Investment Glossary
Are you invested in the latest financial jargon? Don't worry, we've got your back. With a comprehensive glossary of investment terms and phrases that could be thrown around at work or home - no matter where you are- our A to Z Investment Dictionary will keep everyone up on what's going on with money!
A
Absolute Return Funds - The Absolute Return Fund is a funds that aim to deliver returns in both rising and falling markets. Compared with traditional fund managers, these funds have greater scope for using derivatives like short positions or exotic securities as well because they can react more quickly than normal when market conditions change drastically
Accredited Derivatives Advisers - An accredited derivatives adviser is someone who has been granted the privilege of advising retail clients on stocks and options. They are employees, or partners in some cases (depending upon their level), with one company that acts as an exchange for another market maker - so they can give advice based off information from both sides!
Accredited Futures Adviser - People who work as futures advisers have to be accredited by the Australian Securities and Investments Commission (ASIC). They may also recommend stocks, shares or other investments that retail clients can buy from them at their own risk.
Actively Managed - Active funds are funds where the fund manager has discretion in selecting stocks and looking for opportunities to buy low, sell high.
Adjustment To Options Contracts - When certain events happen that could affect the underlying security, such as changing how many shares are per contract or what price they'll trade at from now on if there's an overhaul in company ownership.
AGM - The AGM (Annual general Meeting) of shareholders is a law-required event where directors inform their investors about the company's performance and future prospects. Shareholders also vote on board elections, which decides who will serve as chairperson for that particular year.
Algorithmic Trading - Computerised, rule-based system that automatically buys or sells stocks.
All Ordinaries Accumulation Index - The most important measure for investors is the All Ordinaries Accumulation Index, which takes into account income as well as share price movement. This means that if you have profits from your investments then they will be reinvested to help grow these assets over time- but not at any cost!
All Ordinaries Index (All Ords) - The All Ordinaries Index (All Ords) is a capitalisation-weighted index that tracks the performance of about 500 largest Australian companies.
Allotment Of Shares - Allotment of shares is a process in which directors allocate some or all the company's stock to different people. The decision as to who gets what, and how many are given based on their discretion subject by law for compliance with corporate policies such as good management techniques
AMV - Aggregate market value.
Annual Yield - Yield = (Dividend per share / Last market price) x 100.
Annualised Return - Return or profit, on an annual basis.
Annuity - An annuity is a series of identical fixed payments to be made for the specified number of years.
Aqua Market - The AQUA market is a place for traders to buy and sell third-party issued products that have underlying assets, but these values can't be controlled by the issuer.
Arbitrage - Arbitrage is the process of making money by buying and selling goods or services at different prices, usually because there's been an arbitrariness on price.
Articles Of Association - The Articles of Association are a document that outline how companies should be operated. They were formerly known as "the rules" when it came to setting up your business, but now you'll find them in the Company Constitution!
Assessed Value Payment - If you hold the money deliverable warrants but do not exercise them before or at expiry, then it's possible that this could lead to being entitled for a cash payout, also called AVP.
Asset Backing - Net assets of a company (in $) / number of issued shares.
Assets - Assets are what define you as an individual or company. They may include cash, properties (real estate), machinery/equipment etcetera which can all provide incomes in varying degrees depending on their condition and location. However without maintaining them properly they'll be worth nothing!
Associated Company - Companies can be associated with one another in a number of ways. Companies might have equity interests or partnerships, for example when the controlling interest is held by both parties to an agreement that requires them work together towards certain goals and objectives as laid out within this partnership document.
ASX - Australian Securities Exchange
ASX Clear (Futures) Or Asxclf - It’s important to have a reliable counterparty when trading futures, options or other financial products. That's why ASX Clear was created in order provide this service by centralizing the clearing of interest rates (among others), energy & commodities trades on their exchange platform Trade 24.
ASX Code - Unique code used to identify listed companies.
ASX International Services Pty Ltd - This company is an ASX International Services Pty Ltd, which settles sales and purchases for participating foreign brokers.
ASX Settlement And Transfer Corporation (Astc) - The ASX settlement and transfer corporation has now become known as ASPL, which is a licensed Clearing & Settlement facility under the Corporations Act.
ASX Trade - ASX Trade is a NASDAQ OMX ultra-low latency trading platform based on NASDAQ OMX's Genium INET system.
ASX Trade24 - Trade 24, a trading platform that offers contracts on products including futures and options in the market for Treasury bonds, bank bills or cash rates as well S&P/ASX equity indices. Trade24 also specializes with Listed CFDs such like forex ( currencies), metals & mining shares etc., which can be traded anytime anywhere around world through an online account
At-The-Money - An option that has an exercise price equal to the current market value of a security.
ACH - Australian Clearing House
AFSL - Australian Financial Services Licence
Australian Government Bond - Australian Government Bond is a direct, unconditional and irrevocable obligation of the Australian government.
