Month: February 2016
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Free on Board
Concept of F.O.B. (Free On Board) in Futures TradingIn this context of financial law, the following is a definition of F.O.B. (Free On Board): Indicates that all delivery, inspection and elevation, or loading costs involved in putting commodities on board a carrier have been paid.
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Active Fund
Concept of Active Fund in Futures TradingIn this context of financial law, the following is a definition of Active Fund: A private fund as defined in section 202(a) of the Investment Advisers Act of 1940, that is not a third-party subaccount and that executes 200 or more swaps per month.
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Crop Year
Concept of Crop Year in Futures TradingIn this context of financial law, the following is a definition of Crop Year: The time period from one harvest to the next, varying according to the commodity (e.g., July 1 to June 30 for wheat; September 1 to August 31 for soybeans).
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Interpolation
Interpolation (linear Interpolation)Concept of Interpolation (linear Interpolation) in the context of derivatives contract, by the International Swaps and Derivatives Association (ISDA): A method of estimating an unknown price or yield of a security. This is achieved by using other related […]
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Basis Quote
Concept of Basis Quote in Futures TradingIn this context of financial law, the following is a definition of Basis Quote: Offer or sale of a cash commodity in terms of the difference above or below a futures price (e.g., 10 cents over December corn).
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Give Up
Concept of Give Up in Futures TradingIn this context of financial law, the following is a definition of Give Up: A contract executed by one broker for the client of another broker that the client orders to be turned over to the second broker. The broker accepting the order from the customer […]
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Transaction Supplement
Concept of Transaction Supplement in the context of derivatives contract, by the International Swaps and Derivatives Association (ISDA): The short confirmation that evidences a transaction under a Master Confirmation Agreement (referred to commonly as a “short form”).ResourcesSee […]
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Over-the-Counter
Concept of Over-the-Counter (OTC) in Futures TradingIn this context of financial law, the following is a definition of Over-the-Counter (OTC): The trading of commodities, contracts, or other instruments not listed on any exchange. OTC transactions can occur electronically or over the telephone. […]
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Index
Asset Backed Index (abx)Concept of Asset Backed Index (abx) in the context of derivatives contract, by the International Swaps and Derivatives Association (ISDA): A credit derivative (i.e. an instrument that transfers risk from one party to the other) index based on 20 underlying ABS bonds that […]
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Commodity Pool
Concept of Commodity Pool in Futures TradingIn this context of financial law, the following is a definition of Commodity Pool: An investment trust, syndicate, or similar form of enterprise operated for the purpose of trading commodity futures or option contracts. Typically thought of as an […]
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Clearing Mandate
Concept of Clearing Mandate in Futures TradingIn this context of financial law, the following is a definition of Clearing Mandate: The requirement in the Dodd-Frank Act that certain swap transactions be cleared through a derivatives clearing organization unless the transaction is subject to the […]
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Commercial Mortgage Backed Security
Commercial Mortgage Backed Security (cmbs)Concept of Commercial Mortgage Backed Security (cmbs) in the context of derivatives contract, by the International Swaps and Derivatives Association (ISDA): A type of bond or note issued by a Special Purpose Vehicle (SPV) where the bond or note is […]
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Credit Terms
Definition of Credit TermsThis is the meaning of Credit Terms published by Marco Terry: A type of commercial sale which allows the customer to pay 30 to 60 days after an invoice is submitted. Terms are noted by preceding the number of days to pay with the word “Net” (i.e. Net 30 […]
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Negative Amortization
Negative Amortization in the Context of Mortgage RefinancingsIn this context, a definition of Negative Amortization may be distilled, worded as follows: Occurs when the monthly payments in an adjustable-rate mortgage loan do not cover all the interest owed. The interest that is not paid in the […]
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Realised Correlation Swap
Concept of Realised Correlation swap in the context of derivatives contract, by the International Swaps and Derivatives Association (ISDA): A swap (i.e. a derivative where two counterparties exchange streams of cashflows with each other) that uses the observed correlation between each component […]