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Implied volatility

A measurement of the market’s expected price range of the underlying commodity futures based on the market-traded option premiums.

Index

A number that measures changes in financial markets. Some indexes are used as benchmarks that financial performance is measured against.

Indexed bond

A bond whose payments are linked by an index (such as a consumer-price index).

Index-linked gilt

A gilt, the interest and capital of which change in line with the Retail Price Index.

Indicative quote

A market-maker's price which is not firm.

Inhaberaktien

Swiss or German bearer shares.

Initial margin

The margin required to secure a new futures or options position.

Initial public offering (IPO)

A company's first sale of stock to the public. Companies making an IPO are seeking outside equity capital and a public market for their stock.

Inside information

Inside information is information of a precise nature which has not been made public, relating, directly or indirectly, to one or more issuers of financial instruments or to one or more financial instruments and which, if it were made public, would be likely to have a significant effect on the prices of those financial instruments or on the price of related derivative financial instruments.

Inside spread (Inside quote)

The difference between the best bid and best ask being quoted among all of the market makers competing in a security. Since the inside spread is the aggregate of individual market maker spreads, it is narrower than an individual dealer spread or quote. (See Market maker)

Insider dealing

The purchase or sale of shares by someone who possesses 'inside' information about the company; ie information on the company's performance and prospects which has not yet been made available to the market as a whole, and which, if available, might affect the share price.

Institutional investor

A bank, mutual fund, pension fund, or other corporate entity that trades securities in large volumes.

Interbank rates

The bid and offer rates at which international banks place deposits with each other.

Intercommodity spread

The purchase of a given delivery month on one futures market and the simultaneous sale of the same delivery month on a different futures market.

Interdealer broker

A specialist broker who acts as an intermediary between market-makers who wish to buy or sell securities to improve their book positions, without revealing their identities to other market-makers.

Interdelivery spread

The purchase of one delivery month of a given commodity futures contract and the simultaneous sale of another delivery month of the same commodity futures contract on the same exchange.

Interim dividend

A dividend declared part of the way through a company's financial year, authorised solely by the directors.

Intermarket spread

See Intercommodity spread

Intermarket Trading System (ITS)

A computer system that interconnects competing US exchange markets for the purpose of choosing the best market. ITS is operated by the Securities Industry Automation Corporation (SIAC).

Intermediary

An institution acting between 2 or more other entities by assuming certain rights and obligations.

Internal rate of return

The discount rate at which an investment has a zero net present value.

Internalisation

A process where broker-dealers use internal inventories to settle trades, bypassing exchanges.

Intersettle

A sister company of the Swiss Securities Clearing Corporation (SEGA), which has been set up for international settlement purposes.

In-the-money

A call option is in-the-money if the price of the underlying instrument is higher than the exercise/strike price. A put option is in-the-money if the price of the underlying instrument is below the exercise/strike price. See also Out-of-the-money.
See also Out-of-the-money

Intramarket spread

See Interdelivery spread

Intrinsic value

The amount by which an option is in-the-money. The intrinsic value is the difference between the exercise/strike price and the price of the underlying security.

Inverse floater

A bond with a coupon rate structured to move in the opposite direction of interest rates.

Investment Services Directive

The European Union Investment Services Directive, adopted in 1993, sought to establish the conditions in which authorised investment firms and banks could provide specified services in other European Union Member States on the basis of home country authorisation and supervision. It has subsequently been extended by the Markets in Financial Instruments Directive.

Investment trust

A company whose sole business consists of buying, selling and holding shares.

ISD

See Investment Services Directive

ISD 2

See Markets In Financial Instruments Directive (MiFID)

ISIN code

The structure of the ISIN code is: 2-digit alphacountry code (ISO 3166) or XS for securities numbered by CEDEL or Euroclear; 9-digit alphanumeric code based on the national securities code or the common CEDEL/Euroclear code; a check digit computed according to the modulus 10 'double-add double'.

Issue price

The gross price placed on a new bond issue, expressed as a percentage of the principal amount.

Issuer

A corporation or governmental agency which borrows money through the sale of securities.

Issuing house

An organisation, normally a merchant bank, that arranges the details of an issue of stocks or shares, and the necessary compliance with the London Stock Exchange regulations in connection with the listing of that issue.

Istisna’a

Construction financing, where the financial institution funds the manufacturer during the construction of the asset, acquires title to that asset on completion and immediately passes title to the developer on agreed deferred payment terms.

Itayose

A method of trading employed on Japanese exchanges. Under the itayose method, which is used in the case of opening trades and the like, all orders reaching the floor before the opening are treated as simultaneous orders, and in accordance with the principle of priority, each buy order is compared with sell orders till its quantity and price are matched by a sell order and treat the price as a single price for the consumation of the transaction.