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Settlement |
Actual physical exchange of one currency for another. |
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Settlement date |
The date by which an executed order must be settled by the
transfer of instruments or currencies and funds between
buyer and seller. |
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Settlement Risk |
Risk associated with the non-settlement of the transaction
by the counterparty. |
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Short |
To go "short" is to have sold an instrument without
actually owning it, and to hold a short position with
expectations that the price will decline so it can be
bought back in the future at a profit. |
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Short Margin |
The client’s account condition when Equity becomes smaller
than the amount required to keep the positions open. |
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Short position |
Selling a currency in which you have no position in
anticipation of it falling in value. At that point you
will be able to "cover" your short by buying back the
currency at a lower price. (If physical delivery of the
currency is involved, the short seller will need to borrow
the currency in order to make the delivery to the buyer).
In foreign exchange, when the base currency in the pair is
sold, the position is said to be short in that currency.
It is understood that when the base currency in the pair
is "short," the second currency will be "long." |
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Sidelined |
A major currency that is lightly traded due to major
market interest being in another currency pair. |
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Soft Market |
There are more potential sellers than buyers, creating an
environment where rapid price falls are likely. |
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Spot Contract |
A contract where settlement is in two business days. |
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Spot Rate |
The rate of exchange between two foreign currencies for
"spot" value (normally settlement in two business days),
generally quoted either in "US terms" (price of one unit
of foreign currency expressed in US dollars and cents) or
in "European terms" (price of one US dollar expressed in
units and decimals of the foreign currency). |
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Swissy |
Slang for the Swiss franc. |
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Support levels |
When an exchange rate depreciates or appreciates to a
level where (1) Technical analysis techniques suggest that
the currency will rebound, or not go below; (2) the
monetary authorities intervene to stop any further
downward movement. |
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Spread |
The difference between the ask (offer) and bid price in a
market quote. The spread is the reason why a newly opened
position’s mark to market, or valuation, will likely be
negative. If a trader buys a particular currency he/she
will pay the ask (offer) price, but the current mark to
market will be based on what the marketplace is presently
paying for this currency. That price would be found on the
bid side of the market quote, competitively lower than
where he/she just bought the currency. |
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Stop/Loss Order |
An order to buy or sell at a specified foreign exchange
rate away from the current market for the purpose of
liquidating an open position during market conditions in
which the open position has declined in value. Execution
of such an order can occur at rates below (or above) the
specified foreign exchange rate. |
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Storage |
The charge or recompense associated with a rollover. |
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Support levels |
When an exchange rate depreciates or appreciates to a
level where (1) Technical analysis techniques suggest that
the currency will rebound, or not go below; (2) the
monetary authorities intervene to stop any further
downward movement. |
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Swap price |
A price as a differential between two dates of the swap. |
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Swap |
The simultaneous purchase and sale of the same amount of a
given currency for two different dates, against the sale
and purchase of another. A swap can be a swap against a
forward. In essence, swapping is somewhat similar to
borrowing one currency and lending another for the same
period. However, any rate of return or cost of funds is
expressed in the price differential between the two sides
of the transaction. |
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SABE: |
Semi Annual Bond Equivalent. A method of converting yields
and other measures of value in order to place them on a
comparable basis. This method assumes interest is
reinvested semiannually. SABE is often applied to discount
securities in order to compare |
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Same day transaction: |
A transaction that matures on the day the transaction
takes place. |
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Sandwich spread: |
Same as a butterfly spread. |
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Savings ratio: |
The percentage of disposable income that is saved or used
for debt repayment. |
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Scalping: |
A strategy of buying at the bid and selling at the offer
as soon as possible. |
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SDR: |
Special Drawing Right. A standard basket of five major
currencies in fixed amounts as defined by the IMF. |
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Seasonally Adjusted: |
A method of dealing with statistics to adjust for regular
annual fluctuations in figures normally caused by non
economic factors, e.g. school leavers impact on
unemployment, or rise in food prices in winter. The months
data is divided by the percentage of |
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Secondary date: |
Date that bond is first capable of trading on secondary
market. |
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Selling rate: |
Rate at which a bank is willing to sell foreign currency. |
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Seller/grantor: |
Also known as the option writer. |
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Serial expiration: |
Options on the same underlying futures being contract
which expire in more than one month. |
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Series: |
All options of the same class which share a common strike
price and expiration date. |
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Settlement date: |
The date by which an executed order must be settled by the
transference of instruments or currencies and funds
between buyer and seller. |
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Settlement price: |
The official closing price for a future set by the
clearing house at the end of each trading day. |
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Settlement Risk: |
Risk associated with the non settlement of the transaction
by the counter party. |
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Short / Short Position: |
A shortage of assets in a particular currency. See short
sale |
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Short Contracts: |
Contracts with up to six months to delivery. |
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Short Covering: |
Buying to unwind a shortage of a particular currency or
asset. |
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Short forward date / rate: |
The term short forward refers to period up to two months,
although it is more commonly used with respect to
maturities of less than one month. |
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Short sale: |
The sale of a currency futures not owned by the seller at
the time of the trade. Short sales are usually made in
expectation of a decline in the price. |
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Short term interest rates: |
Normally the 90 day rate. |
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Shorts: |
