Banking and Stock Glossary
The Official Market is the securities trading segment with the highest turnover on German cash exchanges and, compared with the Regulated Market or Unofficial Regulated Market, is a market segment for securities with particularly strict listing conditions and post-listing duties. On the Frankfurt Stock Exchage, the Official Market is sub-divided into a General Standard with requirements prescribed by law and a Prime Standard with additional post-listing obligations.
International financial centers with especially inexpensive locational characteristics, in particular, of a tax-related and/or regulatory nature. Offshore countries are, for example, the Bahamas, Bermuda, British Virgin Islands, Cayman Islands, Guernsey, Isle of Man, Jersey and Mauritius.
Measurement of the price elasticity and effective leverage of a warrant. Omega specifies the percentage by which the price of a warrant changes when the underlying experiences a price change of one percent. In contrast to simple leverage, which assumes an equivalently strong absolute price change for warrant and underlying, omega measures the actual leverage of the warrant by taking into account the delta. For example, a warrant with a current leverage of 10 and a delta of 50% has an omega of 5, the warrrant thus increases approximately by 5% when the underlying rises by 1%.
Account keeping and the processing of financial services through the Internet or by phoning the bank directly. The instructions are signed using an electronic signature (for example, with a PIN or TAN).
A cheque which - unlike a crossed cheque - is paid in cash to the bearer of the cheque by the bank which is specified on the cheque and which keeps the drawer's account.
Number of contracts that have not been closed out after a trading session
With the "official" and "regulated markets", the "open market" is the third legally regulated market segment in Germany. However, it is not subject to public but private law and was officially called the "regulated unofficial market" until October 2005. Trading in the open market segment on the Frankfurt Stock Exchange (FWB) includes not only German shares, but primarily foreign shares, bonds of German and foreign issuers, certificates and warrants. It was first created on May 1, 1987, through the merger of the "regulated unofficial market" and the "unregulated unofficial market". The open market is not an organized market as defined by the German Securities Trading Act (WpHG). The basis for the inclusion of securities in the open market is provided by the conditions for the regulated unofficial market of Deutsche Börse AG. There are only a few formal application requirements and no follow-up obligations. Anti-insider trading rules apply, but the regulation on ad hoc disclosures does not.
The open market policies are the most important monetary policy instruments the central bank has to influence the creation of money. The central bank offers commercial banks specific fixed-income securities (open market securities) to buy, or it buys such securities itself from the commercial banks. If the commercial banks buy the securities, the money invested is no longer available for lending, i.e. the money created sinks. If the commercial banks sell the securities, they can use the money they receive to grant loans.
Open-ended investment funds issue shares (certificates) on continuous basis. The investment fund company uses the proceeds from the sale of the shares to purchase additional investment assets for the fund. The shareholder (investor) has a claim to the redemption of the shares, debiting the fund assets. The redemption price is based on the net asset value of the fund. Opposite: closed-end fund
First price fixed for a security admitted to continuous trading shortly after the trading session has begun.
Operating profit is a business management figure showing the profit from a company's operating business. Operating profit usually designates earnings before the result of financial operations, extraordinary profit and taxes. Similar to EBIT, which stands for earnings before interest and taxes.
An option is a contractually agreed right that the buyer has the right, and the seller (option writer) the oblication, to buy or to sell the underlying at the strike price within a certain period (option period) until the option's expiry date. The buyer pays the option writer a certain amount of money for this right, the option premium.
The premium is the price for an option that is to be paid to acquire an option or a warrant. The option premium or price is comprised of the intrinsic value and time value, and is determined by several factors including the following: exercise (strike) price, the development of the price of the underlying and its volatility, the period of the option, the risk-free interest rate and the dividends of the underlying during the period of the option.
See put option.
In option trades, there is an option buyer and a so-called option writer, the option seller. The buyer acquires the right to request delivery of a specific underlying asset (call option) or request the writer to purchase the underlying asset (put option) at the price fixed on the contract date. For this right, the option writer receives a so-called premium, the option price, from the buyer.
As a type of order paper, ownership of an order cheque is transferred through endorsement. Order cheques are only payable to the legitmate presenter. As the order cheque is inherently an order paper, the customary "to the order of" clause can be legally waived. The bank that cashes the cheque has an obligation to check the endorsement and identification.
Ownership of these papers can be transferred to another person after endorsement. They are made out "to the order of" a named beneficiary. Ownership of the order instruments is transferred by delivery of the endorsed deed. Examples of these instruments are registered shares, bills of lading, bills of exchange and cheques.
Share entitling the holder to all rights specified in the German Stock Corporation Act. In particular, holders of ordinary shares are entitled to a share in profits, to attend the General Meeting, vote at the General Meeting, request information from management, acquire new shares (subscription right) and receive a share of liquidation proceeds. Ordinary shares are the most common class of shares in Germany. The opposite of ordinary shares are preference shares.
These financial instruments (derivatives) are non-standardized and are not traded on an exchange, but are traded directly between market participants (over the counter).
This refers to options and warrants with no intrinsic value. In the case of call options, the current market price of the underlying asset is below the strike price. In the case of put options, the strike price is below the current market price of the underlying asset.
"Outperformer" is an evaluation of the expectations for a stock's future trading. It means that the development of the share's price, according to analysts, will be better than that of the overall market. The share will prospectively perform better than, for example, the DAX®.
Also referred to as personal credit line. Arrangement whereby customers can overdraw their current account up to a specific amount. For salary accounts, the overdraft facility frequently corresponds to two to three net monthly salaries.
Interest payable at a variable rate on the debit balance of a personal credit line or overdraft facility.
An issue is said to be oversubscribed if orders to acquire newly issued securities exceed the number of securities offered for subscription (for purchase). In this case the underwriting banks must adjust (= scale down) customer demand accordingly.
Direct conclusion of a securities transaction between two parties without the intermediation of a stock exchange. The reasons for such trading may be the stock exchange's hours of business (pre-market trading and after-hours trading) or the fact that a security is not admitted to trading on an official or regulated market or to regulated unofficial trading.
The OTC market is a non-exchange trading market or unofficial market for equities and bonds. It is not based in specific location and does not have fixed trading hours. Negotiations usually take place using computer or telephone systems at the international level. The price for a security is negotiated between banks and brokage firms or securities services providers and institutional investors. In this context, the transactions are subject to the applicable statutory provisions for trading in securities.
Securities placed with investors directly by the issuer, without the involvement of an intermediary (e.g. bank). Issuers must have very strong placement capabilities for this to function, i.e. issuers must be able to reach a large number of investors directly. As a rule, only banks with an extensive branch network and/or good relationships with institutional investor groups will have such considerable placement strength. The vast majority of own issues are therefore handled by banks. The risk that the entire issue cannot be sold to (placed with) investors is borne by the issuer. The advantage of direct issuing lies in the lower costs, since no fees are involved for an underwriting syndicate.
All trades in securities, financial instruments, derivatives, foreign exchange and precious metals conducted by the bank in its own name and for its own account.
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