Securities Finance glossary

An EU initiative which aims to deepen and further integrate the capital markets of EU member states.

Transaction motivated by the need of one party to invest cash and the need of the other to borrow. See also ‘Securities-orientated repo’.

A non-financing purchase or sale of securities.

A central counterparty clearing house (CCP) is an organisation that exists in various European countries to help facilitate trading done in European derivatives and equities markets.

CSDR entered into force on 17 September 2014 and aims to harmonize the authorisation and supervision of central security depositories (CSDs), across the EU and to improve settlement discipline in the securities settlement systems (SSSs) that CSDs operate.

A financial organisation that specialises in holding securities so that ownership can be easily transferred electronically without the need for physical certificates.

The clean price is the price of a coupon bond not including any accrued interest. That is, it doesn’t include the accrued interest between coupon payments.

To complete a trade, i.e. when the seller delivers securities and the buyer delivers funds on correct form. A trade fails when proper delivery requirements are not satisfied.

An arrangement to settle all existing obligations to and claims on a counterpart falling under that arrangement by one single net payment, immediately upon the occurrence of a defined event of default.

Securities or cash delivered by a borrower to a lender to support a loan of securities or cash.

Collateral management is the method of granting, verifying, and giving advice on collateral transactions in order to reduce credit risk in unsecured financial transactions.

Commonly used type of unsecured, short-term debt instrument issued by corporations, typically used for the financing of payroll, accounts payable and inventories, and meeting other short-term liabilities.

A CDM is a single, market-wide domain model: it is a common data representation of transaction events, used by the market as a whole. That common data representation is the foundation for the development of solutions that are scalable, efficient and that future-proof our market.

common reporting standard (CRS) An information standard for the Automatic Exchange Of Information (AEOI) on a global level, between tax authorities.

An OTC derivative transaction that enables one party to gain economic exposure to the price movement of a security (bull or bear). Writers of CFDs hedge by taking positions in the underlying securities, making efficient securities financing or borrowing key.

A corporate action is an event initiated by a public company that brings or could bring an actual change to the securities — equity or debt — issued by the company. Corporate actions are typically agreed upon by a company’s board of directors and authorised by the shareholders.

A coupon payment on a bond is the annual interest payment that the bondholder receives from the bond’s issue date until it matures.

A financial contract whereby a buyer of corporate or sovereign debt in the form of bonds attempts to eliminate possible loss arising from default by the issuer of the bonds. This is achieved by the issuer of the bonds insuring the buyer’s potential losses as part of the agreement.

A company that assesses the financial strength of firms and government entities, especially their ability to meet principal and interest payments on their debts.

A transaction concerning either more than one member state, or a member state and a third country.

An entity that holds securities of any type for investors, effecting receipt and deliveries, and supplying appropriate reporting.