A B C D E F G H I J K L M N O P Q R S T U V W  Y Z

Narrow Money: Limited definition of money to include cash or near cash, i.e. M1 or M0.

Nearby Contracts: The closest active futures contracts, i.e. those that expire the soonest.

Negative Sloping Yield Curve: A yield curve where interest rates in the shorter dates are above those in the longer dates.

Netting: A process which enables institutions to settle only the net positions with one another at the end of the day, in a single transaction, not trade by trade.

Net Position: The number of futures contracts bought or sold which have not yet been offset by opposite transactions.

Next Best Price Stop-loss Order: A stop-loss order which must be executed after the request level was reached.

Nickel: US term for five basis points.

Nominal Quotation: Used in Futures markets to refer to the estimated price for a future month or date for which there is no bid, ask or trade price.

Nominee Name: Name in which a security is registered and held in trust on behalf of the beneficial owner.

Nostro Account: A foreign currency current account maintained with another bank. The account is used to receive and pay currency assets and liabilities denominated in the currency of the country in which the bank is resident.

Not Held Basis Order: An order whereby the price may trade through or better than the client's desired level, but the principal is not held responsible if the order is not executed.

Note: A financial instrument consisting of a promise to pay rather than an order to pay or a certificate of indebtedness.

Notice Day: Any day on which notices of intent to deliver on futures contracts may be issued.

Odd Lot: A non standard amount for a transaction.

OECD: Organisation of Economic Co-operation and Development. Membership is the more than developed countries.

Offer: The price at which a seller is willing to sell. The best offer is the lowest such price available.

Offered Market: Temporary situation where offers exceed bid.

Offered Market: Temporary situation where offers exceed bid.

Offset: The closing-out or liquidation of a futures position.

Official Settlements Account: A U.S. balance of payments measure based on movement of dollars in foreign official holdings and US reserves. Also referred to as reserve transaction account.

Off-Shore: The operations of a financial institution which although physically located in a country, has little connection with that country's financial systems. In certain countries a bank is not permitted to do business in the domestic market, but can do business with other foreign banks. This is known as an off-shore banking unit.

Old Lady: Old lady of Threadneedle Street, a term for the Bank of England.

Omnibus Account: An account maintained by one broker with another in which all of the accounts of the former are combined and carried only in its name, rather than designated separately.

One Cancels Other Order: Where the execution of one order automatically cancels a previous order - also referred to as OCO or ?One cancels the other?.

Open Interest: The total number of outstanding option or futures contracts that have not been closed out by offset or fulfilled by delivery.

Open Outcry: A public auction method of trading conducted by calling out bids and offers across a trading ring or pit and having them accepted.

Open Market Operations: Central Bank operations in the markets to influence exchange and interest rates.

Open position: The difference between assets and liabilities in a particular currency. This may be measured on a per currency basis or the position of all currencies when calculated in base currency.

Option: A contract conferring the right but not the obligation to buy (call) or to sell (put) a specified amount of an instrument at a specified price within a predetermined time period.

Option Class: All options of the same type - calls or puts -listed on the same underlying instrument.

Option Series: All options of the same class having the same exercise/strike price and expiration date.

OTC: A market conducted directly between dealers and principals via a telephone and computer network rather than a regulated exchange trading floor. These markets have not been very popular. They were never part of the Stock Exchange since they were seen as "unofficial". Each OTC firm operates a market in the shares of a restricted list of (generally small and little-known) companies. Sometimes the dealer simply puts would-be buyers and sellers together but does not take a position in the shares himself. These days OTC trading is seen as "consumer-friendly," meaning that it is interested in getting the buyer and seller the best possible price. Some see this as what share-trading is all about. However, market makers, many of whom create market movements purposefully, feel they are being elbowed out by OTC, and that speculation, arbitrage and "smart-trading" are undermined by the new market.

Outright Deal: A forward deal that is not part of a swap operation.

Outright Forward: A foreign exchange transaction involving either the purchase or the sale of a currency for settlement at a future date.

Outright Rate: The forward rate of a foreign exchange deal based on spot price plus forward discount/premium.

Out-of-the-Money: A put option is out-of-the-money if the exercise/strike price is below the price of the underlying instrument. A call option is out-of-the money if the exercise/strike price is higher than the price of the underlying instrument.