see Short forward date / rate. |
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SIBOR: |
Singapore Inter-bank Offered Rate. |
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Sidelined: |
A major currency that is lightly traded due to major
market interest being in another currency pair. |
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SIMEX: |
Singapore International Monetary Exchange |
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Simple Yield: |
A modified version of the current yield that accounts for
a deviation in a bond's clean price from par. Any capital
gain or loss is assumed to occur uniformly over the life
of the bond |
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SITC: |
Standard International Trade Classification. A system for
reporting trade statistics in a common manner. |
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Sinking fund Bond: |
A bond with gradual retirement of the original issue at
specified dates (usually coupon dates). For certain serial
issues, a drawing (or lottery) determines which bonds of
the original issue are retired early. |
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Skip day settlement: |
T+2, settle day after next business day. |
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SOFFEX: |
Swiss Options and Financial Futures Exchange, a fully
automated and integrated trading and clearing system. |
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Soft Market: |
More potential sellers than buyers, which creates an
environment where rapid price falls are likely. |
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Sovereign immunity: |
Legal doctrine which means that the state cannot be sued
or have its assets seized. |
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Sovereign risk: |
(1) Risk of default on a sovereign loan;(2) Risk of
appropriation of assets held in a foreign country. |
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Split Date: |
See broken date |
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Spot: |
(1) The most common foreign exchange transaction (2) Spot
or Spot date refers to the spot transaction value date
that requires settlement within two business days, subject
to value date calculation. |
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Spot next: |
The overnight swap from the spot date to the next business
day. |
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Spot month: |
The contract month closest to delivery or |
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Spot price / rate: |
The price at which the currency is currently trading in
the spot market. |
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Spot week: |
A standard period of one week swap measured from the
current value date of the currency spot rate. |
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Spread: |
(l)The difference between the bid and ask price of a
currency. (2) The difference between the price of two
related futures contracts. (3) For options, transactions
involving two or more option series on the same underlying
currency |
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Square: |
Purchase and sales are in balance and thus the dealer has
no open position. |
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Squawk Box: |
A speaker connected to a phone often used in broker
trading desks. |
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Squeeze: |
Action by a central bank to reduce supply in order to
increase the price of money. |
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Stable market: |
An active market which can absorb large sale or purchases
of currency without major moves. |
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Standard: |
A term referring to certain normal amounts and maturities
for dealing. |
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Standard and Poors: |
A US firm engaged in assessing the financial health of
borrowers. The firm also has generated certain stock
indices i.e. S&P 500 |
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Stand by Credit: |
An arrangement with the IMF for draw downs on a "need "
basis. The term is sometimes more generally used. |
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Sterilisation: |
Central Bank activity in the domestic money market to
reduce the impact on money supply of its intervention
activities in the FX market. |
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Sterling Index: |
A index based on the movement of sterling against the
major currency. |
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Sterling: |
British pound, otherwise known as cable. |
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STIBOR: |
Stockholm Inter-bank Offered Rate. |
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Stocky: |
Market slang for Swedish Krona. |
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Stop loss order: |
Order given to ensure that, should a currency weaken by a
certain percentage, a short position will be covered even
though this involves taking a loss. Realise profit orders
are less common. |
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Stop out Price: |
US term for the lowest accepted price for Treasury Bills
at auction. Generally used as Stop price for bond
auctions.. |
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Straddle: |
The simultaneous purchase/sale of both call and put
options for the same share, exercise/strike price and
expiry date. |
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Stagflation: |
Recession or low growth in conjunction with high inflation
rates. |
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Straight: |
A bond with unquestioned right to repayment of principal
and interest at the specified dates with no additional
further rights or bonuses. |
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Straight date: |
See fixed dates |
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Strangle: |
zz |
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Strap: |
A combination of two calls and one put |
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Street Method: |
The standard yield to maturity calculation used in the
United States by market participants other than the U.S.
Treasury. Yield is compounded semiannually regardless of
the coupon frequency. If the value date does not fall on a
coupon date, the present va |
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Strike price: |
Also called exercise price. The price at which an options
holder can buy or sell the underlying instrument. |
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Strip: |
(1) A combination of two puts and one call. (2) (Separate
Trading of Registered Interest and Principal of
Securities). Process by which a bond is separated into its
corpus and coupons, which are then sold separately as zero
coupon securities. |
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Structural Unemployment: |
Unemployment levels inherent in an economic structure. |
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Supply side economics: |
The concept is that tax cuts will boost investment leading
to an increase in the supply of goods in the economy. To
be compared with demand led Keynesian economics. |
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Support levels: |
When an exchange rate depreciates or appreciates to a
level where: (1) Technical analysis techniques suggest
that the currency will rebound, or not go below; (2) the
monetary authorities intervene to stop any further down
ward movement. See resistance poi |
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Swap as a percentage: |
Swaps expressed as an annualised percentage. |
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Swap margin: |
See forward margin. |
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Swap price: |
A price as a differential between two dates of the swap |
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Swap rate: |
See forward margin. |
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Swap: |
The simultaneous purchase and sale of the same amount of a
given currency for two different dates, against the sale
and purchase of another. A swap can be a swap against a
forward. In essence, swapping is somewhat similar to
borrowing one currency and len |