Australian Government Bonds Traded On ASX - Australian government bonds are known as Australian Security Interests (ASI). The holder of an Aussie Government Bond has beneficial ownership in the form a CHESS Depository Interest which gives them all economic benefits that come with owning this type of security including payouts should there ever be any bankruptcy or liquidation proceedings on behalf of companies trading overseas during times when they were still constructing new facilities locally before sending raw materials abroad.
A-Reits - Australian Real Estate Investment Trusts
Authorised Capital - Amount of share capital which a company is permitted to issue.
Automatic Exercise - The automatic exercise function for ASX Clear is a great way to make sure your positions get triggered at expiration.
Average Daily Volume - Trading activity for the day. Calculated by annual volume divided against total number of working days in that year
ASIC - The Australian Securities and Investments Commission is an independent commission of the Australian Government tasked as the national corporate regulator. ASIC's role is to regulate company and financial services and enforce laws to protect Australian consumers, investors and creditors.
B
Backwardation - The futures markets are a place where investors go to hedge their bets. For example, if you think gold will rise but not quickly enough and prefer that your money be in something else at the moment then buying contracts with delivery months further downstream makes sense because it's really just waiting for prices on these items-which have been steadily decreasing over time -to get even lower before they finally reach our level again!
Basis Point - One per cent of one per cent (0.01%).
Basis Risk - Basis Risk is the risk that movements in prices do not always perfectly match up with each other. This can happen when there's no correlation between changes, which leads to an increase or decrease of your investment’s return based on whether it goes down too much rather than just recovering from losses due its fluctuations being less severe than expected-or vice versa .
Bear Market - The bear market is when prices are falling and further falls are expected.
Bearish - The bearish outlook is that prices will fall.
Benchmark - Benchmarking is a way for funds to compare their success with that of other similar investment companies.
Beta -The beta rating is a measure of how changes in the share price for one company correlate to market movements overall. It's considered an important factor when traders are looking at possible investments because it helps them predict future performance based on past results.
Bid - The bid price represents the maximum amount that a buyer is willing to pay for stock in an auction.
Block Trade - Block Trades are an essential part of any market user's strategy. They allow you to trade large amounts with confidence.
Blue Chip - Blue-chip companies are larger, more stable businesses that have a long history of profitability and stability.
Board Of Directors - The Board of Directors is an elected body that ensures the planning and implementation for corporate objectives.
Bond - The bond is a tradeable debt security, usually issued by governments and semi-governments to raise money. Most bonds are issued by companies,
Bonus Dividend - An extra dividend in addition to the normal payout. A bonus share or issue is when shares are given as an award for something special like being active participants within company decisions, etc
Bonus Share Plan - The bonus share plan is a great way for investors who want more control over their rewards. Shareholders may elect to receive all or part of the dividends as opposed cash, which gives them an opportunity at higher returns without putting forth any additional work!
Books Close Date - The date at which the company’s share register is closed off to identify shareholders and calculate any entitlement in new issues or dividends.
Break - Sharp decline
Brokerage - The brokerage fee is a charge that's paid to the stockbroking firm for buying or selling shares.
Bull Market - The bull market is a time when prices generally increase and further rises are expected.
Bullish - Bullish meaning the price of a stock, commodity futures contract or currency might go up.
Buy And Write - The call option is a contract between two parties that allows one party to buy stocks at certain prices and another person or entity named writer sells them. This strategy requires the simultaneous purchase of underlying securities, which are bought with money deposited into an account by your broker/dealer, while writing (setting) options over those same shares you just acquired so as not have any loss on it!
Buy Back - The buy back is an effective way for companies to reduce their shares on issue. It's also called offsetting purchase or covering short sales when they repurchase existing ones in order cover it up, which reduces how many there are available on the market!
Buy On Open - When the market opens, buy on open means that you should purchase an asset at or near its opening price.
C
Call - The terms "No liability" and sometimes 'Limited Liability," refer to companies with shares that are not fully paid. A call may be made for the payment of part, or all outstanding capital in this type of company; if holders do not pay up they will have forfeit their investment accordingly so there is never any risk involved!
Call Option/Warrant - The call option/warrant is a contract which gives the holder the right, but not obligation to buy an underlying asset at some future point in time. Call options expire on their specified dates and if they are exercised before this date then it will mean that you can buy shares for less than what they're worth now.
Cap - The cap on an investment product means that the potential return is limited.
Capital Gain -The difference between the proceeds from selling an investment and what you originally paid for it is called your capital gain.
Capital Gains Tax - Capital Gains Tax
A tax on the profit from selling your capital assets, such as shares or property.
Capital Growth - Increase in the value of an asset such as an investment in shares.
Capital Loss - A capital loss is the difference between what you sell an investment for and its cost.
