Sequence of deals in which a forward (paper) Brent or Dubai cargo of crude oil is traded ahead of receiving loading dates (known as turning wet). A paper Brent cargo may be traded several months ahead of turning wet. A Brent paper chain may be anything up to or over one hundred deals long with an active market player involved many times on both the buy and sell side. Also known as a paper chain.

Buying a large block of shares in a short time, usually for the buyer to position himself in a possible or actual takeover situation. The purchase often takes place at the start of a trading day.

In mining leases, rent which is payable whether a mine is worked or not.

A term used when the cost of funds produces a constricted borrowing environment. Also known as tight money. Opposite to Easy Money.

A debtor country buys back its foreign debt at a discount in line with market conditions for local currency which the creditor can then use to invest in one of that nation's companies. The debtor country is then said to have securitised its debt.

A ratio which measures the amount of long term debt of a company. Calculated by dividing the total amount of outstanding bonds by the company's total capitalisation.

Cost to a country of servicing its foreign debts and in particular debts owed by the public sector and publicly guaranteed debt. The total of interest payments and repayments of principal is expressed as a percentage of export earnings. A level of 20 percent is normally considered an acceptable maximum but establishing the exact figure is often difficult.

A company hives off some of its units into a wholly owned separate concern which may also be listed on a stock exchange. Can occur following a number of acquisitions of a similar nature which may diverge from a company's mainstream operations.

Extra charge paid by cargo suppliers, receivers or charterers for delaying a vessel at a port of loading or discharge beyond the scheduled time of departure. Applies also to barges, freight cars and other carriers.

Accounting term which allows for the loss of value of a company's assets.

Instruments derived from existing instruments in the cash market. Comprising a whole range of futures, options and swaps traded on futures/options exchanges and over the counter. These instruments, often used within a portfolio of holdings, allow investors to hedge. They are often complex and therefore customised, in the case of OTC transactions, for the individual investor. Have become increasingly popular due to their off balance sheet status. See Futures, Option, FRAs, IRS.

An amount paid below the normal price level. In the money markets it is the action of buying financial paper at less than par value. In the foreign exchange markets it is a margin by which the forward rate falls below spot. In the futures market it is referred to as Backwardation. An option can also trade at a discount, meaning that the premium is less than the intrinsic value. Opposite to Premium.

Interest rate at which a central bank will discount government paper or lend money against government paper collateral. See separate entries such as "Germany – Key Interest Rates" for the Group of 10 nations and Switzerland.

Establishes the relative worth of a future investment project by discounting the expected cash flows from the project against its net present value, commonly used in valuing companies and as a component of equity valuation.

The part of a company's after tax earnings which is distributed to the shareholders. The board of directors of the company decides how much dividend is paid and when. The dividend is neither automatic not guaranteed for ordinary shareholders. The dividend can be in the form of cash or shares.

Extend to which a company's dividend and/or interest disbursement is matched or exceeded by its earnings. Expressed as a multiple. The company's rating in the market increases as the multiple rises.

The return that the annual dividend of a share represents in relation to the current share price. Calculated by dividing the annual per share dividend by the current market price.

A composite index made up of the Dow Jones Industrial, Transport and utility averages.

Drawing down funds made available from financial institutions. It can include credits from the International Monetary Fund, Eurocredits from banks or a corporate use of credit granted by a domestic bank.

A bond that pays a coupon in one currency but is redeemed for a fixed amount of another currency, often the dollar. Investors usually get an above market coupon but run the risk that, in this example, the dollar would fall below the exchange rate implied when the amount was fixed. These bonds are attractive to borrowers that operate in the currency of redemption because they have no long term exchange rate risk. For other borrowers the guaranteed exchange rate can be used in a swap, for example, with corporations having abilities in the currency of issue.

an auction where the price is lowered gradually – from a price well above the true value – until a responsive bid is seen. This then becomes the price at which the offering is sold. The U.S. Treasury sells its Treasury Bills using a similar basis where the bids are termed tenders.

A term used when credit and money are lavishly available, associated with a relaxed monetary policy and often, but not always, accompanied by moderate or low interest rates. Opposite to dear money. Also known as cheap money.

Economic Commission for Latin America and the Caribbean. Based in Chile, it is a United Nations sponsored body which coordinates economic development policies in the region. Has 41 members and seven associates.

Planned by the European Community, involving a single market which allows free movement of people, goods, capital and services; formation of the European Monetary Institute, the precursor to the single EC central bank; and a single EC currency.

Barometers of a nation's growth, with major ones issued usually monthly or quarterly by a government department. Examples are gross domestic product, consumer price index, money supply, trade balance and unemployment.

Temporary action, generally by one country, to halt shipment of goods into or out of another country.

Method of allowing countries to bend some of the rules in lending by the International Monetary Fund, provided they promise to undertake strong policy measures aimed at redressing payment imbalances.

Sites in depressed, mostly inner urban areas, where companies are given favourable taxation treatment and are freed of various planning regulations.

