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TMX - Investment glossary Category: Business and Law > Investment terms Date & country: 21/02/2017, USA Words: 348

Advanced Companies
Companies listed on TSX Venture Exchange that meet higher asset, market value and shareholder distribution requirements than those classified as venture companies. This classification is related to TSX Venture Exchange Tier 1 status.

Agent
A securities firm is classified as an agent when it acts on behalf of its clients as buyer or seller of a security. The agent does not own the security at any time during the transaction.

Alberta Securities Commission
(ASC) The provincial regulatory agency responsible for overseeing the capital market in Alberta.

All-or-None Order
An order that must be filled completely or the trade will not take place.

American-Style Options
Options that can be exercised any time during their lifetime. These are also known as open options.

Annual Report
A publication, including financial statements and a report on operations, issued by a company to its shareholders at the company's fiscal year-end.

Anonymous Trading
Permits Participating Organizations to voluntarily withhold their true broker identities when entering orders and trades on TSX trading systems.

Arbitrage
The simultaneous purchase of a security on one stock market and the sale of the same security on another stock market at prices which yield a profit.

Ask or Offer
The lowest price at which someone is willing to sell the security. When combined with the bid price information, it forms the basis of a stock quote.

Assets
Everything a company or person owns, including money, securities, equipment and real estate. Assets include everything that is owed to the company or person. Assets are listed on a company's balance sheet or an individual's net worth statement.

Assignment
The notification to the seller of an option by the clearing corporation that the buyer of the option is enforcing the terms of the option's contract.

At-the-Money
When the price of the underlying equity, index or commodity equals the strike price of the option.

Averages and Indices
Statistical tools that measure the state of the stock market or the economy, based on the performance of stocks, bonds or other components. Examples are the S&P/TSX Venture Composite Index, the S&P/TSX Composite Index, the Dow Jones Industrial Average and the Consumer Price Index.

Averaging Down
Buying more of a security at a price that is lower than the price paid for the initial investment. The aim of averaging down is to reduce the average cost per unit of the investment.

Basis Point
One-hundredth of a percentage point. For example, the difference between 5.25% and 5.50% is 25 basis points.

Bear Market
A market in which stock prices are falling.

Best-Efforts Underwriting
A type of underwriting where the investment firm acts as an agent. The firm agrees to use its best efforts to sell the new issue of securities, but does not guarantee the issuing company that the securities to be issued will be sold.

Beta
A measurement of the relationship between the price of a stock and the movement of the whole market.

Better-Price-Limit Orders
An order with a limit price better than the best price on the opposite side of the market. A better-priced buy order has a limit price higher than the best offering. A better-priced sell order has a limit price lower than the best bid. These are available only at the opening.

Black-Scholes Model
A mathematical model used to calculate the theoretical price of an option.

Blue Chip Stocks
Stocks of leading and nationally known companies that offer a record of continuous dividend payments and other strong investment qualities.

Board Lot
A standard trading unit as defined in UMIR (Universal Market Integrity Rules). The board lot size of a security on Toronto Stock Exchange or TSX Venture Exchange depends on the trading price of the security, as follows:


Bonds
Promissory notes issued by a corporation or government to its lenders, usually with a specified amount of interest for a specified length of time.

Book
An electronic record of all pending buy and sell orders for a particular stock.

Booked Orders
Orders that do not trade immediately upon entry. These orders are also known as outstanding orders.

Bought-Deal Underwriting
A type of underwriting where the brokerage firm acts as principal. The brokerage firm risks its own capital to purchase all of the securities to be issued. If the price of the securities decreases before the brokerage firm has had a chance to resell the securities to its clients, the firm absorbs the loss.

British Columbia International Commercial Arbitration Centre
(BCICAC) An arbitration centre established to resolve business disputes that have not been resolved through normal channels. As part of its services, the centre will accept claims up to $50,000 from clients of participating members of the Investment Dealers Association of Canada (Pacific Division) and TSX Venture Exchange.

British Columbia Securities Commission
(BCSC) The provincial government agency responsible for administering and enforcing the Securities Act and the Commodity Contract Act of British Columbia.

Broker or Brokerage Firm
A securities firm or a registered investment advisor affiliated with a firm. Brokers are the link between investors and the stock market. When acting as a broker for the purchase or sale of listed stock, the investment advisor does not own the securities but acts as an agent for the buyer and seller and charges a commission for these services.