Capital Protected Warrants - Capital protected warrants are a form of security that allows investors to purchase stock in companies with little risk. The investor knows they will get back at least what was paid for, if not more!
Cash Commodity -The cash commodity is the underlying asset of a futures contract. It can also refer to physical stocks and bonds, which are traded on exchanges just like any other security would be.
Cash Market - A place where people buy and sell security or commodity related products.
Cash Price - The price of a commodity in the market place for actual cash or spot delivery to be delivered via customary channels.
Cash Settled Warrant - A cash settled warrant is one where the settlement obligations are met by paying out money from an issuer to holders, instead of carrying out some other transaction.
Cash Settlement - Settlement by a cash payment rather than sale of an underlying asset is called "cash settlement."
CDIs CUFS and DIs - CDIs are a type of depository interest that enables Australian investors to invest in foreign financial products and gain the same beneficial rights as if they had invested directly into those countries' stock markets. There's two types, CHESS Units for Domestic Securities (CUFS); which gives you an ownership stake within Australia while also giving access through your investments across all major sectors including retail services & companies like banks or mining groups etc., so not only do we get profit but growth too! The other option would be DIs-Deposit Accounts abroad where savings can grow automatically without risk thanks getting paid twice monthly just like
Centre Point - Centre Point, a leading Australian Securities Exchange (ASX) trading facility that provides anonymous execution at the prevailing midpoint of best bid and offer in their ASX Trade Match feature is now live. This new addition will allow traders to get in on some fast-paced financial action with no risk or obligation when using our platform."
Certificated Sub-Register - A certificated sub-register is a register that keeps records of legal title to shares through paper certificates. These are typically found in companies and record transactions such as share purchases or sales, option exercises etc., so they can be used at any time for regulatory purposes (such as reporting).
CHESS - CHESS is a system that allows for the electronic transfer of share ownership and associated cash payments. It's an integral part in helping companies settle their trades quickly, which has helped make Australia one step ahead when it comes to business practices!
Classified Asset - Restricted Securities are asset of a kind referred to in paragraph (a) that can only be bought or sold by specific people under certain circumstances.
Clearing - The process of matching, registering and guaranteeing transactions.
Clearing Account - The clearing account is a holder record that's maintained in CHESS by brokers to facilitate settlement of approved securities with clients who are not participants.
Clearing House - Either ASX Clear or ASX Clear (Futures) depending on the instrument.
Closed End Fund - Fund that has a fixed number of shares
Closing Out - Closing out a position can be done in many ways, but it always involves taking an equal and opposite measure to close out your trade.
Closing Purchase - Closing a trade is the last step in an investor's written position.
Contango - Contango is a situation in which future market prices are higher than those for the nearest month or weeks.
Contract Interest - Contract interest is paid daily by contract holders, received from those who have bought long and sold short on ASX CFDs.
Convergence - The process of convergence, where the price for derivative contracts match up with that for underlying financial instruments or commodities at maturity.
Convertible Debt Security - Unsecured notes or debentures that can be converted into equity are considered to fall under the category of “equity” because they offer their holders access not only debt financing but also potential profits through conversion.
Cost Of Carry - Cost factored into the pricing of derivatives instruments (excluding CFDs).
Coupon - coupon payments are made to holders of interest rate securities at regular intervals.
Coupon Rate - The income a bond pays expressed as a percentage of its face value.
Cover - The act of canceling out a short position by purchasing an equal amount. This can also be known as "short covering".
Covered Warrant - Covered warrants are a security structure in which the underlying shares of stock or other property is placed.
Crossed Trade - A crossed trade is when two parties who are not related to one another buy or sell an asset from the same market participant.
Cum (General) - The Cum dividend means that shares are being traded with the current attached and thus, a buyer rather than seller receives any dividends declared. Quoted " cum-rights", entitlees their owner to participate in New Issues of Shares then currently existent.
Currency Warrants - Currency Warrants give investors the opportunity to profit from movements in two different currency exchange rates.
Current Assets - Current assets are the cash or other possessions of an entity that would in normal course be used up within 12 months after ending its last financial year.
Current Delivery (Month) - The current delivery month is when the contract matures and becomes deliverable.
Current Ratio - Current Ratio = (Current assets / Current liabilities) = number of times covered
D
Daily Settlement Price - The daily settlement price is an important measure for traders who want to know how much they will have earned at the end of each trading day.
Day Orders - Orders that expire on the close of a trading day are called "day orders".
DCS - Derivatives Clearing System
Debenture - A debenture is a loan to companies at fixed rates, for terms usually ranging from one to five years.
Debt Funding/Finance - Debt financing is the process of issuing debentures or bonds to finance operations.