Outright Deal: A forward deal that is not part of a swap operation.

Overhang: A holding of foreign exchange that is temporarily unable to be converted from the reserve currency into other reserve assets.

Overheated (Economy): Is an economy where high-growth rates placing pressure on production capacity resulting in increased inflationary pressures and higher interest rates.

Overnight Limit: Net long or short position in one or more currencies that a dealer can carry over into the next dealing day. Passing the book to other bank dealing rooms in the next trading time zone reduces the need for dealers to maintain these unmonitored exposures.

Overnight: A deal from today until the next business day.

Oscillators: Quantitative methods designed to provide signals regarding the overbought and oversold conditions.

Package Deal: When a number of exchange and /or deposit orders have to be fulfilled simultaneously.

Par: (1) The nominal value of a security or instrument. (2) The official value of a currency.

Paris: A term for USD FRF Spot Rate.

Parities: The value of one currency in terms of another.

Parity: (1) Foreign exchange dealer's slang for your price is the correct market price. (2) Official rates in terms of SDR or other pegging currency.

Parity Grid: A term used in the context of the European Monetary System which consists of the upper, central and lower intervention points between member currencies. 

Payment Date: The date on which a dividend or bond interest payment is scheduled to be delivered. 

Payroll Employment: Payroll employment is a measure of the number of people being paid as employees by non-farm business establishments and units of government. Monthly changes in payroll employment reflect the number of net new jobs created or lost during the month. Changes are widely followed as an important indicator of economic activity. Large increases in payroll employment are seen as signs of strong economic activity that could eventually lead to higher interest rates that are supportive of the currency at least in the short term. 

Pegged: The date on which a dividend or bond interest payment is scheduled to be paid.

Permitted Currency: It means a foreign currency which is freely convertible, i.e. a currency which is permitted by the rules and regulations of the country concerned to be converted into major reserve currencies, and for which a fairly active and liquid market exists for dealing against the major currencies.

Petrodollars Foreign: exchange reserves of oil producing nations arising from oil sales.

Philadelphia Stock Exchange (PHLX): The oldest U.S. securities exchange which offers currency futures and options on currency futures.

PIBOR: Paris Inter-bank Offered Rate.

Pip: The smallest unit of price for any foreign currency. Digits added to or subtracted from the fourth decimal place, i.e. 0.0001. Also called Points

Plaza Accord: The 1985 Plaza Hotel agreement by the G5 to lower the dollar. 

Point: (1) 100th part of a per cent, normally 10,000 of any spot rate. Movements of exchange rates are usually in terms of points. (2) One percent of an interest rate, e.g. from 8-9%. (3) Minimum fluctuation or smallest increment of price movement.

Political Risk: The potential for losses arising from a change in government policy or due to the risk of expropriation (nationalization by the government).

Portfolio Insurance: An option hedging strategy to protect long cash market positions. 

Position: The netted total exposure in a given currency. A position can be either flat or square (no exposure), long, (more currency bought than sold), or short (more currency sold than bought).

Position Limit: The maximum position, either net long or net short, in one future or in all futures of one currency or instrument one person is permitted to hold or control. 

Position Clerk: A clerk who assist the dealer in recording a dealers position and ensures that all deal tickets are completed and transferred to the back office or input into the books in a position keeping system.

Pre-Spot Dates: Quoted standard periods that fall between the transaction date and the current spot value date.

PPI: Producer Price Indices. See Wholesale Price Indices.

Premium: (1) The amount by which a forward rate exceeds a spot rate. (2) The amount by which the market price of a bond exceeds its par value. (3) In regard to options, the price a put or call buyer must pay to a put or call seller for an option contract. (4) The margin paid above the normal price level.

Prime Rate: (1) The rate from which lending rates by banks are calculated in the US. (2) The rate of discount of prime bank bills in the UK.

Principal: A dealer who buys or sells stock for his/her own account.

Producer Price Index (PPI): PPI is a measure of the average level of prices of a fixed basket of goods received in primary markets by producers. A rising PPI is normally expected to lead to higher CPI, and thereby to potentially higher short term interest rates.

Profit Graph: A graphical representation of the profits to a given options strategy for different underlying asset prices.  

Profit Taking: The unwinding of a position to realize profits.