Earnings per Share. A figure representing the amount of a company's net earnings which is available to each outstanding ordinary share. The number of outstanding ordinary shares does not include treasury stock or any ordinary share equivalents, such as convertible bonds, convertible preferred shares, warrants or stock options. If these are included, the company would report a fully-diluted earnings per share. The EPS is calculated by dividing the net earnings available for distribution to ordinary shares in issue. This figure is a very important indicator of a company's present growth as well as future growth prospects.

A type of investment fund investing primarily in ordinary and/or preferred shares.

The Employee Stock Option Plan is a retirement plan in which employees receive ordinary shares of the company. The company receives an investment tax credit.

A bond issued in a specific currency outside the currency's domicile. Eurobonds are not subject to withholding tax and fall outside the jurisdiction of any one country. Major eurobond issuers are large international corporations, governments and their agencies and international institutions.

The ECU is a composite currency, based on a basket, with each nation's currency weighted according to each country's share in intra-European Community trade, its percentage share of EC gross national product and the relative importance of each country's foreign exchange reserves. It is calculated daily and is the basis for European Rate Mechanism parities. It is being increasingly used in its own right for trading purposes and to denominate bond issues.

The official all-embracing name for the European Community. This follows the effective date – November 1, 1993 – for the Treaty on European Union, commonly known as the Maastricht Treaty. The Treaty formally created a new entity, the European Union, with responsibilities beyond the EC focus on economic and trade issues. The EU also takes in rules governing common foreign and security policy, procedures for cooperation on terrorism, crime, immigration, asylum and other domestic and judicial matters.

The risk that the credit rating of a borrower and therefore the ability to make payments may depreciate owing to an industrial or natural disaster, regulatory changes, a takeover or a corporate restructuring. In 1989 Standard & Poor's introduced event risk ratings.

Means excluding. Thus ex cap, ex div, ex rights. Indicates that a buyer of shares does not receive a current capitalisation issue, a current dividend or a current rights issue. Opposite to Cum.

Date on which bondholders are eligible for coupon payments. For a certain period of time before the coupon payment the bond trades in ex dividend form and has a negative accrued interest stock. An investor who buys a bond between the ex dividend date and the coupon payment does not receive the coupon and it goes to the previous holder of that bond. The ex dividend date varies from country to country.

The date on which shareholders are eligible for the rights issue. Up until this date, the share trades with the rights (cum rights). During the period from the ex rights date to the end of the subscription period, the share is traded without the rights (ex rights). Similarly applies to dividends and capitalisation issues.

An item which is within normal business activities but which is of unusual size. It is usually recorded separately in the profit and loss account. See Extraordinary Item.

Used to protect and maintain a country's financial position and the value of its currency. The regulations are aimed at preventing or restricting certain foreign currency transactions. Mostly by a country's nationals. The movement of precious metals, particularly gold and silver, can be governed by these controls.

A system aimed at limiting short term movements between European Community currencies. Most member currencies were allowed to move by no more 2.25% either side of a fixed bilateral central rate against other member currencies. However, a few currencies were allowed to fluctuate by 6% either side of their central parities for an undetermined initial period. In august 1993, following turmoil on the foreign exchange markets, member currencies were allowed to move by 15% either side of their central rates. However the German mark and the Dutch guilder retained their 2.25% fluctuation limits.

Trades of crude or products between producers or refiners usually carried out for quality reasons or to save transportation costs.

Currencies known as exotics are not traded very often and are thus not considered to be part of the recognised international foreign exchange market.

The date on which delivery takes place on a futures contract. In options trading, it is the date on which a European option can be exercised. Also known as declaration date and expiration date.

U.S. programmes established in 1985, which allows exporters to receive a subsidy to sell US products to foreign customers at world market prices. The US Department of Agriculture subsidises the difference in the world price and the higher domestic price -–which exporters have to pay for the product – in the form of commodities from the Commodities Credit Corporation inventory or cash. The programme is targeted to countries benefiting from the subsidised imports from non-US exports.

Quota set under an international commodity agreement whereby exporting countries of a particular commodity accept limits on their exports. Also a bilateral or multilateral agreement between countries governing exports of industrial or other goods.

In the US, this is a government export credit agency which provides insurance and export guarantees for exports from the US and advances credit to non-US borrowers to buy American goods. It is an independent entity which can borrow from the US Treasury.

The total amount of credit committed to a borrower or a country. Banks can set rules to prevent over-exposure to any single borrower. In trading operations, it is the potential for running a profit or loss from fluctuations in market prices.

Assistance given to International Monetary Fund member-nations with economies suffering from serious balance of payments difficulties due to structural imbalances in production. Trade and prices or economies characterised by slow growth and an inherently weak balance of payments position. Drawings can be made over a period of three years under conditions to IMF stand-by drawings.

A meeting of shareholders called in addition to the AGM to discuss a particular situation affecting the shareholders and their holdings.

A non-recurring item which shows gains or losses outside normal business activities that is shown in the profit and loss account and affect the balance sheet. It can be, for example, the sale of property or loss from selling part of the company. See Exceptional Item.

Apparent worth. The nominal value which appears on the face of the document recording an entitlement, generally a certificate or a bond. For debt instruments, the amount to be repaid at maturity. Known as par value or nominal value.