Debt To Equity Ratio - Debt to equity ratio = (total debt / shareholder equity) x 100
Deferred Delivery - Deferred Delivery
Shares Quoted “dd” are the result of a reconstruction of company's share capital where shareholders have surrendered old scrip to that point but no new has been issued. Buyers who wish acquire these shares should know they cannot expect delivery at this time because it is only through waiting for an appropriate date before becoming eligible for trading purposes on exchanges or elsewhere will be able do so when launches happen in tandem with other firms' listings following suit
Deferred Settlement - The deferred settlement is a type of contract in which the obligation to settle on trade date plus two (2) business days (T+2), i.e., after ASX fixes, can be postponed until then.
Delisted - The company has been delisted from the Official List, which means that its stocks are no longer quote by any stock exchange.
Deliver Not Enforceable - The delisted security is the result of a new issue for which CHESS statements have not yet been issued.
Deliverable Types - The different types of deliverables that can be found in futures contracts for commodities.
Deliverable Warrant - Deliveries of this type are made when the underlying asset has been transferred instead of cash.
Delivery - The delivery of an underlying physical asset or warehouse receipts covering such commodity in settlement for a futures contract is what delivers the value to your investment.
Delta - Delta is a measure of how an option or warrant price responds to movement in the market value of their underlying asset.
Derivative - A derivative is a financial contract that depends on the performance of another security, such as shares or prices for commodities.
Direct Market Access (DMA) - Direct market access is the process where a Market Participant gives their clients the ability to submit orders, which then get routed through its internal systems and onto an exchange.
Discretionary Account - A discretionary account is an investment program for which a licensed financial adviser makes decisions in accordance with their authority.
Distribution - Distribution is the distribution of profits within a fund to its unit holders. These payments are allocated on an individual basis for every share bought.
Diversification - The idea of diversification is to spread investments over a variety or categories with different performance characteristics, in order reduce risk.
Diversified Portfolio - A diversified portfolio is a way to invest in many different types of assets at once.
Dividend - The distribution by a company to shareholders is known as dividends. It's usually expressed in cents per share.
Dividend Cover - Dividend Cover ratio = (net profit / dividend paid)
Dividend Imputation - Dividend imputation is a system where credits for taxes paid by Australian companies are passed on to shareholders who receive franked dividends.
Dividend Reinvestment Plan (DRP) - An alternative to cash dividends, allowing shareholders to receive new shares instead of cash.
Dividend Yield - Dividend shown as a percentage of the last sale price of securities
Dps Adjusted - Total dividend, in cents per share, for the year, adjusted by a dilution factor to take account of issues and reconstructions.
E
Earnings - Income or profit of an entity.
Earnings Per Share (EPS) - EPS is a measure of how much profit each shareholder receives, no matter what share they own.
Electronic Holding Statement - A holding statement is an electronic record that contains all security holdings on the ASX.
Entry Fee - The fund manager may set an entry fee for buying units in the managed investment, which is a percentage of what's invested.
Equities - Equities are the heart of any investment portfolio. They provide stability and security by giving investors part-ownership in a company, as opposed to bonds or other debts that offer less reward for their riskier nature
Equity Capital Or Equity Funding - Capital raised by a company by issuing shares
Equity Warrants - Warrants are a type of security which give their holders the right to purchase an underlying asset at pre-determined prices and on certain terms
Escrow - The act of placing goods into escrow is an agreement between two parties that allows for the safekeeping and warehousing, but not transfer or sale during certain conditions.
Ex Rights - The ex right is the option to participate in a new issue of securities by purchasing existing ones from another company.
F
Face Value - Face value is the amount at which securities or debt instruments are issued. The term also refers to what you would get if your investment matured today.
Fair Value - The current market price of a security, plus an amount for 'cost-of carry'. This is used as the estimate on what options should be trading at in efficient markets.
Fidelity Fund - Fidelity funds help those who have suffered losses because of defalcations or fraudulent misuses money and other property. They aren't available to cover trading damages
FID - Financial Institutions Duty
Fixed Interest - A fixed interest rate is an unchanging rate charged on a liability, such as a loan or mortgage.
Float - The float is the initial public offering of stocks, which gives people an opportunity to invest in companies they might not be able afford otherwise.
Forward Agreement - Forward agreements are a contract to exchange particular goods or financial instruments at set prices on future dates. Franked Dividend - The franked dividend is a way for companies to pay their shareholders through profits they've already taxes on.
Franking Rate - The franking rate is the tax rate at which dividends are taxed.
Fully Covered Warrant - Fully Covered Warrants are one of the most sought after types among investors because they offer protection against any economic loss incurred by an issuer should it issue shares at below cost.
Fund Manager - The fund manager is responsible for allocating capital to different investment opportunities and managing it accordingly.
Fundamental Analysis - Fundamental analysis looks at how a company operates by using ratios and percentages calculated from financial data.
