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Term Definition: # | A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

Fast market Rapid movement in a market caused by strong interest from buyers and/or sellers. In such circumstances, price levels may be omitted and bid and offer quotations may occur too rapidly to be fully reported.
Fair Market Value The price for a financial instrument that is determined in an open market environment between a willing buyer and seller.
Fed Fund Rate The interest rate on Fed funds. This is a closely watched short-term interest rate as it signals the Fed's view about the state of the money supply.
Federal Deposit Insurance Corporation (FDIC) The regulatory agency responsible for administering bank depository insurance in the US.
Federal Reserve (Fed) The Central Bank of the United States.
Fill or Kill An order which must be entered for trading, normally in a pit three times. If not filled it is immediately canceled.
Filled Trade A trade that is fully executed on behalf of a customerís account pursuant to an order. Once filled, an order cannot be canceled, amended or waived by the customer.
Fixed Exchange Rate Official rate set by monetary authorities for one or more currencies. In practice, even fixed exchange rates are allowed to fluctuate between definite upper and lower bands, leading to intervention.
Flat / Square To be neither long nor short is the same as to be flat or square. One would have a flat book if one has no positions or if all the positions cancel each other out.
Flexible exchange rate Exchange rates with a fixed parity against one or more currencies with frequent revaluations. A form of managed float.
Floating exchange rate An exchange rate where the value is determined by market forces. Even floating currencies are subject to intervention by the monetary authorities. When such activity is frequent the float is known as a dirty float. 
 
