Copy of `The London Trade Group - Stock trading info`

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The London Trade Group - Stock trading info Category: Economy and Finance > London trading and exchange Date & country: 28/01/2011, UK Words: 312

ncu
National Currency Unit. Units of the Legacy Currencies which will be replaced by the Euro.

negative pledge
A condition of a secured loan or funding agreement that states that its security cannot be pledged to secure another transaction.

negotiable instrument
Documents including Bills of Exchange, Promissory Notes, cheques, Bills of Lading and others which can be transferred to other parties by endorsement.

negotiate / negotiation
Buying or selling Bills of Exchange or shipping documents.

negotiating bank
A bank which is party to a Letter of Credit and which agrees to buy or sell Bills of Exchange or shipping documents.

non negotiable instruments
Non-negotiable instruments do not entitle to their owners to the goods or rights described in them.

notarising
Certification by a notary.

note
Colloquial term for Promissory Note especially in the context Forfaiting.

notify party
A person or company whose name appears in transport documents and who is to be notified upon the arrival of goods at their destination.

noting
A Bill of Exchange may be noted when the Drawee refuses to Accept it or to make payment against it. A Notary confirms how, where and when the Bill has been dishonoured which may later be used in court as proof of dishonour.

npv
Net Present Value. The value today of cashflows due in the future. Calculated using predicted interest rates and a margin to reflect the risk of non payment.

nyse
New York Stock Exchange.

oecd
The Organisation for Economic Co-operation and Development.

oeics
Open-Ended Investment Companies.

on board
Notation appearing on a Bill of Lading indicating that a cargo has been loaded on board the vessel.

open account
Terms of trade usually involving invoicing but no additional security for payment. Typically between longstanding counterparties.

opening bank
A bank which issues a Letter of Credit on behalf of a customer or Applicant. Also known as the Issuing Bank.

opinion
Colloquial term for "legal opinion".

otc
Over-The-Counter.

outs / out countries
The 4 EU countries which were not included in the EMU area in the first round of membership in May 1998. They are Denmark, Greece, Sweden and the UK.

packing credits
A type of pre-finance/pre-shipment finance of which a Red Clause L/C is a variety.

paris club
Often used in the context of debt rescheduling arrangements to refer to the officially supported Export Credit Agencies which have guaranteed export credit loans made to a debtor country.

partial drawings
Under a Letter of Credit , when the amount drawn is less than that available under the credit.

partial shipment
When the quantity of goods shipped is only part of the total consignment in question.

payment under reserve
A conditional payment which will need to be repaid if the conditions under which it was made are not met. In trade finance transactions often concerns payments between banks conditional upon receipt of certain documents.

pep
Personal Equity Plan.A tax efficient investment product enabling private investors to invest in equities and bonds. Peps ceased to be available in April 1999.

performance bond
Issued by banks or insurance companies of behalf of suppliers or contractors providing surety to the recipient that contractual terms will be performed. The recipient can call the guarantee if they are not.

pfi
Project Finance Initiative. A UK scheme to involve the private sector in the construction, operation and financing of infrastructure and other public services which have traditionally been carried out by the public sector.

pia
Personal Investment Authority now part of the FSA.

political risk
See Country Risk.

ppp
Purchasing Power Parity - a measure of wealth calculated by reference to the purchasing power of a currency in relation to the US Dollar.

praecipium
A type of front-end fee payable to the lead bank in a loan or bond transaction.

pre-advise
To notify the Beneficiary of a Document of Credit that the credit will be formally Advised to him within a short space of time.

pre-finance / pre-shipment finance
A method of advancing funds to an exporter prior to shipment of goods. Similar in fact to a working capital loan.

primary (market)
New issues of capital markets securities such as bonds or forfaited paper. As distinct from "secondary" paper which is already being traded in the market.

prime bank guarantee
In principle this means a guarantee issued by first class bank. In practice it has come to be associated with spurious and fraudulent instruments purporting to be guarantees issued by highly creditworthy institutions designed to encourage inexperienced investors to part with their money.