Bull Market
A market in which stock prices are rising.

Business Day
Any day from Monday to Friday, excluding statutory holidays.

Business Trust
A trust that usually generates cash flows from one business or operating company, unlike an investment fund, which generates income from a diversified pool or portfolio. The trust holds debt and equity interests of an operating business. Businesses that exhibit these characteristics may opt for a trust structure over a corporate structure to take advantage of tax efficiency.

Buy-In
If a broker fails to deliver securities sold to another broker on the settlement date, the receiving broker may buy the securities at the current market price of the stock and charge the delivering broker the cost difference of such a purchase.

Call Option
An option which gives the holder the right, but not the obligation, to buy a fixed amount of a certain stock at a specified price within a specified time. Calls are purchased by investors who expect a price increase.

Canadian Derivatives Clearing Corporation
(CDCC) The designated central clearing corporation for options and futures trading on the Bourse de Montréal. Previously known as Trans Canada Options Inc. (TCO).

Canadian Investor Protection Fund
(CIPF) A fund established to protect customers in the event of insolvency of a member of any of the following sponsoring self-regulatory organizations: the Bourse de Montréal, Toronto Stock Exchange, TSX Venture Exchange and the Investment Dealers Association of Canada.

Canadian Securities Institute
(CSI) The national educational organization of the securities industry sponsored by the Investment Dealers Association of Canada, Toronto Stock Exchange, the Bourse de Montréal and TSX Venture Exchange.

Capital
To an economist, capital means machinery, factories and inventory required to produce other products. To investors, capital means their cash plus the financial assets they have invested in securities, their home and other fixed assets.

Capital Gain or Loss
Profit or loss resulting from the sale of certain assets classified under the federal income tax legislation as capital assets. This includes stocks and other investments such as investment property.

Capital Gains Distribution
A taxable distribution out of taxable gains realized by the issuer. It is generally paid to security holders of trusts, partnerships, and funds. Like all distributions, it may be paid in securities or cash. The amount, payable date, and record date are established by the issuer. The exchange that the issue is listed on sets the ex-dividend/distribution (ex-d) date for entitlement.

Capital Pool Companies
The TSX Venture Exchange Capital Pool Company (CPC) program offers a unique listing opportunity that brings experienced management teams with proven public financing ability together with development-stage companies in need of capital and management expertise. Unlike traditional public companies, capital pools list and begin trading without an operating business. The nature of their business is to find and acquire a promising early-stage venture, and their treasuries are funded expressly for the search and due diligence process.

Capital Stock
All shares representing ownership of a company, including preferred and common shares.

Capital Trust
A form of financial trust that differs from other trusts in that it looks more like a fixed income instrument than an equity issue. Capital trusts are generally issued by banks or other financial intermediaries. These investment vehicles trade like a debt instrument with $1,000 face value and trade with accrued interest.



Capitalization Change
Any change in the issued and outstanding listed securities of an issuer. This change may involve the issuance, repurchase, or cancellation of listed securities or listed securities that are issuable upon conversion or exchange of other securities of an issuer.

Capitalization Effective Date
The date that the capitalization change is reflected in the issuer's share register, regardless of when it is reported to the Exchange.

Capitalization or Capital Structure
Total dollar amount of all money invested in a company, such as debt, preferred and common stock, contributed surplus and retained earnings of a company.

Capped Indices
Indices for which there is a maximum relative weight by market capitalization for any one constituent. Any individual constituent of the index can represent no more than a specified percent of the index. The individual constituents of the S&P/TSX Capped Composite and S&P/TSX Capped 60 indices are capped at 10%, while the individual constituents of the S&P/TSX Capped sector indices are capped at 25%.

Cash
A special term attached to an equity order that requires the trade to be settled either the same day or the following business day for cash.

Cash Dividend / Distribution
A dividend/distribution that is paid in cash.

Cash Settlement
Settlement of an option contract not by delivery of the underlying shares, but by a cash payment of the difference between the strike or exercise price and the underlying settlement price.

Certificate
The physical document that shows ownership of a bond, stock or other security.

Changes in Stock List
Any modification to the list of tradable issues of an exchange. These modifications include: new listings, supplemental security listings, substitutional listings, deletions, name changes, and stock symbol changes.

CL1
TSX Venture Level 1 (CL1) is a real-time service for listed junior equities that provides trades, quotes, corporate actions and index information from TSX Venture Exchange.

Clearing Number
The trading number of the clearing Participating Organization or Member.

