A cross-trade transaction is a transaction where either the buy
broker and the sell broker are the same, or the buy broker and
the sell broker belong to the same firm.
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The situation which exists when a broker's bid is higher than
the lowest offer of another broker.
Currency Band
see band.
Currency Basket
Various weightings of other currencies grouped together in
relation to a basket currency(e.g. ECU or SDR). Sometimes used
by currencies to fix their rate often on a trade weighted
basket.
Currency Cocktail
Colloquial term for a unit of account or basket of currencies.
Current Account
The net balance of a country's international payment arising
from exports and imports together with unilateral transfers such
as aid and migrant remittances. It excludes capital flows.
Current balance
The value of all exports (goods plus services) less all imports
of a country over a specific period of time, equal to the sum of
trade and invisible balances plus net receipt of interest,
profits and dividends from abroad.
Currency Swaps
See swaps.
Current delivery month
The most current calendar month in which a futures contract
comes to maturity and becomes deliverable. Also known as the
spot month.
CUSIP code
The CUSIP numbering system is the standard method for
identifying securities throughout the US financial industry. The
CUSIP number is permanently allocated to each issue.
Cycle
The set of expiration dates applicable to different classes of
option.
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Day Order
An order that if not executed on the specific day is
automatically canceled.
Day trader
Speculators who take positions in commodities which are then
liquidated prior to the close of the same trading day.
Daylight exposure limit
see intra day position.
Deal date
The date on which a transaction is agreed upon.
Deal Ticket
The primary method of recording the basic information relating
to a transaction.
Dealer
An individual or firm acting as a principal, rather than as an
agent, in the purchase and/or sale of securities. Dealers trade
for their own account and risk.
Dealing Board
The panel of communications equipment forming part of a dealer's
desk.
Debenture
A non-secured loan raised by a company, paying a fixed rate of
interest.
Debt-Service Ratio
The ratio of interest and capital repayments as a percentage of
the country's export earnings. The treatment of public debt
varies.
Declaration date
The latest day or time by which the buyer of an option must
indicate to the seller his intention to the option.
Default
Generally a breach of contract. Failure to make timely payment
of principal or interest.
Deficit
Shortfall in the balance of trade, balance of payments, or
government budgets.
Defection
French term for default.
Deferred months
Distant actively trading contract months, also referred to as
back months.
Deflator
Difference between real and nominal Gross National Product,
which is equivalent to the overall inflation rate.
Del credere risk
Risk that the counterparty is either unable or unwilling to
fulfill his payment obligations.
Delivery date
The date of maturity of the contract, when the exchange of the
currencies is made This date is more commonly known as the value
date in the FX or Money markets.
Delivery month
The calendar month in which a futures contract comes to maturity
and becomes deliverable.
Delivery points
Those locations designated by futures exchanges at which the
currency represented by a futures contract may be delivered in
fulfillment of the contract.
Delivery Risk
A term to describe when a counterparty will not be able to
complete his side of the deal, although willing to do so.
Delivery
The settlement of a futures contract by receipt or tender of a
financial instrument or currency.
Delta
The change in the value of the option premium made fully paid by
the capitalisation of reserves and given relative to the
instantaneous change in the value of the; underlying instrument,
expressed as a coefficient.
Delta hedging
A method used by option writers to hedge risk exposure of
written options by purchase or sale of the underlying instrument
in proportion to the delta.
Delta spread
A ratio spread of options established as a neutral position by
using the deltas of the options concerned to determine the hedge
ratio.
Demand pull
Demand led inflation, commonly referred to as too much money
chasing too few goods.
Depo
Deposit.
Deport
French term for discount.
Deposit dealings
Money Market operations.
Deposit money
Bank and other giro credit balances which can be converted at
any time into cash although normally used for cashless payment.
Deposit Swap
A series of transactions whereby a deposit for a particular
currency 1, and the proceeds converted via spot currency into
currency 2. Currency 2 is then lent. To cover potential exchange
movement a forward sale of currency 2 against currency 1 is
entered into which will return the converted amount plus
interest into the original currency.
Deposit Book
The net position arising from all deposit and loan transactions
in a given currency.
Depreciation
A fall in the value of a currency due to market forces rather
than due to official action.
Depth of market
A measure of how much a price has to move in order to execute
larger than normal transactions. The smaller the price movement
and the larger the transaction, the deeper the market.