A seven digit decimal number which represents the balance off the principle outstanding in a mortgage pool.

A term used in the futures market which would represent the cash price plus the net cost of carry. In the market it is the value derived from the mathematical equation used.

Federal National Mortgage Association. A stockholder owned corporation, sponsored by the U.S. government, that provides funds to the mortgage market primarily by buying mortgages from mortgage originators. These are held in an investment portfolio or pooled for FNMA members. Purchases are financed by sale of corporate obligations to private investors.

Known as the Fed, this is the central bank system of the U.S. comprising 12 Federal Reserve Banks controlling 12 districts under the Federal Reserve Board in Washington. The 12 Fed banks are based in Atlanta, Boston, Chicago, Cleveland, Dallas, Kansas City, Minneapolis, New York, Philadelphia, Richmond, San Francisco and St Louis. Decisions regarding short term monetary policy are taken by the FOMC. (Federal Open Market Committee).

Dividend paid by a company at the end of its financial year and authorised by shareholders at the annual general meeting.

An assessment of an investor's assets. Liabilities, investment goals and the inclination to bear risk which is carried out by brokerage firms and portfolio managers.

The year used for a company's accounting purposes. It can be calendar or cover a different period. In both cases it can be termed the company's fiscal year.

A drag on demand in the economy which occurs when incomes rise but bring an adverse effect on consumer demand because of the higher tax burden. Governments can adjust allowances and thresholds in line with inflation to reduce this fiscal drag but since, generally speaking, the chance to do this occurs only in an annual budget then a government gains from the benefit of fiscal drag.

Land, buildings, plant, equipment, and other assets acquired for carrying on the business of the company with a life exceeding one year.

A system in which currencies have exchange values with fixed parities, or central rate relationships with Special Drawing Rights, gold, the U.S. dollar or other currencies.

Deposits placed in the money markets with commercial banks for fixed periods. These deposits are non-negotiable. Maturities extend out to one year and can be as short as overnight. See CDs.

Registering a vessel in another country, i.e. changing nationality, to save costs and to benefit from more lax regulations regarding working conditions and labour laws.

An interest rate option which protects the holder from a decrease in interest rates. The holder, by exercising, receives a cash settlement representing the difference between the strike level and the underlying interest rate, should the latter be lower for the set period. Floors have a life of normally between two and five years. The option can be exercised at regular intervals (e.g. every 6 months) during the life of the floor. See Cap.

Free on Board. Means freight and insurance costs are borne by the charterer. Also, it is applied in balance of payments accounts to mean valuation of goods at point of embarkation, thus making imports more directly comparable with exports.

Similar to an FX swap except the first leg shows a value date in the future and not spot. Also, a future loan or deposit. Unlike the FRA, which applies to a notional transaction, the forward/forward is an on balance sheet obligation, derived from current money market rates. See FX Swap, FRAs.

A market which delivers and settles on a date other than spot. The value date can be the same day as transaction date, tomorrow or three days following the transaction date. Deals for value up to one month are known as short dates. The standard forward dates are counted from the spot value date.

A yield curve often derived from the zero coupon yield curve and indicating each point as the implied forward interest rate. Used frequently to price interest rate derivatives, such as FRAs, Caps, Floors and Swaps. The forward rate allows the trader to ascertain the current market rate.

Members fix their own tariffs on trade with the rest of the world but there are no internal tariffs.

Lead and co-lead managers for a loan receive front end fees from a borrower for arranging a loan and fees for servicing the loan, arranging interest payments and principal repayments.

Occurs with some savings or funds schemes when fund running expenses and the commission earned by a salesman are deducted from the investor's initial contributions.

Term used to describe the front-line dealing staff of a bank's money market operation. See Back Office, Middle Office.

The Financial Times Stock Exchange Index is known world-wide, officially, as the FOOTSIE. It comprises 100 leading U.K. shares quoted in London, representing over 70 percent of the total market capitalisation of U.K. domestic issues listed on the London Stock Exchange. This is an arithmetic capitalisation weighted index, calculated each minute, which takes account of changes in constituents, capital, scrip and rights issues. Futures and options are traded on the Chicago Mercantile Exchange (CME) and the London International Financial Futures and Options Exchange (LIFFE). The Chicago Board Options Exchange (CBOE) trades options.

Determines the value, for a set date in the future, of a sum of money invested now at a specific rate of interest until that date.

Exchange-traded contracts which are firm agreements to deliver or take delivery of a standardised amount of an underlying financial instrument or commodity at a standardised date in the future at a predetermined price. Futures exist in currencies, money market deposits, bonds, shares and commodities. Trade Chicago Board of Trade (CBOT) Treasury bond future is the world's most actively traded derivative contract in terms of volume. The Chicago Mercantile (CME) Eurodollar contract has the world's largest open interest.

A physical location for the trading of futures and options on futures contracts. Opposite to Over the Counter (OTC) market.

A foreign exchange swap is simultaneous purchase and sale, or vice versa, of identical amounts of one currency for another with two different value dates (normally spot to forward). The price of a swap is quoted in forward points.