Client Order
An order from a retail customer of a Participating Organization.

Closed-End Investment Fund
An investment trust that issues a fixed number of securities that trade on a stock exchange or in the over-the-counter market. Assets of a closed-end fund are professionally managed in accordance with the fund's investment objective and policies and may be invested in a wide range of financial instruments/assets. Like other publicly traded securities, the market price of closed-end fund securities fluctuates and is determined by supply and demand in the marketplace.

Closing Transaction
An order to close out an existing open futures or options contract.

Commission
The fee charged by an investment advisor or broker for buying or selling securities as an agent on behalf of a client.

Commodities
Products used for commerce that are traded on a separate, authorized commodities exchange. Commodities include agricultural products and natural resources such as timber, oil and metals. Commodities are the basis for futures contracts traded on these exchanges.

Common Shares or Common Stock
Securities that represent part ownership in a company and generally carry voting privileges. Common shareholders may be paid dividends, but only after preferred shareholders are paid. Common shareholders are last in line after creditors, debt holders and preferred shareholders to claim any of a company's assets in the event of liquidation.

Complete Fill
When an order trades all of its specified volume.

Conditional Listing Application
(CLA) When a company applies to list on Toronto Stock Exchange, a CLA consists of the Toronto Stock Exchange listing agreement and the company's prospectus.

Consolidated Short Position Report
A consolidated report that includes the total shares short (as of the trade date) and the net change from the previous report, for both TSX and TSX Venture Exchange listed issues. Under UMIR rule 10.10, all TSX and TSX Venture Exchange Participating Organizations and Members must report the firm's short position on a semi-monthly basis to TSX Datalinx. Non-clearing firms may report through the firm that is responsible for their clearing.

Continuous Disclosure
A company's ongoing obligation to inform the public of significant corporate events, both favourable and unfavourable.

Convertible Security
A security of an issuer (for example - bonds, debentures, or preferred shares) that may be converted into other securities of that issuer, in accordance with the terms of the conversion feature. The conversion usually occurs at the option of the holder of the securities, but it may occur at the option of the issuer.

Corporation or Company
A form of business organization created under provincial or federal laws that has a legal identity separate from its owners. The shareholders are the corporation's owners and are liable for the debts of the corporation only up to the amount of their investment. This is known as limited liability.

Cross
A trade that occurs when two accounts within the same Participating Organization/Member wish to buy and sell the same security at an agreed price and volume. With some approved exceptions, crosses can only occur within the current bid and ask for the stock.

Crossing Session
After the close of the regular trading day, crosses can be executed between 4:10 p.m. and 5:00 p.m. ET at the last sale price of the stock.

Cum Dividend
With dividend. The owner of shares purchased cum dividend is entitled to an upcoming already-declared dividend. The opposite of this is ex dividend.

Cum Rights
With rights. The owner of shares purchased cum rights is entitled to forthcoming, already-declared rights. The opposite of this is ex rights.

Cum-Dividend/Distribution Date
The trading day before the ex-dividend/distribution (ex-d) date. It is the last day on which the securities can be traded and on which the buyer is entitled to the dividend/distribution.

CUSIP
CUSIP © (Committee on Uniform Security Identification Procedures) is a standard system of securities identification and securities description, which is used in electronic processing and recording of securities transactions in North America. As a service bureau to the Canadian financial industry, CDS INC., a subsidiary of CDS, acts as liaison between Standard & Poor's (S&P) and the issuing companies for the assignment of CUSIP numbers and descriptions. A CUSIP number uniquely identifies a Canadian or American security issue and its issuer.

Cyclical Stock
A stock of a company in an industry sector that is particularly sensitive to swings in economic conditions.

Daily Price Limit
The maximum price advance or decline permitted for a futures contract in one trading session compared to the previous day's settlement price.

Day Order
An order that is valid only for the day it is entered. If the order is still outstanding when the market closes, it will be purged overnight.

Debenture
A long-term debt instrument issued by corporations or governments that is backed only by the integrity of the borrower, not by collateral. A debenture is unsecured and subordinate to secured debt. A debenture is unsecured in that there are no liens or pledges on specific assets.

Debt Price
The price paid per $100 of a debt instrument's face value traded. A debt instrument trading at par would have a price of $100. A price below face value (for example, $99.1) indicates that the debt instrument has traded at a discount. A price above face value (for example, $101.1) indicates that the debt instrument has traded at a premium.