Futures / Futures Contract - Future contracts are agreements to buy or sell an asset at a date in the future.
G
Government bond - Debt security issued by the government.
GST - Goods and Services Tax.
H
Hedge - Hedge transactions are designed for reducing risk in your portfolio.
Historic volatility - Annualised standard deviation of daily changes in the price of the asset underlying a futures, options or warrant contract.
Holder identification nu mber (HIN) - Number identifying registration on the CHESS sub register.
Holding lock - The facility prevents securities from being deducted or entered into a holding.
HOT - High yield instalments. Instalments containing a high gearing level (usually between 70% to 110%).
Hybrid ETFs - Hybrid ETFs are a new type of exchange-traded fund that can either be based on an index or actively managed.
Hybrids - Hybrids are a type of interest rate security that have characteristics from both stocks and bonds.
I
Imputation Credits - These credits may be passed on to a shareholder who receives franked dividends.
Index (Indices) - Indexes are a way for investors to track changes in value. They're often used as one measure, or input, when trading stocks and other financial instruments like mutual funds.
Index Arbitrage - Index arbitrage is a trading strategy where traders try to take advantage of pricing discrepancies between an index based derivative and related products that make up the shares in question.
Index Futures - Index futures are a type of contract that has as its underlying asset an index, typically the share price index.
Index LEPOS - An index LEPO is a European call option over the share price of an underlying benchmark, with one point strike price.
Index Options - Options over a share price index.
Index Warrants - Index Warrants are a type of security that allows investors to buy stocks in an index.
Infrastructure Fund - The infrastructure fund is a type of managed investment that invests in assets such as transport and telecommunications.
Initial Margin - Initial margin is the minimum deposit that must be paid by a Clearing House to all futures contracts and exchange traded options, which can also include basis trades.
Interest Cover - Interest Cover = Earnings Before Interest and Tax (EBIT) / Net Interest Payments = number of times covered.
Interest Rate Security -Interest rate security is a type of financing that pays out interest at regular intervals.
Interim Dividend - interim dividends
When a company pays out more than one annual dividend, they are called "interim" or partial payments.
In-The-Money - The call option or warrant has an exercise price that is below (above) the market value of its underlying asset.
Intrinsic Value -Intrinsic value is the present value of expected future cash flows of an asset.
Issue Date - Date by which an Issuer must have entered Financial Products into holders' uncertificated holdings
Issued Capital - The total value of all the shares and debts that have been allotted to a company's shareholders.
Issued Shares - Issued shares of a company that have been allotted to shareholders.
Issuer Sponsored Sub-Register - issuer-sponsored subregister
A special kind of register that operates solely on behalf and under the supervision/control of a listed entity itself, for registration purposes only.
L
Leverage - leverage is a measure of how much an investor or business borrows.
LICs - Listed Investment Companies.
Limit -Price limit for an order,
Limit order - Limit orders are instructions to buy or sell a security at the limit price, which can be set by you.
Limited liability company - Limited Liability Company (LLC)
A company with members who have liability limited to what is unpaid on their shares or guaranteed by another individual. In cases where there could be potential for debts from other sources, an LLC operates as if the member has no assets at all because everything belonging to them would need approval before being paid out in any case.
Liquid assets - Liquid assets are those that can be bought or sold easily and with little impact on price.
Liquid market - Liquid markets are a great way to buy or sell items without having your offer impacted by higher market prices.
Liquidity - Liquidity is a measure of how easily and with little impact on price you can buy or sell assets.
Listed company - Listed companies are those that have agreed to abide by ASX listing rules so their stocks can be bought and sold on the Australian Securities Exchange (ASX).
Listing rules - The Australian Securities Exchange (ASX) has created an extensive set of rules to govern the procedures and behaviour for all entities that are listed on their exchange.
Long - Long traders are individuals that buy or hold positions in anticipation of rising prices.
Lot - A lot is the smallest unit of trading in futures contracts.
Low exercise price options (LEPOs) - LEPO options are a great way to invest in low-cost index funds with little risk.
M
Managed investments - Professionally managed portfolio of assets.
Management Expense Ratio (MER) - The Management Expense Ratio is a fee paid to the manager of an investment fund.
Mandatory settlement - The process of closing out a trading option or futures contract by mandatory cash settlement is called "mandatory settling."
Margin - Margin is the amount calculated by a clearing house as necessary to cover risk in options contracts, futures trading and CFDs.
Margin call - The margin call is a communication to the client that their position has moved against them and may require additional funds.
Margin interval - The margin interval is the probable maximum one day move in an underlying asset as calculated by a clearing house. It's expressed as percentage and used for calculation of options and futures margins too!
Market announcements office - The ASX's office that handles market announcements.
Market capitalisation - The market capitalization of a company is determined by measuring its total number shares, multiplying them with the current price per share and then adding up all these values.
