C

Côte Officielle

The market on Euronext Paris where securities of the largest French issuers (public or private) are traded.

Cabinet trade

A trade that allows options traders to liquidate deep out-of-the-money options by trading the option at a price equal to one-half tick.

Cable

A term used in the foreign-exchange market for the US dollar/British pound rate.

Calendar spread

Buying (selling) the calendar spread involves the simultaneous purchase (sale) of contract(s) in a near delivery month and the sale (purchase) of an equal number of contract(s) in a far delivery month of the same futures contract.

Call

A period of trading.

Call option

A call option confers the right but not the obligation to buy stock, shares or futures at a specified price within a predetermined time period. The buyer (taker) pays the seller (grantor) a premium for this.

Cap

An agreement with a counterparty that sets an upper limit to interest rates for the cap buyer for a stated time period.

Cap and Trade

The basis of the carbon trading mechanism. When an authority sets a limit or cap on something (i.e.carbon dioxide (CO2) emissions) and allows those who exceed the limit to buy "credits" from those who have credits to spare.

Capital market

The market for medium- and long-term securities.

Capitalisation

See Market capitalisation

Capitalisation issue

The process whereby money from a company's reserves is converted into issued capital, which is then distributed to shareholders as new shares, in proportion to their original holdings. Also known as a bonus or scrip issue.

Carbon Credit

A "credit" to emit a Tonne of carbon dioxide (CO2) issued as part of an emissions trading scheme such as the European Emissions Trading Scheme.

Carbon Dioxide Equivalents

A measurement unit used to indicate the global warming potential (GWP) of greenhouse gases. Carbon dioxide is used as the reference gas against which all other greenhouse gases are measured.

Carbon emissions

Carbon dioxide (CO2) that enters the atmosphere as a result of human activity, especially the burning of carbon-based fuels.

Carbon neutral

When CO2 emissions of an individual, group, organisation or activity have been entirely "cancelled out" through a process of calculation, reduction and offsetting.

Carbon offsetting

The counter balancing of carbon emissions through the purchase of a carbon credit or offset from specialised intermediary companies who generate offsets by various means, such as planting trees or investing in renewable energy.

Carbon price

The amount it costs a company to buy permission to emit one metric tonne of carbon dioxide. The price varies depending on the trading scheme and fluctuates constantly due to market forces.

Carbon Trading

The trading of carbon dioxide (CO2) emission allowances through a scheme, such as the European Emissions Trading Scheme.

Carry

The interest cost of financing securities held.

Cash and carry

An arbitrage transaction involving the simultaneous purchase of a cash commodity with borrowed money and the sale of the appropriate futures contract.

Cash market

The market in the actual financial instrument on which a futures or options contract is based.

Cash settlement

Final disposition of open positions on the last trading day of a contract month. Occurs in markets where there is no actual delivery.

Central Securities Depository

A Central Securities Depository is a financial institution providing custodial and securities settlement services to one or several markets.

Certificate of deposit (CD)

A negotiable certificate issued by a commercial bank as evidence of a deposit with that bank which states the maturity value, maturity rate and interest rate payable. CDs vary in size with maturities ranging from a few weeks to several years. CDs may normally be redeemed before maturity only by sale on the secondary market but may also be redeemed back to the issuing bank through payment of a penalty.

Certified Emission Reduction

Carbon credits arising from Clean Development Mechanism projects. One CER is awarded for a reduction in greenhouse gas emissions equivalent in impact to one tonne of carbon dioxide.

Certified Emissions Reductions

The output of Clean Development Mechanism projects, as set out in the Kyoto Protocol. One CER represents the reduction of one metric tonne of Carbon Dioxide (CO2).

Cheapest-to-deliver

The bond, deliverable against a futures contract, for which delivery is most attractive in terms of cost from the short position holder’s point of view.

CIBOR

The rate at which the banks lend the Danish krone on an unsecured basis. The rate is calculated daily by the Danmarks Nationalbank (the Danish Central Bank), based on rules set out by the Danish Banker's Association.