Proxy Hedge: A term to describe when it is necessary to hedge against a currency where there is no market but it follows a major currency, the hedge is entered against the major currency. 

Purchasing Power Parity (PPP): Model of exchange rate determination stating that the price of a good in one country should equal the price of the same good in another country after adjusting for the changes in the price due to the change in exchange rate. Also known as the law of one price.
Put Call Parity: The equilibrium relationship between premiums of call and put options of the same strike and expiry.

Put Option: A put option confers the right but not the obligation to sell currencies, instruments or futures at the option exercise price within a predetermined time period.

Pyramiding: The use of cash generated by positive variation margins on a futures position to increase the size of the position, each reinvestment in successively smaller increments.

Quota: (1) A limit on imports or exports, (2) A country's subscription to the IMF.

Quote: An indicative price. The price quoted for information purposes but not to deal.

Random Walk Theory: An efficient market hypothesis, stating that prices move randomly versus their intrinsic value. Therefore, no one can forecast market activity based on the available information.

Rally: A recovery in price after a period of decline.

Range: The difference between the highest and lowest price of a future recorded during a given trading session.

Rate: (1) The price of one currency in terms of another, normally against USD
(2) Assessment of the credit worthiness of an institution.

Ratio Spread: Buying a specific quantity of options and selling a larger quantity of out of the money options.

Ratio Calendar Spread: Selling more near-term options than longer maturity options at the same strike price.

Reaction: A decline in prices following an advance.

Real: A price, interest rate or statistic that has been adjusted to eliminate the effect of inflation.

Realignment: Simultaneous and mutually co-ordinated re- and devaluation of the currencies of several countries. An activity that mostly refers to EMS activity.

Reciprocal Currency: A currency that is normally quoted as dollars per unit of currency rather than the normal quote method of units of currency per dollar. Sterling is the most common example.
Recession: A decline in business activity. Often defined as two consecutive quarters with a real fall in GNP.

Reinvestment Rate: The rate at which interest earned on a loan can be reinvested. The rate may not attract the same level of interest as the principal amount.

Report: French term for premium.

Reporting Dealer: Term for U.S. Primary Dealers.

Repo Rate: Repurchase Agreement.

Repurchase Agreement: Agreements by a borrower where they sell securities with a commitment to repurchase them at the same rate with a specified interest rate.

Reserve Currency: A currency held by a central bank on a permanent basis as a store of international liquidity, these are normally Dollar, Euro, and sterling.

Reserves: Funds held against future contingencies., normally a combination of convertible foreign currency, gold, and SDRs. Official reserves are to ensure that a government can meet near term obligations. They are an asset in the balance of payments.

Reserve Requirement: The ratio of reserves to deposits, expressed as a fraction prescribed by national banking authorities, including the United States.

Reserve Tranche: The 25% of its quota to which a member of the IMF has unconditional access, and for which there is no obligation to repay.

Resistance Point or Level: A price recognised by technical analysts as a price which is likely to result in a rebound but if broken through is likely to result in a significant price movement.

Rescheduling: The renegotiation of the terms of existing debts. The term is usually used with reference to LDC debt. The term rescheduling is considered to be refinancing to avoid any implication of default. Major sovereign debt rescheduling for Brazil, and Mexico have been undertaken in recent years.

Retail Price Index: Measurement of the monthly change in the average level of prices at retail, normally of a defined group of goods.

Resistance: A price level at which the selling is expected to take place.

Resistance Point or Level: A price recognized by technical analysts as a price which is likely to result in a rebound but if broken through is likely to result in a significant price movement.

Retail Price Index: Measurement of the monthly change in the average level of prices at retail, normally of a defined group of goods.

Retail Sales: Retail Sales are a measure of the total receipts of retail stores. Monthly percentage changes reflect the rate of change of such sales and are widely followed as an indicator of consumer spending. Rises in Retail Sales are often associated with a strong economy, and therefore an expectation of higher short term interest rates that are often supportive to a currency in at least the short term. 

Reuter Dealing: A system for screen based trading that has been in operation since the early 1980s. Reuter Dealing now has a matching optional enhancement known as Dealing 2000-2.

Revaluation: Increase in the exchange rate of a currency as a result of official action.

Revaluation Rate: The rate for any period or currency which is used to revalue a position or book.

