Month: August 2016
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Super Senior Tranche
Concept of Super Senior Tranche in the context of derivatives contract, by the International Swaps and Derivatives Association (ISDA): The least risky tranche in a CDO capital structure. For example, a tranche with a 8 – 100% attachment/detachment point.ResourcesSee AlsoDerivatives Contract
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Exchange Risk Factor
Concept of Exchange Risk Factor in Futures TradingIn this context of financial law, the following is a definition of Exchange Risk Factor: The delta of an option as computed daily by the exchange on which it is traded.
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Duration
Concept of Duration in Futures TradingIn this context of financial law, the following is a definition of Duration: A measure of a bond’s price sensitivity to changes in interest rates.
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Exempt Foreign Firm
Concept of Exempt Foreign Firm in Futures TradingIn this context of financial law, the following is a definition of Exempt Foreign Firm: A foreign firm that does business with U.S. customers only on foreign exchanges and is exempt from registration as a futures commission merchant under CFTC […]
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Many-to-Many
Concept of Many-to-Many in Futures TradingIn this context of financial law, the following is a definition of Many-to-Many: Refers to a trading platform in which multiple participants have the ability to execute or trade commodities, derivatives, or other instruments by accepting bids and offers […]
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Escrow
Escrow in the Context of Mortgage RefinancingsIn this context, a definition of Escrow may be distilled, worded as follows: The holding of money or documents by a neutral third party before closing on a property. It can also be an account held by the lender (or servicer) into which a homeowner […]
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Agricultural Commodity
Concept of Agricultural Commodity in Futures TradingIn this context of financial law, the following is a definition of Agricultural Commodity: An agricultural commodity is defined in Commission regulation 1.3(zz) as a commodity in one of four categories: (a) the enumerated commodities listed in […]
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Currency Swap
Concept of Currency Swap in Futures TradingIn this context of financial law, the following is a definition of Currency Swap: A swap that involves the exchange of one currency (e.g., U.S. dollars) for another (e.g., Japanese yen) on a specified schedule.
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Matching Algorithm
Concept of Matching Algorithm in Futures TradingIn this context of financial law, the following is a definition of Matching Algorithm: A set of rules (encoded in software in the case of electronic markets) for determining when and if bids and offers are matched to one another.
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Asian Option
Concept of Asian Option in Futures TradingIn this context of financial law, the following is a definition of Asian Option: An exotic option whose payoff depends on the average price of the underlying asset during some portion of the life of the option.
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Lookalike Option
Concept of Lookalike Option in Futures TradingIn this context of financial law, the following is a definition of Lookalike Option: An over-the-counter option that is cash settled based on the settlement price of a similar exchange-traded futures contract on a specified trading day.
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Gross Processing Margin
Concept of Gross Processing Margin (GPM) in Futures TradingIn this context of financial law, the following is a definition of Gross Processing Margin (GPM): Refers to the difference between the cost of a commodity and the combined sales income of the finished products that result from […]
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Security Interest
Security Interest in relation to Home Equity Lines of CreditIn this context, a definition of Security Interest is provided: If stated in your credit agreement, a creditor’s, lessor’s, or assignee’s legal right to your property (such as your home, stocks, or bonds) that secures payment of your […]
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Valuation Percentage (haircut)
Valuation Percentage (haircut)Concept of Valuation Percentage (haircut) in the context of derivatives contract, by the International Swaps and Derivatives Association (ISDA): The percentage by which the market value of the collateral will be reduced to allow for price volatility and instrument […]
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Clearing
Concept of Clearing in Futures TradingIn this context of financial law, the following is a definition of Clearing: The procedure through which the clearing organization becomes the buyer to each seller of a futures contract or other derivative, and the seller to each buyer for clearing members.