Circuit breaker

A procedure that temporarily halts trading on all US stock markets for one hour when the Dow Jones Industrial Average falls 250 points or more within a trading day. The pause is designed to allow time for the markets to absorb the news that precipitated the decline. Should the average fall another 150 points within the same day, trading would again be halted, this time for two hours.

Clean Development Mechanism

The Clean Development Mechanism (CDM) is an arrangement under the Kyoto Protocol allowing industrialised countries with a greenhouse gas reduction commitment (so-called Annex 1 countries) to invest in emission reducing projects in developing countries as an alternative to what is generally considered more costly emission reductions in their own countries. The CDM is supervised by the CDM Executive Board (CDM EB) and is under the guidance of the Conference of the Parties (COP/MOP) of the United Nations Framework Convention on Climate Change (UNFCCC).

Clean price

The price of a bond not including the accrued-interest element.

Clearing

The process of matching, registering and guaranteeing transactions.

Clearing house

An exchange-associated, usually independent organisation through which all contracts are made, offset and delivered.

Clearing margin

Financial safeguards to ensure that clearing members (usually companies or corporations) perform on their customers' open futures and options contracts. Clearing margins are distinct from customer margins that individual buyers and sellers of futures and options contracts are required to deposit with brokers.

Clearing member

A member firm of a clearing house.

Close out

A transaction which leaves the trade with a zero net commitment to the market. A purchase if the initial transaction was a sale and vice versa.

Closed-end mutual funds

A mutual fund that issues a set number of shares, which then are only re-sold on the secondary market exchanges like regular stock shares.

Closing range

The high and low prices at which transactions took place at the end of the day's trading session.

Collar

A combination of a cap and a floor. A collar sets a band within which interest rates will apply (eg 10.5–13.75%), for a given period.

Collateralised mortgage obligations

CMOs package the mortgage payment stream from a portfolio of mortgages into several series of debt instruments which are prioritised in terms of their right to receive principal payments. In the most basic CMOs, each series must be repaid in full before any principal payments can be made to the holders of the next series.

Commission

The fee that a broker may charge clients for dealing on their behalf.

Commission des Opérations de Bourse (COB)

The French securities-market watchdog. The COB holds the status of an autonomous administrative body.

Committee of Wise Men on the Regulation of the European Securities Markets

See Lamfalussy Report

Commodity Futures Trading Commission (CFTC)

The US Federal regulatory agency for futures traded on commodity markets.

Concentration rule

The rule in the current European Union Investment Services Directive allows European Union Member States to require that all retail investor transactions be executed on a regulated market. However, the European Union Commission considers that there must be convergence towards a single consensus view of marketplace regulation in order to create a single financial market in which supply and demand for a given financial instrument can interact across an integrated and efficient trading infrastructure.

Concert party

A group acting together in a takeover situation. Each member of the group (which acts in secret) buys a percentage of shares to avoid no longer being able to hide behind nominee status.

Confirmation

The process immediately following a transaction whereby the traders confirm the details of the trade.

Conseil des Bourses de Valeurs (CBV)

The French Stock Exchange Council which is the supervisory and regulatory authority of the French securities markets.

Consideration

On the London Stock Exchange, the money value of a transaction (number of shares multiplied by the price).

Consolidated tape

The combined tapes of the New York and American stock exchanges. Network A covers New York Stock Exchange-listed securities, identifying the market where the trade takes place. Network B does the same for American Stock Exchange securities and securities listed on US regional exchanges.

Contango

(i) On the London Stock Exchange, a mechanism for detailing settlement of a bargain until the next account day. This mechanism is used when the selling party is unable to deliver the stock for the appropriate account day. The selling party pays an interest premium to the buyer to cover the extended settlement period. On futures markets, a market in which distant months sell at a premium over near months.
(ii) In futures markets a situation in which prices are progressively higher in the succeeding delivery months than in the nearest delivery month.

Contante price

Italian bond market cash price.

Contract

See Futures contract

Contract expiration date

The date on which a commodity must be delivered to fulfil the terms of the contract. For options, the last day on which the option holder can exercise his right to buy or sell the underlying security.