Market order - A market order is an instruction to buy or sell at the current level of prices. It can be given by anyone, including you!
Market participants - Market participants are the organisations that meet ASX's requirements to be recognised as such. This includes both trading and clearing companies, which make up one of Australia’s most important financial markets - worth $1 trillion per year!
Market price - The market price is the last time at which you can buy or sell shares before they hit their Prevailing Stock Exchange (ASX) prior to listing.
Maturity - The maturity of an agreement is when the term ends and either cash or physical settlement will happen.
Memorandum of association - The memorandum of association is an important part in starting up any new business. This document provides for all the basic information about your company, such as its name and what it does - so make sure you get this right!
Merger - When 2 or more companies combine(merge) either by takeover or creation of a new entity.
MINIs - MINIs are a great way to trade the price movement of an underlying asset on its own. They act like CFD's, but with one major difference: when you buy MINI shares there is no need for registration since they're just agreements between two parties who exchange money instead.
N
National Guarantee Fund (NGF) - The National Guarantee Fund (NGF) provides an important safety net for those who invest in ASX-traded products. The fund was established to protect Participants of the Australian Securities Exchange and certain other companies from certain types claims arising out these transactions, including financial loss due legal proceedings involving
Net Asset Value (NAV) - Net Asset Value (NAV) is the book value of a company's assets divided by shares on issue.
Net position - A net position is the difference between long and short positions in any one contract. If you have a lot of contracts, then your total exposure to an underlying asset will be zero but it can still give us information on how traders view their investments by looking at where they put themselves into either winning or losing trades
Net Tangible Assets (NTA) - The net tangible assets or NTA of a company is the total value calculated as opposed to intangible ones like goodwill and less all liabilities.
No liability company - The company has no obligations to make good on the unpaid shares. It's designated as an N-L, which means they're not liable for anything related or connected with their stock offerings and what goes up must come down!
Non-renounceable rights - Non-renounceable rights are a type of asset that can only be taken up or forfeited, and cannot traded on the market.
Novation - Novation is the process undertaken by a clearing house to substitute itself between buyer and seller of trade, acting as "middleman" that guarantees obligations from each party involved in deal.
O
Off market transfer - The transfer of shares between parties without going through the market place is called off-market transfers. These are executed using an "Australian Standard Transfer Form", which gives all necessary information about how to complete it and find resources for assistance when needed
Offer - The price at which someone is prepared to sell their securities.
Offer period - The offer period is the time during which offers under a bid remain open. In relation to an announcement of intention-to propose scheme, this would be from date it was first received by exchange until effecting date
Official list - The Official list is the authoritative source for all ASX listed companies to publish their prices.
Open ended fund - Managed investment fund where there is no restriction on the number of units in it.
Open interest / open position - The number of positions open in a particular class or series.
Opening price(or range) - Price range recorded during the period when an instrument commences trading.
Option - The contract between two parties gives the taker (buyer) rights, but not obligations to buy or sell an underlying asset at a particular price on or before date.
Ordinary share - Ordinary shares give their holders a say in how the company operates, but they don't come with any special rights.
OSXT - An example of a trade where one market participant was buying outside Australian hours, this is called an "OSXT."
Out-of-the-money - Out of the money means that a call or warrant is currently trading at an asset's market price which exceeds (falls short) its exercise price.
P
Paid-up capital - The amount paid by shareholders or recorded as paid on issued shares is called "paid-up capital."
Parent company or entity - Controlling company
Pari passu - Pari Passu means on an equal footing. This term is often used with respect to share issues, indicating that new shares will rank equally in all respects as previously issued shares either immediately or at some specified time within the near future
Participating dividend - This company has decided to reward their preference shareholders with a special dividend.
Participating preference shares - Share with a claim to profits ahead of ordinary shares. Preference shares are eligible for a higher dividend rate than their fixed rate if the company earns profits more than a set amount.
Partly paid shares - The shares that have been issued with only part of their value paid, for example you might buy a $1.00 share but haven't sent in all your money yet - this is called "paid-in favours."
Percentage franked - Dividend paid by a company out of profits on which the company has already paid tax
Physical market - Physical markets are a place where physical assets can be traded. Different types of underlying markets for Derivatives include shares, equity indices or interest rates to name just some examples
Placement - Allotment of shares, debentures etc. made directly from the company to investors.
Preference shares - Preferences make it possible for investors to be aware of their ranking in the event of liquidation.
Premium (option) - Premiums are paid to the writer of an option when they purchase it from another party.
Premium margin - With the current market value of an option based on yesterday's closing price, it is easy to see that this number will change depending upon whether or not you have been successful in your trade.
Price range for day or week - The highest and lowest prices for a day or week.
Price-Earnings Ratio (PE) - P/E ratio = Price per Share/Earnings per share
Private equity fund - Private equity funds are private and not available to the general public.