Derivatives
A broad term relating to risk management instruments such as
futures, options, swaps, etc.. The contract value moves in
relation to the underlying instrument or currency. The issue of
derivatives and their control following large losses by banks
and corporates has been subject of much debate.
Desk
Term referring to a group dealing with a specific currency or
currencies.
Details
All the information required to finalize a foreign exchange
transaction, i.e. name, rate, dates, and point of delivery.
Deutsche Terminboerse
German options and futures exchange, a fully computerized system
with integrated trading and clearing.
Devaluation
Deliberate downward adjustment of a currency against its fixed
parities or bands, normally by formal announcement.
Devisen, Devises
Foreign exchange in German and French respectively.
Devisenkassamarkt
German for spot exchange market.
Devisenterminmarkt
German for forward exchange market.
Diagonal (bull or bear)
spread
The purchase of a longer maturity option and the sale of a
shorter maturity, lower exercise price option. The choice of
calls or puts will determine its bear or bull character.
DIBOR
Dublin Inter-bank Offered Rate.
Direct quotation
Quoting in fixed units of foreign currency against variable
amounts of the domestic currency.
Dirty Float
Floating a currency when the rate is controlled by intervention
by the monetary authorities.
Discount
(1) See forward Rate. Forward rate is lower than spot rate (2)
an option that is trading for less than its intrinsic value.
Discount Rate
The rate at which a bill is discounted. Specifically it refers
to the rate at which a central bank is prepared to discount
certain bills for financial institutions as a means of easing
their liquidity, and is more accurately referred to as the
official discount rate.
Disposable Income
Earnings after tax.
Discretionary Income
Net of tax and fixed personal spending commitments.
Divergence indicator
A concept in the EMS to measure divergence from the central
parity of the currency against the ECU. The thresh-hold for
intervention for each currency excludes the currencies weight in
the ECU.
DM, DMark
Deutsche Mark.
Domestic Rates
The interest rates applicable to deposits domiciled in the
country of origin. Value and values may vary from Eurodeposits
due to taxation and varying market practices.
Double
An option either to buy or sell an instrument or currency at a
specified price. The exercise of the right to sell causes the
right to buy to expire and vice versa.
Down and Out call
A call option that expires if the asset price falls below a
predetermined level.
Down tick
The sale of a security at a price lower than the previous one.
DTB
abbreviation of Deutsche Terminboerse.
Due from Balance
US term for " nostro account".
Due to Balance
US term for " vostro account".
Dutch Auction
A competitive bidding technique where the lowest price to sell
the entire amount of the offered instrument is the price at
which all instruments are sold. A technique used for some
controlled foreign exchange and sovereign debt.
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Easing
Modest decline in price.
Economic Indicator
A statistics which indicates current economic growth rates and
trends such as retail sales and employment.
ECU
European Currency Unit.
EDI
Electronic Data Interchange.
Effective Exchange Rate
An attempt to summarize the effects on a country's trade balance
of its currency's changes against other currencies.
EFT
Electronic Fund Transfer.
Either way market
In the Euro Interbank deposit market where both bid and offer
rates for a particular period are the same.
Emu
Name of currency that is to be the vehicle for European monetary
union under the Maastricht Treaty.
EMS
European Monetary System.
End/end
Indicates that both the spot and forward maturity, or two
forward maturities in a swap transaction, fall due on the last
business day of appropriate calendar months.
Entrepot
A term used for international trade where goods are shipped to a
centre for re-export. Hong Kong engages in significant amounts
of this form of trade.
EOE
European Options Exchange.
Epsilon
The change in the price of an option associated with a 1% change
in implied volatility (technically the first derivative of the
option price with respect to volatility). Also referred to as
eta, vega, omega and kappa.
ERM
Exchange Rate Mechanism.
Euro clear
A computerized settlement and depository system for safe
custody, delivery of, and payment for Eurobonds.
Euro Rates
The rates quoted for Euro-currencies.
Eurobonds
A long-term loan issued in a currency other than that of the
country or market in which it is issued. Interest is paid
without the deduction of tax.
Eurocurrency
A currency domiciled outside its country of origin normally held
by non residents.
Eurodollars
US dollars deposited in a bank (US or non US) located outside
the USA.
Eurofranc
Swiss French or Belgian francs traded on the Eurocurrency
market. Normally Swiss Francs are the more common currency.
Euromark