Contract month

The month in which a futures contract matures or becomes deliverable if not liquidated or traded out before the date specified.

Contract note

On the London Stock Exchange, on the day on which a bargain takes place a member firm must send to the client a contract note detailing the transaction, to include full title of the stock, price, consideration, commission and stamp duty (if applicable).

Contract size

For futures contracts, the quantity to be delivered.

Conversion premium

The amount by which the price of a convertible bond exceeds the market price of the underlying stock.

Conversion price

The par value of a convertible security divided by the number of shares into which it may be exchanged.

Conversion ratio

The number of shares for which a convertible security may be exchanged.

Convertible bond

A bond which confers on the holder the right to exchange the bonds for other securities of the issuing company at a predetermined price and at, or during, determinable dates.

Convertible security

Bond or preferred stock that may be converted into another security at the holder's option.

Corporate bond

A long-term interest-bearing debt instrument that requires the issuer to pay the purchaser a specified sum of money, usually at specific intervals, and to repay the principal amount of the loan at maturity.

Correlation coefficient

A measure of the closeness of the relationship between 2 variables.

Coupon

(i) On bearer stocks, the detachable part of the certificate exchangeable for dividends.
(ii) Denotes the rate of interest on a fixed-interest security.

Coupon value

The annual rate of interest of a bond.

Cours

On Belgian and French exchanges, the market price of a share.

Covariance

A measure of the comovement between two variables.

Cover

The total net profit a company has available for distribution as dividend, divided by the amount actually paid gives the number of times that the dividend is covered.

Crack spread

A hedge used in the energy futures market to offset the risk of buying (or selling) crude oil with an opposite transaction in the refined products that may be derived from it.

Crore

An Indian measurement equating to 10 million.

Cross rates

Rates between two currencies, neither of which is the US dollar.

Crossed market

The situation which exists when a broker's bid is higher than the lowest offer of another broker.

Cross-trade

A cross-trade transaction is a transaction where either the buy-broker and the sell-broker are the same, or the buy-broker and the sell-broker belong to the same firm.

Crush

The meal and oil products resulting from processing soya beans.

Crush margin

The ratio of oil and meal resulting from crushing a given volume of soya beans.

Crush spread

The spread between soya beans and soya bean products created by buying soya bean futures and selling soya bean oil and soya bean meal futures.

Cum

Latin for 'with' (used in the abbreviations cum cap, cum div, cum rights, etc), to indicate that the buyer of a security is entitled to participate in the forthcoming capitalisation issue, dividend or rights issue.
See also Ex

Cum all

A stock trading with the right to all supplementary advantages attached to the share.

Cum capitalisation

The purchaser of stock which is cum capitalisation is entitled to receive an issue of new shares made fully paid by the capitalisation of reserves and given free of charge in proportion to his or her existing holdings.

Cum dividend

The purchaser of a stock which is cum dividend is entitled to receive the declared dividend.

Cum period

A period during which a buyer of securities is entitled to the dividend regardless of whether or not he is on the register at the record date.

Cum rights

The purchaser of a stock trading cum rights is entitled to buy shares of a new issue of stock in direct proportion to his or her existing holdings.

Current delivery month

The most current calendar month in which a futures contract comes to maturity and becomes deliverable. Also known as the spot month.

CUSIP code

The CUSIP numbering system is the standard method for identifying securities throughout the US financial industry. The CUSIP number is a 9-digit alphanumeric number which is permanently allocated to each issue and identifying that single issue and no other issue. CUSIP numbers are also assigned to most Canadian securities. (Exceptions being issues of purely domestic interest such as municipal debt securities. Such securities are issued CUSIP compatible codes by the Canadian Depository for Securities Ltd.)

Customer margin

Within the futures industry, financial guarantees required of both buyers and sellers of futures contracts and sellers of options contracts to ensure fulfilling of contract obligations. FCMs are responsible for overseeing customer margin accounts. Margins are determined on the basis of market risk and contract value. Also referred to as performance-bond margin.