Promissory note - Promissory Notes are an agreement between two parties in which one promises to pay the other upon demand. The promisor guarantees that he or she will make payment, but there's no guarantee about when this might happen - so it can be difficult for people who rely on them being paid back!
Property trusts - Property trusts are a popular way for investors to purchase an interest in real estate assets.
Proxy - The proxy is an authorisation given by one person to another so that they can act in place of them. The person authorised will be known as your "proxy".
Put option / warrant - Put options are a type of contract that give the holder rights to sell an underlying asset at its exercise price.
Q
Quotation - listed entities can trade their securities on the ASX, which are defined by listing rules as official quotations.
R
Real Estate Investment Trusts (REITs) - Companies that own or finance income-producing real estate across a range of property sectors. These real estate companies have to meet a number of requirements to qualify as REITs.
Recognised Trustee - Under Australian Securities Exchange ('ASX') Settlement Operating Rules, a trustee company within the meaning of State or Territory Trustee Legislation.
Reconstruction - An alteration to the issued capital of a company. Includes share splits, consolidations and reductions in outstanding shares as well as schemes that allow for partial repayments or name changes!
Record Date - The date used in determining who is entitled to a dividend or other entitlement associated with security.
Redeemable Preference Shares - When shares are issued on the terms that they may be redeemed by a company at a later date, either out of profits, which would otherwise go towards paying dividends or fresh issue.
Redemption - Paying off or cancelling of a debt.
Related Company - The company which controls or is controlled by another via ownership of subsidiaries.
Renounceable Rights - The issue of rights where you can choose to take up the offer, let them lapse or trade on market.
Reset Date - When it comes to Rolling Instalments, the Reset Date is when your final payment for that loan amount is reset.
Restricted Securities - Securities that during the escrow period are restricted, unprotected and owned by a third party. The Listing Rules define these types of securities as being in "designated" or certain categories which may restrict how they can be disposed/owned after sale until their term has passed.
Return On Investment - The annualised return of an investment is the percentage that remains after you take into account how much was invested, what its original cost or value was and how long it takes for all profits to be earned.
Rights Issue - The ability to invest in new shares is given only to those who possess it.
Risk - Probability that an investment will result in a loss. Can also refer to the level of volatility returns attached to your particular investments
(Risk) Margin - The margin for futures and exchange traded options required to cover the likely one or two day probable worst case movement against your position.
Roll over - Closing out one position while opening another over the same underlying asset with a later expiry date.
Rolling Instalments - This type of installment has a longer life than most, with the periodic reset date usually set at least once every year.
Routine Transaction Statement - The security statement is a record of all transactions in that particular stock.
S
S&P ASX 200 - The benchmark for Australian equities, the S&P/ASX 200 is comprised of 100 stocks plus an additional group.
secondary market - The secondary market is where traders buy and sell stocks that were originally issued in a primary marketplace.
Securities Exchanges Guarantee Corporation (SEGC) - Trustee of the National Guarantee Fund.
Security reference number (SRN) - The security reference number is an important identifier for allocating holders on a certificate register. It's allocated by the issuer and identified with each person who has been given permission to own some form of investment, such as stocks or bonds in their names.
Sell a contract - In the future, you will be able to sell a contract on any underlying asset that suits your needs. For example if I wanted gold but not right now then there’s an option for me through this futures market!
Settlement day - Settlement day is the day in which cash settlement or delivery resulting from expired futures and options contracts are conducted.
Settlement month - The calendar month in which you need to finalize your contract's trade date.
Share capital - Share capital is the sum of money that shareholders put into a business.
Share certificate - Share certificates used to be a popular way for investors and corporations alike, but they're becoming less common now that most people hold their stocks through electronic holding statements.
Share indices - Share indices are a great way to measure movement in the price of shares.
Shares - shares represent a portion of the ownership in any business and come with different perks depending on what type you hold.
Short - A trader who has sold or holds a position that will benefit from falling prices.
Short selling - Short selling is when an investor or fund manager borrows a security and sells it with the intention of buying back at lower prices.
STAP - Single Traded Auction Price
SPAN - Standard Portfolio Analysis of Risk
Special transaction statement - The definition of a special transaction statement is one where an account holder requests their own transactions be recorded.
Specific cover - The CHESS Security exchange has lodged as collateral to cover call options written over those specific securities.
Split - Split shares are a way for companies to increase the total number of their equity tokens outstanding, with each share staying at its original value. This means that there's been no change in price proportionately among all shareholders- but it also means you could get more stock!
Split holder - Split holders are used for splitting shares into units of lesser value.
Spot month - Nearest expiry month to the present.
Stapled security - With a stapled security, two or more different types of financial instruments are bound together so that they can't be sold separately.
STIR - Short Term Interest Rate.
