Jargon Buster

Jargon Buster

ACCA

The Association of Chartered Certified Accountants

Acquisition

The act of one corporation acquiring control of another corporation or asset

Around

Term used by dealers when the forward premium/discount is near parity e.g. ‘three-three around’ means 3 pips either side of the current spot price

Arbitrage (arb)

Riskless profit made by taking advantage of pricing discrepancies between 2 markets; buying securities in one country/market and selling them in another

Ask Price

The price at which a bank, dealer or trader is willing to sell

Basel III

An international regulatory framework, developed by the Basel Committee on Banking Supervision, to strengthen the regulation, supervision and risk management of the banking sector

Bear

A Bear is an investor who believes that the prices in the market will decline

Bear Market

A Bear Market is one where prices are falling or static (e.g. if the GBP/USD rate is dropping)

Bid or Bid Rate

The current price at which a broker/dealer is willing to buy

Bid/Ask Spread

The difference in price in 'pips', between the Bid and Ask or Offer price, the amount being used to measure market liquidity

Bid Offer

Bid Offer is the difference in price or spread between where one can buy a currency and one can sell it at the same moment

Big Figure

The first (main) digits of an exchange rate. Because these rarely change in normal market fluctuations they may be omitted verbally in dealer quotes when market activity is high (e.g. if the USD/JPY rate was 107.40/107.45, it might be quoted as simply '40/45')

Bonds

A long-term loan certificate issued by governments and organisations in order to raise capital. The capital is repaid with interest. A bond issued by a foreign institution is known as a "bulldog" in the UK, a "Yankee" in the USA, a "samurai" bond in Japan and so on

Book

'The book' is the summary of a trader's or desk's total positions

Broker

An individual or company that acts as an intermediary, putting together buyers and sellers for a fee or commission. A Broker is a 'middle man' acting as a 'negotiator' for both customer (the trader) and supplier (the main market players like commercial or national banks and financial institutions)

BrokerTec

World’s leading electronic trading platform for the fixed income markets

Bull

An investor who believes a market will go up

Bull Market

A market in which traders and investors are feeling positive and in which prices are rising

CFTC

US Commodity Futures Trading Commission

CIMA

The Chartered Institute of Management Accountants

Clearing

The process of settling a completed trade

Clearing House

An institution that practises clearing, which significantly reduces the number of inter-bank payments

Commission

Fee charged or received by a broker or other party as payment for a service; can be a fixed amount or a percentage of the value of the transaction

Compression

A multilateral process enabling a group of financial institutions to both identify multiple offsetting derivative contracts and to cancel them, in order to reduce their overall trade count and notional outstanding, thus reducing systemic risk and freeing up capital to be deployed elsewhere

Derivative

A contract that changes its value in relation to price movements of a related security, future or other financial instrument

Dodd-Frank Act

The Dodd-Frank Wall Street Reform and Consumer Protection Act, a federal statute in the US

EBS

Award-winning electronic trading platform business. The benchmark for transparent, reliable price discovery and execution in the widest range of spot FX, Non-Deliverable Forwards (NDFs) and precious metals

ECB

European Central Bank

eCommerce

ICAP’s service which offers electronic and hybrid advice and solutions both internally and externally to the client base

EMIR

European Market Infrastructure Regulation

Euclid Opportunities

Provides funding, tailored support and guidance to entrepreneurs to help deliver strategically viable financial technology offerings to market (more info)

Euribor

Euro interbank offered rate

FCA

Financial Conduct Authority, a successor to the Financial Services Authority

Fixing

The process of setting an official price for a financial instrument, on a regular basis, involving market participants and sometimes central banks or other regulatory bodies

Forward

The pre-specified exchange rate for a foreign exchange contract settling at some agreed future date, based on the interest rate differential between the two currencies involved

FRA

Forward rate agreements

Futures Market

An auction market in which participants buy and sell commodity / future contracts for delivery on a specified future date

Hedge

A hedge is a position established in one market in an attempt to offset exposure to price fluctuations in some opposite position in another market with the goal of minimizing one's exposure to unwanted risk

Getting Filled

An order you have been given to work by a client is successfully executed, the client is then filled

Global Broking

ICAP’s voice broking services that wholesale market participants use to assess trading availability and successfully execute trades