Revaluation Rate: Revolving credit Upon repayment by the borrower the credit becomes automatically available.
Reversal: Reversal patterns that occur at the end of the trend, signalling the trend change.

Right-hand Side: To do a deal on the right hand side of a two way quote, normally to buy the currency and sell dollars.

Ring: An area on a trading floor where futures or equities are traded.

Risk: The degree of uncertainty associated with an investment. The main elements that contribute to the riskiness of an investment are volatility, liquidity and leverage. All things being equal, a high degree of volatility and leverage makes an investment more risky. An illiquid market, where buyers are not always matched by sellers, also increases risk & investors can be left holding an asset that is falling in price.

Risk/Return: The relationship between the risk and return on an investment. Usually, the more risk you are prepared to take, the higher the return you can expect. Depositing your money in a bank is safe and therefore a low return is regarded as sufficient. Investing in stock market exposes you to more risk (from capital losses) and so investors will expect a higher return.

Risk Factor: The risk factor (delta) indicates the risk of an option position relative to that of the related futures contract.

Risk Management: The identification and acceptance or offsetting of the risks threatening the profitability or existence of an organisation. With respect to foreign exchange involves among others consideration of market, sovereign, country, transfer, delivery, credit, and counterparty risk.

Risk Position: An asset or liability, which is exposed to fluctuations in value through changes in exchange rates or interest rates.

Risk Premium: Additional sum payable or return to compensate a party for adopting a particular risk.

Risk Reversal: A combination of purchasing put options with the sale of call options.

Risk Reversal: The put limits downside, while the call limits the upside.

Rolling over: The substituting of a far option for a near option of the same underlying stock at the same strike/exercise price.

Rollover: An overnight swap, specifically the next business day against the following business day (also called Tomorrow Next, abbreviated to Tom-Next).

Rollover Credit: Medium term credit with a variable interest rate, which is governed by the currently prevailing rates on the Euromarket.

Round Trip: Buying and selling of a futures or options contract.

Running a Position: Keeping open positions in the hope of a speculative gain.

Same Day Transaction: A transaction that matures on the day the transaction takes place. 

Sandwich Spread: Same as a butterfly spread. 

Scalping: A strategy of buying at the bid and selling at the offer as soon as possible. 

SDR: Special Drawing Right. A standard basket of five major currencies in fixed amounts as defined by the IMF. 

Selling Rate: Rate at which a bank is willing to sell foreign currency.

Seller/Grantor: Also known as the option writer.

Serial Expiration: Options on the same underlying futures being contract which expire in more than one month.

Series: All options of the same class which share a common strike price and expiration date. 

Settlement: Actual physical exchange of one currency for another.

Settlement Date: It means the business day specified for delivery of the currencies bought and sold under a Forex contract.

Settlement Price: The official closing price for a future set by the clearing house at the end of each trading day. 

Settlement Risk: Risk associated with the non-settlement of the transaction by the counterparty. 

Short: A market position where the client has sold a currency he does not already own, usually expressed in base currency terms.

Short / Short Position: A shortage of assets in a particular currency. See Short Sale. 

Short Contracts: Contracts with up to six months to deliver. 

Short Covering: Buying to unwind a shortage of a particular currency or asset. 

Short Forward Date/Rate: The term short forward refers to a period of up to two months, although it is more commonly used with respect to maturities of less than one month. 

Short Sale: The sale of a currency futures not owned by the seller at the time of the trade. Short sales are usually made in expectation of a decline in the price. 

Short-Term Interest Rates: Normally the 90 day rate. 

Sidelined: A major currency that is lightly traded due to major market interest being in another currency pair.

SIMEX: Singapore International Monetary Exchange

SITC: Standard International Trade Classification. A system for reporting trade statistics in a common manner.

SOFFEX: Swiss Options and Financial Futures Exchange, a fully automated and integrated trading and clearing system.

Soft Market: More potential sellers than buyers, which creates an environment where rapid price falls are likely.

Sovereign Immunity: Legal doctrine which means that the state cannot be sued or have its assets seized.

Sovereign Risk: (1) Risk of default on a sovereign loan, (2) Risk of appropriation of assets held in a foreign country. Split Date
Split Date: See Broken Date. 

Spot: (1) The most common foreign exchange transaction. (2) Spot refers to the buying and selling of the currency where the settlement date is two business days forward.