Stock - Stock refers to all of the shares in a company, which can also be used for describing inventories held by businesses.
Stock exchange - A market on which securities are bought and sold.
Stop loss - The stop loss order is a predetermined sell (buy) at the current market price intended to minimize losses should it fall further.
Subscribers - Initial purchasers in the primary issue.
Subsidiary - The subsidiary is a separate legal entity, with its own liability to taxes.
Substantial shareholder - Person/company holding more than 5% of a company's voting rights.
SYCOM - Sydney Computerised Market is a predecessor of the current trading system that was used for futures and listed CFDs. Now it's just called ASX Trade24, with all its features added onto this amazing platform!
Securities - Securities allow people to invest in whatever they want, be it stocks or bonds. They're like little pieces of the companies that give them profits andtrophy opportunities as well!
Stochastic Indicator - A stochastic oscillator is an indicator that compares the closing price of a security to its range over time. The sensitivity can be reduced by adjusting either how long you measure or if there's moving average taken in effect, which will make it easier for less extreme fluctuations happen within this system as well!
T
Tailor made combination - Multi-legged options order traded at a net price.
Takeover - The acquisition of a controlling interest in your company by purchasing shares is called "takeover."
Taker - Buyer of an option contract.
Technical analysis - Technical analysis is the study of past price movements and volume data to identify market sentiment in order to forecast future price movements. A chart representing all previous changes in price values will be used for this purpose and it's an important tool because trends tend to persist and changes in the price show the collective behaviour of buyers and sellers.
Terms of the scheme - The terms of the incentive scheme include all those set out in its list, including conditions and restrictions which aim to introduce a professional tone.
Tick - Tick is the smallest amount of change allowed in a share price.
Time value - The time value of an option is the price of the option minus its exercise value.
Trading halt - An interruption to trading at the request of an entity that is not a suspension from quotation.
Trust deed - The trust deed is an important document that ensures the rules of how investments are to be managed, as well as what benefits will accrue for beneficiaries.
Trustee securities - Trustee Securities are a unique type of security that meet the legal requirements for being used by Trustees.
Trusts, unit trusts - Collective fund which holds a portfolio of securities on behalf of the investors who hold units in the trust.
U
Uncalled capital - The amount of capital that has not been called up on the shares which are currently issued.
Underlying instrument underlying security - Asset that the holder of a derivative has the right to buy or sell, or against which a cash payment is made on exercise of an option or warrant. The underlying instrument may be a security (such as shares in a company), a share price index, a commodity or a currency.
Underwriter -A professional who agrees, for the fee of agreement to purchase any unsold shares in an issue.
Unit - Unit in a trust.
Unit nav - Unit NAV = fund net asset value/number of units on issue in the fund.
Unlisted company - Unlisted companies are not a common sight on Australian exchanges. This is because they cannot trade their shares on ASX, so people who want to invest in them will need an unestablished broker or else go through some other means of purchasing these shares privately.
Unsecured notes - The most common type of corporate note is an unsecured loan. These notes offer higher rates than regular debentures but lack security like collateral and always have a fixed rate for the time period that they are issued in which can be up to three years or less if it's just going onto their credit card!
V
Variation margin - An unfavourable movement in the price of futures, options or exchange traded CFDs can lead to an increase in margin requirements. This is where a call made by clearing houses for additional funds or eligible security will occur if needed so that traders don't experience any drops during these volatile periods.
Volatility - Volatility is the measure of how much a price fluctuates over time.
VWAP - Volume weighted average price.
W
Warrant code - This six-letter code represents a way to trade ASX quoted warrants. The first three letters of the letter identify the underlying security as well as type, issuer and sequential number for each warrant respectively.
Warrant series - All warrants with the same terms of issue and underlying asset are issued under a single "warrant issuer" (a company), but each individual series has its own set of unique warrant codes.
Warrants - Warrants are a financial instrument that can be traded on the Australian Securities Exchange (ASX). They're used for both investment purposes and to make money, though they have more of an appeal when it comes time sell your shares in order realize their potential gain from price increase. The ASX is home primarily trading these types stocks with other instruments such as share prices indices or currencies; there's even warrant
Wrap account - Consolidation of investments under one administrative umbrella. Investments are wrapped into one single account.
Writer - A writer is a person who sells options contracts.
X
XT - A cross trade (XT) is when a broker executes an order to buy and sell the same security at exactly the same time, in which both sides are clients.
Y
Yield -The percentage return paid on a stock in the form of dividends or interest is referred to as "dividend yield".
Yield to Maturity ( YTM) - A bond's total return measure, or YTM. It includes any capital gain (or loss) as well as income earned from the price you paid for your investment at purchase up until maturity date-of course assuming that it will be held all the way through!
Z
Zombies - Companies that continue operating while awaiting a merger or closure, even though they are insolvent and bankrupt.