Nine member nations of the European Community who have agreed to abolish formal passport controls at all internal frontiers. The nine are Belgium, France, Germany, Greece, Italy, Luxembourg, Netherlands, Portugal and Spain.

Securities and Exchange Commission, the official U.S. body responsible for regulatory oversight and administering rules associated with all sectors of the securities industry. Its main aim is to promote full public disclosure. This Federal agency came into being through the 1934 Securities Exchange Act and took over from the Federal Trade Commission.

In the U.S., companies are required to make Securities and Exchange Commission filings on various forms concerning their corporate activities. Some of the forms have also to be filed with the appropriate stock exchange.

Market for the buying and selling of previously issued securities involving non-primary dealers such as dealers and brokers. This market can take place on a regulated exchange or Over the Counter.

The exchanging of debt, often at below face value, for tradable instruments such as stocks and bonds. See Debt for Equity.

Sistema Enonomico Latino Americano (Latin American Economic System). Aims to accelerate economic and social development. Cooperates in such fields as technology and food. Members total 27 nations. Based in Caracas.

Secured debt which ranks first in terms of repayment in the event of a default.

The risk that an expected settlement amount will not be made on time. The establishment of netting systems is a direct consequence of efforts to minimise settlement risk. See Netting.

A share represents ownership in a company and the right to receive a share in the profits of that company. In the U.S. a share is called a stock. See Ordinary Share, Preferred Share.

The amount by which the market value of shares drops below par value. Significant for preferred share which pay fixed dividends based on par value.

A bill of exchange payable on demand or within a very short time.

A position showing a sale or an excess of sales over purchases in anticipation of a fall in prices. A short position can be closed out through the purchase of an equivalent amount. Buying back from a short position is known as shortcovering. Selling into a market without a prior long position is called short selling. See Long Position.

The selling of instruments which are not held, i.e. with no prior long position, in anticipation of a fall in prices. The action of buying back to cover the short position is known as shortcovering.

Since most equity price movements are based on perceptions of future performance, signals sent out by the company are extremely important. Typical signals would be advance information about expected future earnings and dividend payments. The markets will then tend to respond to these signals while also waiting for positive correlation when the actual figures are announced.

The basis of most memory and logic circuits in computers. Silicon is used because of its properties as a semiconductor and because it is abundant and therefore cheap.

Simple interest is the cost of borrowing or the return on lending money. This cost or return is based on three elements:- the amount borrowed or lent which is called the principal, the rate of interest and the amount of time. See Compound Interest.

Used in technical analysis. The simple moving average is a trend-following indicator. A moving average is created by adding and then averaging a set of data over a constant number of periods. Calculations usually look at closing prices but can also use High and Lows or a High-Low-Close combination.

A bullish signal exists when prices rise above the simple moving average and the moving average turns up.

A bearish signal exists when the prices fall below the simple moving average and the moving average turns down.

Regular mandatory prepayments by a borrower regardless of price movements in the secondary bond market to redeem a certain amount of an issue through payments to a special account, thus reducing the principal amount due at maturity. See Pro Rata Sinking Fund, Purchase Fund.

Major exchange rate adjustments were agreed by the Group of 10 nations in Washington in 1971 as well as a devaluation of the U.S. dollar against gold to 38 dollars per ounce from 35 dollars. A number of key currencies returned to fixed rates relative to the newly devalued dollar with an allowed fluctuation margin of 2.25 percent either side of the new central rates. Some currencies retained their former dollar parity with the overall depreciation of the dollar coming out at around seven percent. Agreement was also reached on suspension of the U.U. import surcharge.

Can carry an interest rate below the real cost of borrowing or no interest rate at all. The International Development Association - the World Bank affiliate - provides soft loans to developing countries for long term capital projects.

A currency basket with specific weightings of major traded currencies (U.S. dollar, sterling, German mark, French franc and Japanese yen). Created by the International Monetary Fund in 1969 as an International reserve asset to supplement existing reserve assets. The IMF uses SDRs for book-keeping purposes. See Ordinary Drawing Rights (ODRs).

A stock exchange member located at the trading post who keeps an orderly market in the shares for which he is listed as a specialist and thus he can buy and sell for his own account as needed. He is also a broker's broker. When a commission broker on the floor has a client order he can leave it, if wished, with the specialist who is obliged to act in the customer's best interest.

The risk associated with investing all in only one security. Diversification will protect an investor from this risk. Also known as non-systemic risk.

