Banking and Stock Glossary
Settlement date on which interest payments are credited or debited to the customer's bank account; interest payments are made from this date onwards.
Procedure for calculating the loss potential resulting from price changes of the trading position. This loss potential is calculated on the basis of market-orientated price changes and is quoted subject to a certain probability (99 % for instance).
Continuous quotation. For high-volume stocks, usually of large companies, continuous market prices are determined (quoted) on each trading day, rather than a single cash quotation or cash price. The initial price is referred to as the starting or opening price, while the closing price refers to the last price. The quotation of a stock in continuous trading is a condition for inclusion in one of the selection indices of Deutsche Börse.
Bidding procedure, in particular for the tender of securities repurchase transactions. The bidding bank must specify both the interest rate at which it wishes to participate and the volume it is prepared to transact. While, under the US-style rate tender, allocations are made to the bank according to the interest rate offered, a uniform interest rate is determined in the Dutch-style rate tender which corresponds to the most favourable allocated interest rate and is applied to all participating banks. In addition to the variable rate tender procedure there is the fixed-rate tender procedure.
Daily clearing of profits and losses resulting from futures and options on futures. To this end, individual positions are valued at their daily settlement price. The difference compared to the position's value on the previous trading day is debited or credited to the market participant.
The VDAX®, the DAX® volatility index, expresses the fluctuation of the DAX® expected by market participants over the next 45 days. The basis of calculation are the DAX® option prices and implied volatility, i.e. the intensity of future price fluctuations currently expected by the market. A high VDAX® is a sign of an unstable market, low values suggest a development without major price swings. The VDAX® is therefore also referred to as the "fear barometer". It gives no indication of the direction of the change, i.e. whether share prices will rise or fall.
Indicator that meaures the change in the price of an option resulting from a one percent change in the volatility of the underlying, all other things being equal. A high vega means that the price of the option responds relatively strongly to changes in the volatility of the underlying.
Also referred to as risk capital. Equity capital provided by venture capital companies to young, innovative companies from growth sectors with uncertain prospects. Management consultancy services are also offered to start-up companies. Venture capital companies usually raise capital by launching venture capital funds. Private investors, pension funds and other investors who want to invest part of their assets in high-risk assets acquire fund shares and leave the choice of investment up to the VC company. Venture capital companies usually invest in young companies for a period of five to eight years. After that period, the VC company finds an exit strategy to realize its gain from the investment.
See capital-forming payments.
Indicator of the price fluctuation of a security or index during a certain period. Based on volatility it is possible - regardless of market performance - to assess a security's potential gain or loss. Since the ratio expresses the expected future change of a security, it is also of special importance in determining option prices. Generally speaking, the higher the volatility of a reference value, i.e. the extent and frequency of fluctuations, the higher the option premium, regardless of whether it is a call or put option.
In a volume tender (or fixed-rate tender) procedure, the interest rate is set for the central bank money on offer. Commercial banks submit bids specifying the amount of money they want to acquire. The allocation rate is calculated on the basis of the total intended allocation volume in relation to the total sum bid. In addition to the volume tender, there is what is called the variable rate tender. The problem associated with the volume tender is that the commercial banks tend to submit higher volume bids than they actually require due to the low interest rate. As a result, they do better at the subsequent pro-rata allocation. Because of the continual and massive overbidding, the ECB changed over to the variable rate tender procedure for executing open market transations in 2000.
Each holder of an ordinary share is entitled to voting rights exercised at the stock company's General Meeting. Voting rights are exercised according to the nominal amount of shares. Normally, each ordinary share grants the shareholder one vote. Voting rights can also be exercised by an authorised person: proxy voting right.
In the VCC procedure, the cheques in question are no longer presented for payment in voucher form to the bank specified on the cheque. The cheques concerned here are bearer cheques or order cheques issued in EUR up to a value of € 5,999.99 and drawn on a domestic bank. The cheque data are captured on electronic media (DME) by the bank transferring the cheques using the VCC procedure.
For the settlement of cashless payments using the voucherless DME procedure, DME files instead of vouchers (bank transfers, debit transfers, cheques), are exchanged between banks or between banks and their customers on magnetic tapes, diskettes, cassettes or by remote data transfer (RDT). The payment data are not made available to the payee or the payer in voucher form but are notified to him directly on his account statement.
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