Spot Month: The contract month closest to delivery. 

Spot Next: The overnight swap from the spot date to the next business day.

Spot Price/Rate: The price at which the currency is currently trading in the spot market.

Spot Week: A standard period of one week swap measured from the current value date of the currency spot rate. 

Spread: (1) The difference between the bid and ask price of a currency. (2) The difference between the prices of two related futures contracts. (3) For options, transactions involving two or more option series on the same underlying currency.

Square: Purchases and sales are in balance and thus the dealer has no open position. 

Squawk Box: A speaker connected to a phone, often used in broker trading desks. 

Squeeze: Action by a central bank to reduce supply in order to increase the price of money. 

Stable Market: An active market which can absorb large sales or purchases of currency without having any major impact on the interest rates.

Stagflation: Recession or low growth (stagnation) in conjunction with high inflation rates.

Standard: A term referring to certain normal amounts and maturities for dealing.

Stand by Credit: An arrangement with the IMF for draw downs on a "need " basis. The term is sometimes more generally used. 

Standard and Poors (S&P): A US firm engaged in assessing the financial health of borrowers. The firm also lends its name to the S&P 500 Stock Index.

Sterilization: Central Bank activity in the domestic money market to reduce the impact on money supply of its intervention activities in the Forex market.

Sterling Index: A index based on the movement of sterling against the major currency.

Sterling: British pound, otherwise known as cable.

Stocky: Market slang for Swedish Krona. 

Stop Loss Order: Order given to ensure that, should a currency weaken by a certain percentage, a short position will be covered even though this involves taking a loss. Realize profit orders are less common.

Stop Out Price: US term for the lowest accepted price for Treasury Bills at auction.

Straddle: The simultaneous purchase/sale of both call and put options for the same share, exercise/strike price and expiry date.

Stagflation: Recession or low growth in conjunction with high inflation rates.

Straight: A bond with unquestioned right to repayment of principal and interest at the specified dates with no additional further rights or bonuses. 
Straight Date: See ?fixed dates?. 

Strap: A combination of two calls and one put. 

Strike Price: Also called exercise price. The price at which an option holder can buy or sell the underlying instrument.

Strip: A combination of two puts and one call.

Structural Unemployment: Unemployment levels inherent in an economic structure.

Support Levels: A price level at which the buying is expected to take place. When an exchange rate depreciates or appreciates to a level where (1) Technical analysis techniques suggest that the currency will rebound, or not go below; (2) The monetary authorities intervene to stop any further downward movement. See Resistance Point.

Supply Side Economics: The concept is that tax cuts will boost investment leading to an increase in the supply of goods in the economy. To be compared with demand led Keynesian economics.

Swap: The simultaneous purchase and sale of the same amount of a given currency for two different dates, against the sale and purchase of another. A swap can be a swap against a forward. In essence, swapping is somewhat similar to borrowing one currency and lending another for the same period. However, any rate of return or cost of funds is expressed in the price differential between the two sides of the transaction.

Swap Price: A price as a differential between two dates of the swap. 

Swaption: An option to enter into a swap contract. 

Swift: Society for Worldwide Interbank Financial Telecommunications is a Belgian based company that provides the global electronic network for settlement of most foreign exchange transactions.

Swissy: Market slang for Swiss Franc.

Synthetics: Options or futures that create a position that is able to be achieved directly, but is generated by a combination of options and futures in the relevant market. In foreign exchange a SAFE combines two forward contracts into a single transaction where settlement only involves the difference in values.

Talking Up: Statements made normally by the central bank or government minister designed to bolster market sentiment with respect to the currency.

Tau: Expresses the price change of an option for a percentage change in the implied volatility.

T-Bill: Treasury Bill.

Technical Analysis: Is concerned with past price and volume trends and often with the help of chart analysis in a market in order to be able to make forecasts about future price developments of the commodity being traded.

Technical Correction: An adjustment to price not based on market sentiment but technical factors such as volume and charting.

Temporal Accounting: Method of determining accounting exposure which translates all balance sheet items at the current rate of exchange, not the one at the time the cost was incurred.

Tender: (1) a formal offer to supply or purchase goods or services. (2) In the UK the term for the weekly Treasury Bill issue.

Tenor: Maturity or number of days to maturity normally on bills of exchange.