prime rate
The rate of interest charged by US commercial banks to those borrowers with the strongest credit rating.

project finance
Used variously by financial institutions to mean: Finance made available to be repaid by revenue derived from a project. Corporate lending.

promissory note
A payment instrument evidencing an obligation to pay a sum of money on a fixed or determinable future date. It is issued by the person owing the money to, or to the order of, the person to whom the money is owed.

protest
A formal legal procedure required in some countries to assert the right of a drawer of a bill of exchange to be paid.

rate fixing
A procedure used for loans and other debt instruments whereby the applicable rate of interest is determined from time to time, usually by the Agent bank.

recourse / limited recourse
Where an exporter or project sponsor provides whole or partial guarantees of future payment.

red clause letter of credit
A mechanism by which funds may be advanced to an exporter under a Letter of Credit in advance of goods being shipped.

reducing balance guarantee
A guarantee for a loan that reduces as the loan is repaid.

reimbursement
Used in the context of Letters of Credit whereby a bank which has made a payment on behalf of another bank is entitled to reclaim the funds from a designated account of the instructing bank.

repo
Jargon for "repurchase agreement" whereby one party agrees to sell securities to another and to repurchase them on or by a defined date in the future.

retention
A financial clause attaching to payments made to a contractor in respect of large project or construction operation according to which a proportion of the funds are withheld until the project is completed or commissioned or testing has taken place.

revenue-driven
A financing structure which is developed based upon the cash flows of the project being financed.

revolving letter of credit
A Letter of Credit which provides for automatic reinstatement of funds available for drawing once a drawing has been made from it.

rohirst forfait management system
Commonly referred to as "Rohirst", this is the principal software application used in the forfaiting market to calculate discounts and store data on trades and portfolios.

rollover
The extension of a loan for a further period of time, beyond that originally envisaged. A renewal of a loan for a further period within the terms originally agreed.

romalpa clause
A form of reservation of title where a supplier seeks to retain title to goods he has supplied to his buyer. Romalpa clauses apply to situations where the supplier fears that if he supplies goods and the buyer becomes insolvent without having paid for them, he will be left as an unsecured creditor.

rtgs
Real Time Gross Settlement System for transferring money.

saibatsu
A term used to describe the large Japanese conglomerates which are made up of industrial companies, trading houses and financial institutions.

secondary market
Dealing in securities such as bonds or forfaited paper which have already been issued into their Primary market.

securitisation
The process of transforming financial obligations into tradable securities such as shares or bonds. Bonds backed by mortgages or credit card receivables are well-known examples.

sfa
Securities and Futures Authority now part of the FSA.

shipped on deck
When cargo is shipped on the deck of a vessel rather than in the hold, i.e. exposed to the elements. This is may appear as a Clausing on a Bill of Lading.

sight draft
A Bill of Exchange payable immediately as opposed to a Usance bill.

slc
see STANDBY LETTER OF CREDIT

soft commodity
While there is no formal definition of this term it is widely taken to mean coffee, cocoa, sugar and cotton but not agricultural commodities such as wheat and potatoes, and not industrial commodities, chemicals and metals.

sovereign borrower / guarantor
Government borrower or guarantor.

sovereign risk
See Country Risk

spread
Risk margin as applied of loans and discounts.

sro
Self-Regulating Organisation e.g. IMRO, SFA, PIA etc.

ssap
Statements of Standard Accounting Practice.

stale bill of lading
A bill of lading which has been presented under a Letter of Credit but is older than 21 days since its date of issue.

standby letter of credit
A Letter of Credit, similar to an on-demand guarantee, under which drawings are contingent upon a particular event or set of circumstances occurring or failing to occur.

stir
Short-Term Interest Rate.

straight discount
A method of calculating a discount commonly used in Forfaiting. The result of a straight discount is expressed as percentage of the discounted Face Value of future cashflows.

