M

Maintenance margin

The minimum margin which an investor must keep on deposit in a margin account at all times.

Make-a-market

A dealer is said to make-a-market when he or she quotes bid and offer prices at which he or she stands ready to buy and sell.

Mandatory quote period (MQP)

On the London Stock Exchange, the period during which all registered market-makers are obliged to display prices.

Marché au comptant

The French cash market. All securities on the official list not traded on the monthly settlement market are traded on this market. Cash transactions comprise the least active shares and the great majority of bonds; any quantity may be negotiated for immediate settlement and delivery.

Marché officiel

Official list of French stock exchanges.

Margin

(i) In equity markets, the amount paid by the customer when he/she uses his broker’s credit to buy a security.
(ii) For options, the sum required as collateral from the writer of an option.
(iii) For futures, a deposit made to the clearing house on establishing a futures position.

Margin call

A demand for additional funds to be deposited in a margin account to meet margin requirements because of adverse future price movements.

Market Abuse

Conduct that adversely affects a financial market and falls below the standards expected by the regular user of that market. The Financial Services Authority (FSA) can enforce disciplinary action against those who commit such abuses.

Market capitalisation

The current total market value of a company’s issued shares. Obtained by multiplying the current market price by the current number of shares in issue.

Market operator

Market operator is a person or persons who effectively direct the business of a regulated market.

Market order

An order to buy or sell a financial instrument immediately at the best possible price.

Market value

The number of shares in issue multiplied by their current market price.

Market-maker

A market-maker is a person or firm authorised to create and maintain a market in a security. Market-makers commit themselves to always being ready to deal in the range of stocks for which they are registered.

Markets In Financial Instruments Directive (MiFID)

European Union legislation covering investment intermediaries and financial markets which replaces the previous Investment Services Directive (ISD). MiFID, part of the EU’s Financial Services Action Plan, extends the coverage of the ISD regime and introduces new and more extensive requirements for firms, in particular in relation to their conduct of business and internal organisation.

Mark-to-market

The daily adjustment of an account to reflect accrued profits and losses.

Material news

News released by a public company that might reasonably be expected to affect the value of a company's securities or influence investors' decisions. Material news includes information regarding corporate events of an unusual and non-recurring nature, news of tender offers, unusually good or bad earnings reports, and a stock split or stock dividend. (See Trading halt)

Maturity date

Date on which a bond matures, at which time the face value will be returned to the purchaser. Sometimes the maturity date is not one specified date but a range of dates during which the bond may be repaid.

Maximum on-line publication level

On the London Stock Exchange, the maximum size of bargain in each SEAQ security which will be published on-line on SEAQ, immediately following trade reporting.

Member firm

A trading firm on the London Stock Exchange which may act as an agency broker on behalf of clients or a principal.

Mercato ristretto

Italian regulated market for unlisted securities.

Mid-price

The price half-way between the 2 prices shown on the London Stock Exchange’s daily official list under quotation, or the average of both buying and selling prices offered by the market-makers.

Minimum price fluctuation

The smallest increment of market price movement possible in a given futures contract.

Minimum quote size

On the London Stock Exchange, the minimum number of shares in which market-makers are obliged to display prices on SEAQ for securities in which they are registered.

Modaraba

Modaraba is an Arabic word which means a business (project) in which capital is provided by one party (a company or individual) while effort and skill are contributed by the other party (beneficiary, entrepreneur or borrower). During the lifetime of the project the lender is the sole owner of the project and the borrower is the manager. In a Modaraba arrangement financial losses have to be borne exclusively by the lender. In Pakistan, the sponsor of a Modaraba has to be a company which must be registered under the Modaraba Companies and Modaraba (Flotation and Control Ordinance 1980).

Money market

The market for short-term investments. 'Short term' is usually defined as less than one year.

Money-market fund

An open-ended mutual fund that invests in very short-term instruments such as US Treasury bills, corporate commercial paper and certificates of deposit of US and foreign banks.

Mudarabah

Participation or trust financing. This arrangement involves two parties, the managing trustee (Mudarib) and the beneficial owner (Rab al Maal). Where Mudarabah is used as a method of financing, the financial institution will provide funds to the customer who then acts as Mudarib. The Mudarib will retain a fixed percentage of the profits, the Islamic financial institution’s reward is a fixed share in the balance of the revenue generated by the investments There is no guarantee that the Islamic financial institution’s investment will be returned or that a profit will be generated.

Multilateral Trading Facility (MTF)

An MTF is a multilateral system which brings together multiple third-party buying and selling interests in financial instruments – in the system and in accordance with non-discretionary rules – in a way that results in a contract.

Multiply-listed option

Any option contract that is listed and traded on more than one national options exchange.

Murabaha

Cost-plus profit financing. The Murabaha technique is used extensively to facilitate the trade finance activities of Islamic financial institutions. The financial institution purchases and takes title to the necessary equipment or goods from a third party (either directly or through an agent). The financial institution then sells on the equipment or goods to its customer at cost plus profit. All of the above contracts are undertaken at the request of the customer. Deferred payment terms may be agreed and the arrangement may be secured. Such arrangements are not considered to be contrary to Shari’ah law as, by taking title to the equipment or goods, the bank is assuming a risk and engaging in a sale transaction which entitles it to profit. As the price of the equipment or goods is fixed, the customer is not affected by fluctuations in the base lending rate.

Musharakah

Equity financing. This is very similar to the Mudarabah contract, except that the customer puts up part of the equity. The Islamic financial institution and the customer provide financing for a specified project in agreed proportions. All parties have the right to participate in the project but the parties also have the right to waive such rights. Furthermore, in the event of loss, both parties will bear the losses in proportion to their participation. Profits and losses are shared in direct proportion to the respective contributions of the participants. The Islamic financial institution may receive an agreed management fee.
See also Mudarabah

Mutual fund

An open-end investment company. Equivalent to unit trust.