Terms of Trade: The ratio between export and import price indices.

Terme: (French) Period.

Theory of Elasticities: A model of exchange rate determination stating that the exchange rate is simply the price of the foreign exchange which maintains the BOP in equilibrium. The degree to which the exchange rate responds to a change in price.

Threshold of Divergence: A safety feature for the EMS which creates an emergency exit for currencies which become the singular focus of various adverse forces. The threshold of divergence indicates when the specific country with the pressured currency should take additional steps other then simple central bank intervention in the foreign exchange markets.

Theta: A measure of the sensitivity of the price of an option to a change in its time to expiry.

Thin Market: A market in which trading volume is low and in which consequently bid and ask quotes are wide and the liquidity of the instrument traded is low.

Thursday/Friday Dollars: A U.S. foreign exchange technicality. If the bank leaves the funds overnight and transfers them on Friday by means of a clearing house cheque then clearance is not until Monday, the next working day. Higher interest rates for this period are thus available.
TIBOR: Tokyo Inter-bank Offered Rate.

Tick: A minimum change in price, up or down.

Tier One: A measure of a banks financial strength used by the BIS being the shareholders' equity available to cover actual or potential irredeemable and non-cumulative preference shares. It excludes, hybrid forms of capital such as fixed term stock, goodwill, and revaluation reserves. BIS has a minimum requirement of 4 percent on risk-weighted assets.

Tight Money: A condition where there is a shortage of credit as a result of monetary policy restricting the supply of credit normally through raising interest rates.

TIFFE: Tokyo International Financial Futures Exchange.

Time Decay: The decline in the time value of an option as the expiry approaches.

Time Decay: Interest bearing deposits at a savings institution that has a specific maturity.

Time Value: That part of an option premium which reflects the length of time remaining in the option prior to expiration. The longer the time remaining until expiration, the higher the time value.

Today/Tomorrow: Simultaneous buying of a currency for delivery the following day and selling for the spot day, or vice versa. Also referred to as overnight.

Tombstone: Colloquial term for announcement in a publication that a loan or bond has been arranged.

Tomorrow Next (Tom Next): Simultaneous buying of a currency for delivery the following day and selling for the spot day or vice versa.

Trade Date: The date on which a trade occurs.

Trade Deficit/Surplus: The difference between the value of imports and exports. Often only reported in visible trade terms.

Trade-weighted Exchange Rate: The changes in the exchange rate against a trade weighted basket including the currencies of the county's principal trading partners.

Traded Options: Transferable options with the right to buy and sell a standardised amount of a currency at a fixed price within a specified period.

Tradeable Amount: Smallest transaction size acceptable.

Transaction Date: The date on which a trade occurs.

Tranche: A portion of, specifically used for borrowings from the IMF.

Transaction: The buying or selling of securities resulting from the execution of an order.

Transaction Exposure: Potential profit and loss generated by current foreign exchange transactions.

Translation Exposure: The calculation of loss or profit resulting from the valuation of foreign assets and liabilities for balance sheet purposes, when consolidating into the base currency.

Treasury Bills: Short-term obligations of a Government issued for periods of one year or less. Treasury bills do not carry a rate of interest and are issued at a discount on the par value. Treasury bills are repaid at par on the due date. In the UK they are normally for 91 days, and are offered at weekly tenders. In the US they are auctioned.

Turnover: The total money value of currency contracts traded is calculated by multiplying size by the number of contracts traded.

Two-Tier Market: A dual exchange rate system where normally only one rate is open to market pressure, e.g. South Africa.

Two-Way Quotation: When a dealer quotes both buying and selling rates for foreign exchange transactions.

Ultimo: Continental term for month or year end.

Uncovered: Another term for an open position.

Under Reference (Order): Before finalizing a transaction all the details should be submitted for approval to the order giver, who has the right to turn down the proposal.

Under-Valuation: An exchange rate is normally considered to be undervalued when it is below its purchasing power parity.

Undo: A colloquial term for reversing a transaction, e.g., a spot sale by means of a forward purchase or if done in error a spot purchase.

Unit of Account: A device designed to provide a consistent value with varying currencies. e.g. ECU and SDR.

Unload: Term for sale of assets or unwinding positions either to limit loss or to undermine other market participants positions.