Debt Value
The total dollar value of volume traded on one side of the transaction for a specified period. It equals price multiplied by volume divided by 100.

Debt Volume
The number of debt instruments traded on one side of the transaction for a specified period multiplied by the face value of the debt instrument.

Defensive Stock
A stock purchased from a company that has maintained a record of stable earnings and continuous dividend payments through periods of economic downturn.

Delayed Delivery Order
A special term order in which there is a clear understanding between the buying and selling parties that the delivery of the securities will be delayed beyond the usual three-day settlement period to the date specified in the order.

Delist
The removal of a security's listing on a stock exchange. This is done when the security no longer exists, the company is bankrupt, the public distribution of the security has dropped to an unacceptably low level, or the company has failed to comply with the terms of its listing agreement.

Delisted Issue
The status of a security that is no longer listed on the Exchange. The security could trade on another market.

Delisted Issuer
An issuer whose securities are no longer listed on Toronto Stock Exchange or TSX Venture Exchange. A listed issuer is delisted when the last listed security of the issuer is delisted.

Delivery
The tender and receipt of the underlying commodity or the payment or receipt of cash in the settlement of an open futures contract.

Delivery Month
The calendar month in which a futures contract may be satisfied by making or taking delivery.

Delta
A ratio that measures an option's price movement compared to the underlying interest's price movement. Delta values have a range of 0 to 1. Deep in-the-money options have deltas that approach 1.

Demand
The combined desire, ability and willingness on the part of consumers to buy goods or services. Demand is determined by income and by price, which are, in part, determined by supply.

Discretionary Account
A securities account created when a client gives a partner, director or qualified portfolio manager of a Participating Organization specific written authorization to select securities and execute trades on the client's behalf.

Distribution
The portion of the issuer's equity paid directly to the security holders. It is generally paid to security holders of trusts, partnerships, and funds. The issuer or its representative provides the amount, frequency (monthly, quarterly, semi-annually, or annually), payable date, and record date. The exchange that the issue is listed on sets the ex-dividend/distribution (ex-d) date for entitlement.

Diversification
Limiting investment risk by purchasing different types of securities from different companies representing different sectors of the economy.

Dividend
The portion of the issuer's equity paid directly to shareholders. It is generally paid on common or preferred shares. The issuer or its representative provides the amount, frequency (monthly, quarterly, semi-annually, or annually), payable date, and record date. The exchange that the issue is listed on sets the ex-dividend/distribution (ex-d) date for entitlement. An issuer is under no legal obligation to pay either preferred or common dividends.

Dividend Reinvestment Plan
A means of reinvesting dividends, which would otherwise be paid to the shareholder in cash, in additional stock of the company.

Dividend Yield
Equal to the indicated annual dividend rate per share divided by the security's price. For example, if the indicated dividend rate is $1.00 and the closing price is $50.00, $1 divided by $50.00 equals 2%.

Dividend/Distribution Payable Date
The date set by the issuer on which the dividend/distribution will be paid.

Dividend/Distribution Record Date
The date on which a security holder must be registered as a holder of an issue to receive the dividend/distribution.

Dollar Cost Averaging
Investing a fixed amount of dollars in a specific security at regular set intervals over a period of time. Dollar cost averaging results in a lower average cost per share, compared with purchasing a constant number of shares at set intervals. The investor buys more shares when the price is low and buys fewer shares when the price is high.

Dow Jones Industrial Average
(DJIA) An average made up of 30 actively traded stocks. The DJIA is calculated by adding the prices of each of the 30 stocks and dividing by a divisor. The DJIA is one of the most widely quoted stock market averages in the media.

Downtick
A trade is on a downtick when the last trade occurred at a price lower than the previous one.

Energy or Royalty Trust
Investment vehicles that may engage in the development, acquisition, and/or production of oil and gas reserves. The trust receives royalty income from producing properties (essentially, net cash flow) and then sells interests in the trust (called trust units) to investors. Conventional oil and gas royalty trusts are actively managed portfolios holding assets of mature producing properties. Substantially all of the cash flow generated by the oil and gas assets, net of certain deductions, such as administrative expenses and management fees, is passed on to the unit holders as royalty income. Capital expenses may also be deducted, but are usually subject to restrictions on the amount. The distributions are highly dependent upon the cash flow generated by the trust. In general, the largest variable in determining the level of cash flow is the price of crude oil and natural gas.