subparticipation agreement
An agreement by which banks may sell to other banks pieces or "participations" in loans that they make to borrowers. Under a "silent subparticipation agreement" other parties to the main agreement such as the borrower or other members of a lending Syndicate will be unaware of the existence of the subparticipation arrangements.

switch trading
Using outstanding credit balances in bi-lateral trading accounts between two countries to finance imports from third parties

syndication
A loan made by a group or "syndicate" of banks.

target
Trans-European Automated Real-Time Gross-Settlement Express Transfer - the wholesale same-day payment system for euros operated by the European Central Bank.

tariff
Duty or tax payable on imports.

tenor
The term at which funds are payable, for example under Bills of Exchange. Commonly used tenors are 30, 60, 90, 180 days etc.

tessa
Tax Exempt Special Savings Account. A British savings product enabling private investors to save money free of income tax on the interest it earned. TESSAs ceased to be available in April 1999.

tested telex
A form of coded telex message used between banks to ensure security and veracity of its content. Formerly extensively used for confirming payment details, tested telexes have been widely superceded by SWIFT.

through bill of lading
A Bill of Lading covering an entire shipment from start to finish even though Transhipment may take place en route.

tied aid
Aid funding, guarantees, loans or export credits which can only be utilized in relation to exports of goods, equipment or services purchased from the country providing the aid.

tir
Transport International Routier a system for sealed road transport of goods used throughout Europe.

tolerance
Applied to quantities, qualities and prices of goods to allow for a given measure of under or over shipment. Thus, for example, a 10% tolerance by weight allowed in a contract of sale relating to a particular bulk cargo, allows for the quantity shipped to be 10% more or less that that agreed.

tolling
A charge paid to a facility for using it, road tolls being the most common. The term is also applied to use of production facilities, mining operations and other productive plants handling or processing raw materials.

tombstone
A form of publicity, usually shown in the financial press, which sets out the highlights of a financing which has been arranged in the capital markets. Tombstones usually show the clients, the arranger or agent bank and the lenders or funding providers which were involved in the transaction.

tranche
A discreet sum of money, often part of a larger loan or payment.

transfer risk
The risk that funds cannot be transferred or paid from a particular territory usually because of political circumstances or lack of foreign exchange.

transhipment
The process of moving goods from one vessel to another or from one means of transport to another.

transition period
Beginning 1st January 1999 and ending 31st December 2001 during which in- countries prepare to substitute the Euro for their domestic currencies.

ucp
Uniform Customs and Practice for Documentary Credits published by the International Chamber of Commerce, Paris. The principal rulebook governing Letters of Credit.

unconfirmed
A term used in Letters of Credit meaning that documents presented will be inspected by the Issuing or Opening Bank.

underwriter
A term widely used in lending, insurance, the stock market and other connections where a party agrees to take a risk, buy something or make sums available in the event that a certain set of circumstances does or does not take place.

usance
A term used with reference to Bills of Exchange and Letters of Credit where funds are not Payable straightaway (at Sight) but at some fixed or determinable future time.

validity date
Under a Letter of Credit, also referred to as the Expiry Date. The date by which the Beneficiary must present documents to the bank inspecting them.

value date
The date on which a payment is received and on which the holder of the funds is able to make us of them.

value dating
Adjusting or backdating the Value Date of a payment made between banks, used to correct delays in payment. Another method is for the paying bank to pay interest to the receiving bank for the period in which it had use of the funds.

waiver
Often in the form of a waiver letter whereby a party agrees to forego certain right or privileges. A bank, may for example waive its right of Recourse to another party in the event of non-payment.

warehouse receipt
A written receipt whereby a warehouse, depot or storage facility confirms that it has taken delivery of specified goods or commodities.

without recourse / non recourse
Where, in the context of an export financing operation, the financier takes on the risk of non-payment.

world bank
see IBRD

wto
World Trade Organization, the successor to GATT. Set up to foster free trade and combat restrictive international trade practices among member countries such as quota restrictions and import tariffs.