Unmatched Book: If the average maturity of a banks liabilities is less than that of its assets, it is said to be running an unmatched book.

Unwind: Selling of assets and or instruments to square a position.

Up-Tick: A transaction executed at a price greater than the previous transaction.

USD: United State Dollar

USDX: Currency index which consist of the weighted average of the prices of ten foreign currencies against the U.S.

Value at Risk: The expected loss from an adverse market movement.

Valeur Compensee: (French) Payments are said to be "valeur compensee" when payment by one party in one centre, and settlement by the other party in another centre, takes place on the same day.

Value Date: For exchange contracts, it is the day on which the two contracting parties exchange the currencies which are being bought or sold. For complete description see the chapter on trading. For a spot transaction, it is two business banking days forward in the country of the bank providing quotations which determines the spot value date. The only exception to this general rule is the spot day in the quoting centre coinciding with a banking holiday in the country(ies) of the foreign currency(ies). The value date then moves forward a day. The enquirer is the party who must make sure that the spot day coincides with the one applied by the respondent. The forward months maturity must fall on the corresponding date in the relevant calendar month. If the one month date falls on a non-banking day in one of the centers, then the operative date would be the next business day that is common. The adjustment of the maturity for a particular month does not affect the other maturities that will continue to fall on the original corresponding date if they meet the open day requirement. If the last spot date falls on the last business day of a month, the forward dates will match this date by also falling due on the last business day. Also referred to as maturity date.

Value Spot: Normally settlement for two working days from the date the contract is entered into. 

Value Today: Transaction executed for same day settlement; sometimes also referred to as "cash transaction" 

Vanilla: A simple option whose terms and conditions do not include any provisions other than exercise style, expiry and strike. To compare with exotic options which have additional terms.

Variation Margin: Funds required to be deposited by a client when a price movement has caused funds to fall below the stipulated percentage of the value of the contract.

Vega: Expresses the price change of an option for a one per cent change in the implied volatility.

Velocity of Money: The speed with which money circulates, or turnover in the economy. It is calculated as the annual national income; average money stock in the period.

Vertical (Bear or Bull) Spread: The sale of an option with a high exercise price and the purchase (in the case of a bull), or the sale (in the case of a bear), of an option with a lower exercise price. Both options will have the same expiration date. 

Volatility: A measure of the amount by which an asset price is expected to fluctuate over a given period. Normally measured by the annual standard deviation of daily price changes (historic). Can be implied from futures pricing, implied volatility.

Vostro Account: A local currency account maintained with a bank by another bank. The term is normally applied to the counterparty's account from which funds may be paid into or withdrawn as a result of a transaction.

Whipsaw: Term for where a trader takes a position, then has to move against it, triggering stop-loss limits and liquidation of positions, then having to move in the original direction. Normally occurs in volatile markets.

Wholesale Money: Money borrowed in large amounts from banks and institutions rather than from small investors.

Wholesale Price Index: It measures changes in prices in the manufacturing and distribution sector of the economy and tends to lead the consumer price index by 60 to 90 days. The index is often quoted separately for food and industrial products.

Window-dressing: Where financial institutions or companies raise funds for specific reporting dates such as year ends to give the appearance of high liquidity.

Working Balance: Discretionary element in the monetary reserves of a central bank.

Working Day: A day on which the banks in a currency's principal financial centre are open for business. For FX transactions, a working day only occurs if the bank in both (all relevant currency centers in the case of a cross are open).

World Bank: A bank made up of members of the IMF whose aim is to assist in the development of member states by making loans where private capital is not available.

Writer: The seller of a call or put option in connection with an opening position who receives a premium and who is required to perform if it is exercised.

Yard: Slang for milliard, one thousand million (1 European milliard = 1 US billion = 1,000 million).

Yield Curve: The graph showing changes in yield on instruments depending on time to maturity. A system originally developed in the bond markets is now broadly applied to various financial futures. A positive sloping curve has lower interest rates at the shorter maturities, and higher at the longer maturities. A negative sloping curve has higher interest rates at the shorter maturities.

Z-Certificate: Certificate issued by the Bank of England to "discount houses" in lieu of stock certificates to facilitate their dealing in the short dated gilt edge securities.

Zero Coupon Bond: A bond that pays no interest. The bond is initially offered at a discount to its redemption value.