed Fund interest rates, etc. |
|
Foreign Currency |
The legal tender issued by and acceptable for the payment
of obligations under the laws of one or more countries
other than the United States of America. |
|
Foreign Exchange Contract |
A Spot Contract for the purchase or sale of a Foreign
Currency. |
|
Foreign Exchange Rate |
The price relationships between two currencies that are
freely determined by the forces of supply and demand. |
|
Foreign Exchange Swap |
A transaction which involves the actual exchange of two
currencies (principal amount only) on a specific date at a
rate agreed at the time of the conclusion of the contract
(short leg), at a date further in the future at a rate
agreed at the time of the contract (the long leg). |
|
Foreign Exchange (or Forex or FX) |
The simultaneous buying of one currency and selling of
another in an Over-the-Counter market. Most major FX is
quoted against the US dollar. |
|
Forward |
A deal that will commence at an agreed date in the future.
Forward trades in FX are usually expressed as a margin
above (premium) or below (discount) the spot rate. To
obtain the actual forward FX price, the margin is added to
the spot rate. The rate will reflect what the FX rate has
to be at the forward date so that if funds were
re-exchanged at that rate there would be no profit or loss
(i.e. a neutral trade). The rate is calculated from the
relevant deposit rates in the two underlying currencies
and the spot FX rate. Unlike in the futures market,
forward trading can be customized according to the needs
of the two parties and involves more flexibility. In
addition, there is no centralized exchange. Forward points
- the pips added to or subtracted from the current
exchange rate to calculate a forward price. Forward Rate -
forward rates are quoted in terms of forward points, which
represent the difference between the forward and spot
rates. In order to obtain the forward rate from the actual
exchange rate, the forward points are either added or
subtracted from the exchange rate. The decision to
subtract or add points is determined by the differential
between the deposit rates for both currencies involved in
the transaction. The base currency with the higher
interest rate is said to be at a discount to the lower
interest rate quoted currency in the forward market.
Therefore, the forward points are subtracted from the spot
rate. Similarly, the lower interest rate base currency is
said to be at a premium, and the forward points are added
to the spot rate to obtain the forward rate. |
|
Free margin |
Available funds in the client’s account not currently
being used to support existing trading positions, which
can be used to open new positions. |
|
Fundamentals |
The macroeconomic factors that are accepted as forming the
foundation for the relative value of a currency, these
include inflation, growth, trade balance, government
deficit, and interest rates. |
|
Fundamental Analysis |
Analysis based on economic and political factors. Thorough
analysis of economic and political data with the goal of
determining future movements in a financial market. |
|
Futures Contract |
An obligation to exchange a good or instrument at a set
price on a future date. The primary difference between a
future and a forward is that futures are typically traded
over an exchange (Exchange-Traded Contacts – ETC), versus
forwards, which are considered Over-the-Counter (OTC)
contracts. An OTC is any contract NOT traded on an
exchange. |
|
Fair value: |
An option value derived from a mathematical option
valuation model. |
|
Fast market: |
Rapid movement in a market caused by strong interest by
buyers and/or sellers. In such circumstances price levels
may be omitted and bid and offer quotations may occur too
rapidly to be fully reported. |
|
Fat tail distribution: |
A graph that predicts a greater probability of a very
large price movement than that predicted by normal
distribution. |
|
Fed Fund Rate: |
The interest rate on Fed funds. This is a closely watched
short term interest rate as it signals the Feds view as to
the state of the money supply. |
|
Fed Funds: |
Cash balances held by banks with their local Federal
Reserve Bank. The normal transaction with these fund is an
inter bank sale of a Fed fund deposit for one business
day. Straight deals are where the funds are traded
overnight on a unsecured basis. |
|
Fed: |
The United States Federal Reserve |
|
Federal Deposit Insurance Corporation: |
Membership is compulsory for Federal Reserve members. The
corporation had deep involvement in the Savings and Loans
crisis of the late 80s. |
|
Federal National Mortgage Association: |
A privately owned but US government sponsored corporation
that trades in residential mortgages. Its activities are
funded by the sale of instruments commonly known as Fannie
Maes. |
|
Federal Open Market Committee: |
See FOMC |
|
Federal Reserve Board: |
The board of the Federal Reserve System, appointed by the
US President for 14 year terms, one of whom is appointed
for four years as chairman. |
|
Federal Reserve System: |
The central banking system of the US comprising 12 Federal
Reserve Banks controlling 12 districts under the Federal
Reserve Board. Membership of the Fed is compulsory for
banks chartered by the Comptroller of Currency and
optional for state chartered bank |
|
Feste Schuld: |
A long term debt consolidated in the form of bonds,
mortgages etc. |
|
Fest Geld: |
Offered Rate. Money on fixed term deposit at banks. FIBOR: |
|
Frankfurt Inter-bank: |
An order which must be entered for trading, normally in a
pit three times, if not filled is immediately cancelled. |
|
Fill or Kill: |
A futures contract based on a financial instrument. |
|
Financial future: |
Introduced in 1979 it is part of the dual currency
exchange rate system operated in South Africa. It is the
proceeds of disposal of South African securities and
includes the purchase of plant and equipment by foreign
investors. |
|
Financial Rand: |
(1) A quote with a narrow spread.(2) The most favourable
rate charged to a high quality borrower. |
|
Fine Rate: |
The price given in response to a request for a rate at
which the quoting party is willing to execute a deal for a
reasonable amount for spot settlement. Screen quotes are
indicative. Quotes on matching systems are normally firm
depending on systems requir |
|
Firm quotation: |
The first day on which notices of intention to deliver
actual currencies against futures market positions can be
received. |
|
First notice day: |
Use of taxation as a tool in implementing monetary policy. |
|
Fiscal Policy: |
The relationship that exists between interest rates and
exchange rate movements, so that in an ideal situation
interest rate differentials would be exactly off set by
exchange rate movements. See interest rate parity. |
|
Fisher Effect: |
The monthly calendar dates similar to the spot. There are
two exceptions. For detailed description see value dates. |
|
Fixed dates: |
Official rate set by monetary authorities. Often the fixed
exchange rate permits fluctuation within a band. |
|
Fixed exchange rate: |
A method of determining rates by normally finding a rate
that balances buyers to sellers. Such a process occurs
either once or twic daily at defined times. Used by some
currencies particularly for establishing tourist rates .