The act of taking a long or short position in the market in anticipation of a favourable move, which should result in a gain when the position is covered. Also refers to investors' general belief that a certain specific event may occur.

Stock which carries a higher level of risk, in terms of price and company performance.

A recognised participant in most markets who tries to anticipate price changes with a view to making profits. Generally, the speculator has no long term interest in the underlying physical commodity or financial instrument.

Method used by a company to spilt its operations and assets by proportionately distributing shares it holds in a company to its own shareholders. Also termed hive off.

A market whose trades deliver and settle immediately (normally two working days ahead). Also known as cash market.

Difference in a quotation between buying and selling prices. A large spread normally indicates inactive trading of a product and is known as a wide opening.

Can also be used to express the difference in yields between two fixed income securities of the same quality but different maturities or of different quality but same maturities (Ted Spread).

A futures spread is the difference in prices between delivery months in the same or different markets.

An option spread is the combination of two calls or two puts on the same underlying. See Bear Spread, Bull Spread.

The purchase of on futures contract and the simultaneous sale of another in order to take advantage of expected price discrepancies. A long spread is created by the purchase of a nearby contract against a sale of a deferred contract. A short spread is created by the sale of a nearby contract and the purchase of a deferred contract. A much followed spread trade is the Ted Spread.

European Community programme for helping developing countries under the Lome Convention by stabilising export commodity earnings, i.e. by providing EC subsidies for those countries in the scheme whose earnings fall below a certain level.

An economy where rising inflation is accompanied by falling or static industrial production and employment.

The most common periods quoted and traded in the forward and deposit markets are, one, two, three, six, nine months and one year. Any other date falling outside these standard periods are broken or odd dates. Short dates are considered to be any value date up to one month.

Arrangement with a lender (either a group of banks or the International Monetary Fund in the case of a member country) whereby a fixed amount of credit will be available for drawing during a given period, if required.

The basic International Monetary Fund soverign loan, usually over one or two years, aimed at overcoming short term balance of payments difficulties. Loan conditions are focused on macro-economic policies.

Regulation by the state of a sector of the economy using state appointed administrators who do not bow to the forces of a free market economy in their sector. See Planned Economy, Market Economy, Mixed Economy, Parastatal.

The U.S. equivalent of a share. In the U.K., mainly refers to gilt edged bonds (government stock).

A generic term for stock options, warrants and rights, both Over the Counter and exchange-traded. A holder of such contracts does not receive the same benefits as the owner of a share.

A dividend paid to a company's shareholders in the form of authorised but hitherto unissued shares.

A trading floor or screen based auction market, in which members of the exchange come together to buy and sell securities.

A composite measure of the movement of a market as a whole consisting of a large number of shares which are usually representative of various sectors of industry. Indices ususlly carry some form of weighting which can reflect, for example, the differing importance of components or market capitalisation. See Weighted Index.

Lending of shares by long term holders, such as institutions, when shares are in short supply. Often an investment house will not actually take delivery of the stock but will use it as an underlying instrument in a derivatives strategy.

A company, or individual, providing execution of trades, and / or investment advice, to the customer base, both individual and institutional while not acting as a principal.

Reform of the structure of a whole economy. Mostly used in the context of Structural Adjustment Programmes promoted by the International Monetary Fund (IMF) and the World Bank. Designed to bring about open markets, to liberalise trade, to cut deficits generally and so forth. In the case of the IMF, this usually means recipient nations have to agree on such plans, or at least on some broad outline, before funds become available.

Debt which ranks for repayment of principal behind debt senior to it.

Purchase of newly issued securities.

A company of which more than 50 percent of its voting stock is owned by the parent company.

Sugar is derived from both sugar beet and sugar cane and traded either raw or white. One tonne of white (refined) sugar roughly equals 1.087 tonnes of raw sugar.

Cuba is the world largest single sugar exporter. The European Community is the largest collective producer and India the largest single producer but both are also large consumers. China and Brazil are likewise major producers and consumers. Australia and Thailand are major producers and exporters. The U.S. is a major consumer.

Laws in the U.S. which allow maximum public disclosure on governmental bodies and including organisations in charge of securities trading regulations.

The amount of sellers, who provide market supplies, and buyers, who create market demand. Supply and demand is a major influence in generating the market price.

Theory that tax cuts, and similar measures, will boost investment in production and increase the supply of goods in the economy.

