Securities Finance glossary

An EU directive designed to create a framework for authorities to manage bank failures effectively.

Basel III is a global, voluntary regulatory framework on bank capital adequacy, stress testing, and market liquidity risk.

One one-hundredth of a percent, or 0.01 percent.

Securities that are not registered to any particular party and hence are payable to the party that is in possession of them.

A party that is entitled to the right of ownership of property. In the context of securities, the term is usually used to distinguish this party from the registered holder (a nominee, for example) that holds the securities for the beneficial owner.

Any entitlement due to a stock or shareholder as a result of purchasing or holding securities, including the right to any dividend, rights issue, scrip issue, etc. made by the issuer. In the case of loaned securities or collateral, benefits are passed back to the lender or borrower (as appropriate), usually by way of a manufactured dividend or the return of equivalent securities or collateral.

A bond is a contract between two parties. Companies or governments issue bonds because they need to borrow large amounts of money. They also have to pay the investors a little bit more than they paid for the bond. Bonds are usually traded through brokers and are part of a financial instrument group called ‘fixed income’.

A broker-dealer is a person or firm in the business of buying and selling securities for its own account or on behalf of its customers.

BTF is a fixed-rate short-term discount treasury bill issued by the French debt agency.

BTP are bonds offered by the government of Italy.

A bund is a debt security issued by the German government to generate revenue with which to finance expenditures.

The act of repurchasing shares, where a counterparty did not deliver securities in a timely fashion, or did not deliver them at all. The difference in price is transferred to the failing party.

Types of bond transactions that, in economic substance, replicate reverse repos, and repos respectively. These transactions consist of a purchase (or sale) of a security versus cash with a forward commitment to sell back (or buy back) the securities. Used as an alternative to repos/reverses.