The system is also used in th |
|
Fixing: |
Exchange rates with a fixed parity against one or more
currencies with frequent revaluations. A form of managed
float. |
|
Flexible exchange rate: |
1. see Floating exchange rate. 2. Cash in hand or in the
course of being transferred between banks 3. Federal
Reserve Float arises from the system where cheques sent to
the Federal Reserve Banks are credited sometimes in
advance of the depositing bank loo |
|
Float: |
An exchange rate where the value is determined by market
forces. Even floating currencies are subject to
intervention by the monetary authorities. When such
activity is frequent the float is known as a dirty float. |
|
Floating exchange rate: |
An agreement with a counterparty that sets a lower limit
to interest rates for the floor buyer for a stated time. |
|
Floor: |
A term for an exchanges trading area (cf. screen based
trading), normally the trading area is referred to as a
pit in the commodities and futures markets. |
|
FOMC: |
Federal Open Market Committee, the committee that sets
money supply targets in the US which tend to be
implimented through Fed Fund interest rates etc. |
|
Foreign Exchange: |
The purchase or sale of a currency against sale or
purchase of another. |
|
Forex: |
Foreign Exchange. |
|
Forex Club: |
Groups formed in the major financial centres to encourage
educational and social contacts between foreign exchange
dealers, under the umbrella of Association Cambiste
International. |
|
Form: |
The method by which bond ownership is evidenced. (See
Allotment letter, Bearer, Book-entry, Registered) |
|
Forward book: |
Various net exposures for forward contracts which the bank
has incurred as a result of dealing activities. |
|
Forward Contract: |
Sometimes used as synonym for "forward deal" or "future".
More specifically for arrangements with the same effect as
a forward deal between a bank and a customer. |
|
Forward Cover: |
Taking forward contracts to protect against movements in
the exchange rate. |
|
Forward Deal: |
A deal with a value date greater than the spot value date. |
|
Forward Forward: |
A forward / forward deal is one where both legs of the
deal have value dates greater than the current spot value
date. |
|
Forward margins: |
Discounts or premiums between spot rate and the forward
rate for a currency. Normally quoted in points. |
|
Forward maturities: |
Trading days on which deals can be transacted later than
the spot date. |
|
Forward Operations: |
Foreign exchange transactions, on which the fulfilment of
the muual delivery obligations is made on a date later
than the second business day after the transaction was
concluded. |
|
Forward Outright: |
A commitment to buy or sell a currency for delivery on a
specified future date or period. The price is quoted as
the Spot rate minus or plus the forward points for the
chosen period. |
|
Forward Rate Agreements: |
The FRA is an agreement between two parties that determine
the interest rate that will apply to a notional future
loan or deposit of an agreement |
|
Forward Rate: |
Forward rates are quoted in terms of forward points, which
represents the difference between the forward and spot
rates. In order to obtain the forward rate from the actual
exchange rate the forward points are either added or
subtracted from the exchange |
|
FRAS: |
Forward Rate Agreement |
|
Franc zone: |
A grouping of currencies which are pegged to the French
Franc and are supported by the activities and resources of
the Bank of France. The main currency is the CFA which is
administered by the communal central banks in West and
Central Africa BEAC and BCE |
|
Free payment basis: |
Payment and delivery of a bond may be at different times. |
|
FRN: |
Floating rate note, see floating rate. |
|
FRCD: |
Floating rate CD. see floating rate. |
|
Free Reserves: |
Total reserves held by a bank less the reserves required
by the authority. |
|
Freeze: |
Legislation or agreement to keep prices or wages at
current levels. |
|
Front Office: |
The activities carried out by the dealer, normal trading
activities |
|
Frozen Assets: |
Normally funds that are temporarily blocked normally
either due to court order or government regulation often
arising from war or major international dispute, eg Iran,
Iraq, and Yugoslavia.. |
|
Fundamentals: |
The macro economic factors that are accepted as forming
the foundation for the relative value of a currency, these
include: inflation, growth, trade balance, government
deficit, and interest rates. |
|
Fungibles: |
Instruments that are equivalent, substitutable and
interchangeable in law. May apply to certain exchange
traded currency contracts offered on a number of
exchanges. |
|
Furthest month: |
The month that is furthest away from settlement of a
futures or options contract. |
|
Futures contract: |
A contract traded on a futures exchange which requires the
delivery of a specified quality and quantity of a
commodity, currency or financial instruments a specified
future month, if not liquidated before the contract
matures. |
|
FX: |
Foreign Exchange. |