Support is a level that supports market price action for a period of time. It is a level where buying interest is strong enough to overcome selling pressure so that the market does not break beyond that level. Each time a level of support is penetrated it will take on the new role of resistance. See Resistance Point, Peaks / Troughs. Trendline.

The difference when income, or revenue, is greater then expenditure. Opposite to Deficit.

A company's shares can be temporarily suspended, either voluntarily by the company of by the relevant stock exchange, when a key announcement is expected shortly. Longer or permanent suspension can be imposed by a stock exchange for failure to comply with listing requirements or numerous other reasons.

The exchange of one asset for another. See FX Swap, IRS,Currency Swap.

Crude oil with a low sulphur content such as those from North Africa, Nigeria and the North Sea.

A large sized loan which will be arranged by a group of banks that form a syndicate, headed by the Lead Manager.

Risk that cannot be diversified away as it is the risk of market movements or of market segment movements. Also known as market risk.

The risk associated with a change in the overall financial system.

Acquisition of a controlling interest in a company through the purchase of its shares.

The initial offer by a predator company for another. The bid can be in cash, shares or a combination. Often a counterbid comes from a third party. Bids may then be increased by either predator in which case the situation becomes a takeover battle. Bids usually have a closing date for acceptance but these are often extended.

Usually, one predator withdraws and may sell the accumulated share to the victor.

The risk that tax laws relating to dividend income and capital gains on shares are changed, making stocks a less attractive investment vehicle.

The study of past market action, taking into account the market price, volume and open interest, with the aid of charts. Used to estimate future price trends. Also known as Chart Analysis. See Open Interest, Fundamental Analysis.

In the securities market, it is the process whereby all allocations are assigned at the same price.

In commodities trading, it is the notice of intent to deliver physical goods against a futures contract. Also, an invitation to acquire or sell a physical product. In a buy tender, a country sets out the terms under which will purchase a commodity. In a sell tender, a country states that it wishes to sell a commodity, e.g. a specific quantity of a crop for delivery at a specified time.

Price out forward by an investor at which they are willing to buy a new issue of securities. The tender price will usually be placed within predetermined limits set down by the issuing house. See Offer for Subscription.

Certificates of deposit that carry maturities from two to five years. See CDs.

An electronic display showing prices at which each successive trade is executed on a stock exchange, the trading volume and the share symbols. See Ticker Symbol.

A notice to the public, such as an advertisement in a newspaper, announcing the names of banks, investment and finance houses who have organised and provided funds for a security issue. It describes the terms and appears as a matter of record and not as an invitation to subscribe.

Artificial restraint on the free exchange of goods and services between countries, usually in the form of tariffs, subsidies, quotas or exchange controls.

Used in reference to foreign exchange rates with currency movements weighted in accordance with their importance in a country's trade. This trade weighting is then formulated in an index.

Concern that buys and sells futures and physicals for the account of customers as well as for its own account.

A generic term used to describe the total number of contracts traded in any particular period.

French word for a slice. Used widely. An agreed instalment of a credit or loan which may be drawn down as required. Also refers to a country's drawings from the International Monetary Fund, which are made in tranches. Also the subsequent part, or parts, of a public debt offering by a government.

Occurs when a vessel from the loading port discharges cargo at an intermediate port and the goods are loaded into another ship bound for the final destination.

Charges payable by investors on purchases and sale of shares.

A form of currency risk associated with the valuation of balance sheet assets and liabilities between financial reporting dates.

Short term government security issued in domestic currency with maturities not exceeding one year therefore considered to be a money market instrument. Treasury bills are sold at a discount from par and do not bear a coupon. The investor's return is measured by the difference from the par value at maturity and the discount price paid.

Government debt security issued with a maturity of 10 years or more (maximum 30 years to date) traded in the capital markets. Treasury bonds are issued with a fixed coupon.

In technical analysis, a trendline is a line that connects specific points of price action in order to identify the direction of the market. The longer the trendline has been in place, tested but not broken, the more significant the trendline. Trendlines are used to identify the following characteristics about trends:

• direction of the trend
• trend reversals
• trend continuation
• support and resistance

General theory is that once a trendline is penetrated it is a signal for a consolidating market and, depending on what happens after that, a possible change in trend.

The price level at which buy/sell mechanisms, provided for in commodity agreements, take effect.

Occurs every quarter and is the simultaneous expiry of stock index futures contracts, stock index options and options on individual stocks. It can often increase volatility, notably on the U.S. stock markets.