Good Till Cancelled Order (GTC)

An order to buy or sell at a specified price. The order remains open until filled or until the client cancels

Guibos

Back office trades confirmation system

Harmony Securities

Cross-asset matching engine, part of Traiana’s business

ICAP Fusion

ICAP’s next generation portal provides a customisable, single point of access to services such as trading venues, aggregated information, views of real-time market data, cutting edge analytics and streaming of relevant news and market commentary

i-Forwards

ICAP’s electronic platform for the transaction of forward foreign exchange

i-Swap

Award-winning electronic trading platform for OTC interest rate derivatives, offering continuous streaming support across EUR, GBP and USD Interest Rate Swaps

ISDX

ICAP Securities & Derivatives Exchange is an equity market for small and medium sized companies who want to raise money from investors to finance and grow their businesses

Leverage

The use of various financial instruments or borrowed capital, such as margin, to increase the potential return of an investment. Leverage magnifies both potential gains and losses

LIBOR

London interbank offered rate

Liquidity

A function of volume and activity in a market. It is the efficiency and cost effectiveness with which positions can be traded and orders executed. A more liquid market will provide more frequent price quotes at a smaller bid/ask spread

LME

London Metal Exchange

Margin

The minimum amount of funds required in a trader's brokerage account in order to open a position (enter a trade) or to maintain an open position

Margin Call

A warning by the broker of the impending (or automatic) closing of a position if the margin falls below the required minimum during a trade

Market Maker

A dealer who regularly quotes both bid and ask prices, and is willing to make a two-sided market for any financial instrument

Market Order

An order to a broker to buy a currency lot or stock at the current Ask price

MarkitWire

A third party trades delivery system that RESET use

Maturity

The date for settlement or expiry of a financial instrument

MiFID

Markets in Financial Instrument Directive. This proposed the concept of an organised trading facility. The European Commission has proposed in its revision to MiFID a new type of trading venue known as the organised trading facility. These are organised platforms which are currently not regulated as a Regulated Market or multilateral trading facility

MTF

Multilateral trading facility – an electronic system used to facilitate trading in financial instruments between multiple parties, rather than solely on a one buyer/one seller basis

Multi-lateral matching

Core business idea of RESET

MyTreasury

ICAP’s electric money market trading platform for corporate treasury investors

Offer

The price at which a market maker is willing to sell a security

One Cancels Other (OCO)

When you are given two prices to work by a counterparty, whereby he/she gets 'filled' on one interest would automatically take him/her out of their other interest

OTF

Organised trading facility, a category or trading revenue proposed by MiFID

Over The Counter (OTC)

Describes transactions not conducted over an exchange

Pip or PIP

The last two numbers of an FX quote (e.g. in EUR/USD 1.4236 the ‘36.’ The ‘1.42’ is known as the ‘big figure’)

Quantitative Easing

When the Federal Reserve either reduce interest rates or increase the money supply by purchasing bonds (or both) in order to stimulate growth in the economy

ReMatch

ReMatch is a post-trade bulk risk mitigation service designed for today’s credit derivative marketplace

RESET

Part of ICAP’s post-trade services, RESET is the market leading expert on managing resets – an important instrument in hedging against risk

RTNS

A third party system for NDF trades

SEC

Securities and Exchange Commission, a US regulator

SEF

Swap execution facility, a type of organised trading venue

Settlement

Process by which a trade is entered into the books and records the details of a transaction

Size

The total amount/volume of client's interest, of the total amount/volume on the bid or the offer

Spread

The price difference, quoted as a number of pips, between bid and offer rates (buy and sell) for currency pairs

Straight through processing (STP)

Allows ICAP to process trades at a greater speed, reducing human input and room for error

Tapering

A gradual winding down of central bank activities used to improve the conditions for economic growth

Tibor

Tokyo interbank offered rate

Tick

Shortest interval used in stock trading and forex charting

Traiana

Traiana is an ICAP company specialising in providing post-trade risk and information services relating to the electronic processing of over-the-counter foreign exchange, futures, equities and equity derivatives

TriOptima

TriOptima is an important provider of post trade infrastructure for the over-the counter derivatives market. Its web-based solutions address key post-trade risk management challenges

Volatility

The ability to change rapidly; rapid changes in exchange rates

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