Floating profit (loss) Unrealized profit (loss) in an open position.
Floating Rate Interest  As opposed to a fixed rate, the interest rate on this type of deal will fluctuate with market rates or benchmark rates. One example of a floating rate interest is a standard mortgage.
FOMC Federal Open Market Committee, the committee that sets money supply targets in the US, which tend to be implemented through Fed Fund interest rates, etc.
Foreign Currency The legal tender issued by and acceptable for the payment of obligations under the laws of one or more countries other than the United States of America.
Foreign Exchange Contract A Spot Contract for the purchase or sale of a Foreign Currency.
Foreign Exchange Rate The price relationships between two currencies that are freely determined by the forces of supply and demand.
Foreign Exchange Swap A transaction which involves the actual exchange of two currencies (principal amount only) on a specific date at a rate agreed at the time of the conclusion of the contract (short leg), at a date further in the future at a rate agreed at the time of the contract (the long leg). 
Foreign Exchange (or Forex or FX) The simultaneous buying of one currency and selling of another in an Over-the-Counter market. Most major FX is quoted against the US dollar. 
Forward A deal that will commence at an agreed date in the future. Forward trades in FX are usually expressed as a margin above (premium) or below (discount) the spot rate. To obtain the actual forward FX price, the margin is added to the spot rate. The rate will reflect what the FX rate has to be at the forward date so that if funds were re-exchanged at that rate there would be no profit or loss (i.e. a neutral trade). The rate is calculated from the relevant deposit rates in the two underlying currencies and the spot FX rate. Unlike in the futures market, forward trading can be customized according to the needs of the two parties and involves more flexibility. In addition, there is no centralized exchange. Forward points - the pips added to or subtracted from the current exchange rate to calculate a forward price. Forward Rate - forward rates are quoted in terms of forward points, which represent the difference between the forward and spot rates. In order to obtain the forward rate from the actual exchange rate, the forward points are either added or subtracted from the exchange rate. The decision to subtract or add points is determined by the differential between the deposit rates for both currencies involved in the transaction. The base currency with the higher interest rate is said to be at a discount to the lower interest rate quoted currency in the forward market. Therefore, the forward points are subtracted from the spot rate. Similarly, the lower interest rate base currency is said to be at a premium, and the forward points are added to the spot rate to obtain the forward rate. 
Free margin Available funds in the clientís account not currently being used to support existing trading positions, which can be used to open new positions.
Fundamentals The macroeconomic factors that are accepted as forming the foundation for the relative value of a currency, these include inflation, growth, trade balance, government deficit, and interest rates. 
Fundamental Analysis Analysis based on economic and political factors. Thorough analysis of economic and political data with the goal of determining future movements in a financial market.
Futures Contract An obligation to exchange a good or instrument at a set price on a future date. The primary difference between a future and a forward is that futures are typically traded over an exchange (Exchange-Traded Contacts Ė ETC), versus forwards, which are considered Over-the-Counter (OTC) contracts. An OTC is any contract NOT traded on an exchange.
Fair value: An option value derived from a mathematical option valuation model.
Fast market: Rapid movement in a market caused by strong interest by buyers and/or sellers. In such circumstances price levels may be omitted and bid and offer quotations may occur too rapidly to be fully reported.
Fat tail distribution: A graph that predicts a greater probability of a very large price movement than that predicted by normal distribution.
Fed Fund Rate: The interest rate on Fed funds. This is a closely watched short term interest rate as it signals the Feds view as to the state of the money supply.
Fed Funds: Cash balances held by banks with their local Federal Reserve Bank. The normal transaction with these fund is an inter bank sale of a Fed fund deposit for one business day. Straight deals are where the funds are traded overnight on a unsecured basis.
Fed: The United States Federal Reserve
Federal Deposit Insurance Corporation: Membership is compulsory for Federal Reserve members. The corporation had deep involvement in the Savings and Loans crisis of the late 80s.
Federal National Mortgage Association: A privately owned but US government sponsored corporation that trades in residential mortgages. Its activities are funded by the sale of instruments commonly known as Fannie Maes.
Federal Open Market Committee: See FOMC
Federal Reserve Board: The board of the Federal Reserve System, appointed by the US President for 14 year terms, one of whom is appointed for four years as chairman.
Federal Reserve System: The central banking system of the US comprising 12 Federal Reserve Banks controlling 12 districts under the Federal Reserve Board. Membership of the Fed is compulsory for banks chartered by the Comptroller of Currency and optional for state chartered bank
Feste Schuld: A long term debt consolidated in the form of bonds, mortgages etc.
Fest Geld: Offered Rate. Money on fixed term deposit at banks. FIBOR:
Frankfurt Inter-bank: An order which must be entered for trading, normally in a pit three times, if not filled is immediately cancelled.
Fill or Kill: A futures contract based on a financial instrument.
Financial future: Introduced in 1979 it is part of the dual currency exchange rate system operated in South Africa. It is the proceeds of disposal of South African securities and includes the purchase of plant and equipment by foreign investors.
Financial Rand: (1) A quote with a narrow spread.(2) The most favourable rate charged to a high quality borrower.
Fine Rate: The price given in response to a request for a rate at which the quoting party is willing to execute a deal for a reasonable amount for spot settlement. Screen quotes are indicative. Quotes on matching systems are normally firm depending on systems requir
Firm quotation: The first day on which notices of intention to deliver actual currencies against futures market positions can be received.
First notice day: Use of taxation as a tool in implementing monetary policy.
Fiscal Policy: The relationship that exists between interest rates and exchange rate movements, so that in an ideal situation interest rate differentials would be exactly off set by exchange rate movements. See interest rate parity.
Fisher Effect: The monthly calendar dates similar to the spot. There are two exceptions. For detailed description see value dates.
Fixed dates: Official rate set by monetary authorities. Often the fixed exchange rate permits fluctuation within a band.
Fixed exchange rate: A method of determining rates by normally finding a rate that balances buyers to sellers. Such a process occurs either once or twic daily at defined times. Used by some currencies particularly for establishing tourist rates . The system is also used in th
Fixing: Exchange rates with a fixed parity against one or more currencies with frequent revaluations. A form of managed float.
Flexible exchange rate: 1. see Floating exchange rate. 2. Cash in hand or in the course of being transferred between banks 3. Federal Reserve Float arises from the system where cheques sent to the Federal Reserve Banks are credited sometimes in advance of the depositing bank loo
Float: An exchange rate where the value is determined by market forces. Even floating currencies are subject to intervention by the monetary authorities. When such activity is frequent the float is known as a dirty float.
Floating exchange rate: An agreement with a counterparty that sets a lower limit to interest rates for the floor buyer for a stated time.
Floor: A term for an exchanges trading area (cf. screen based trading), normally the trading area is referred to as a pit in the commodities and futures markets.
FOMC: Federal Open Market Committee, the committee that sets money supply targets in the US which tend to be implimented through Fed Fund interest rates etc.
Foreign Exchange: The purchase or sale of a currency against sale or purchase of another.
Forex: Foreign Exchange.
Forex Club: Groups formed in the major financial centres to encourage educational and social contacts between foreign exchange dealers, under the umbrella of Association Cambiste International.
Form: The method by which bond ownership is evidenced. (See Allotment letter, Bearer, Book-entry, Registered)
Forward book: Various net exposures for forward contracts which the bank has incurred as a result of dealing activities.
Forward Contract: Sometimes used as synonym for "forward deal" or "future". More specifically for arrangements with the same effect as a forward deal between a bank and a customer.
Forward Cover: Taking forward contracts to protect against movements in the exchange rate.
Forward Deal: A deal with a value date greater than the spot value date.
Forward Forward: A forward / forward deal is one where both legs of the deal have value dates greater than the current spot value date.
Forward margins: Discounts or premiums between spot rate and the forward rate for a currency. Normally quoted in points.
Forward maturities: Trading days on which deals can be transacted later than the spot date.
Forward Operations: Foreign exchange transactions, on which the fulfilment of the muual delivery obligations is made on a date later than the second business day after the transaction was concluded.
Forward Outright: A commitment to buy or sell a currency for delivery on a specified future date or period. The price is quoted as the Spot rate minus or plus the forward points for the chosen period.
Forward Rate Agreements: The FRA is an agreement between two parties that determine the interest rate that will apply to a notional future loan or deposit of an agreement
Forward Rate: Forward rates are quoted in terms of forward points, which represents the difference between the forward and spot rates. In order to obtain the forward rate from the actual exchange rate the forward points are either added or subtracted from the exchange 
 
FRAS: Forward Rate Agreement
Franc zone: A grouping of currencies which are pegged to the French Franc and are supported by the activities and resources of the Bank of France. The main currency is the CFA which is administered by the communal central banks in West and Central Africa BEAC and BCE
Free payment basis: Payment and delivery of a bond may be at different times.
FRN: Floating rate note, see floating rate.
FRCD: Floating rate CD. see floating rate.
Free Reserves: Total reserves held by a bank less the reserves required by the authority.
Freeze: Legislation or agreement to keep prices or wages at current levels.
Front Office: The activities carried out by the dealer, normal trading activities
Frozen Assets: Normally funds that are temporarily blocked normally either due to court order or government regulation often arising from war or major international dispute, eg Iran, Iraq, and Yugoslavia..
Fundamentals: The macro economic factors that are accepted as forming the foundation for the relative value of a currency, these include: inflation, growth, trade balance, government deficit, and interest rates.
Fungibles: Instruments that are equivalent, substitutable and interchangeable in law. May apply to certain exchange traded currency contracts offered on a number of exchanges.
Furthest month: The month that is furthest away from settlement of a futures or options contract.
Futures contract: A contract traded on a futures exchange which requires the delivery of a specified quality and quantity of a commodity, currency or financial instruments a specified future month, if not liquidated before the contract matures.
FX: Foreign Exchange.


Term Definition: # | A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

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