Caproasia

Financial Market Terms

Financial System
Placement or transfer of money

Financial Assets
Assets, instruments or investments that are recognised in the financial system, and can be easily bought and sold or priced

Example: Cash, deposits, stocks, bonds, unit trust, options, futures

Financial Market
Marketplace for buying and selling of any financial assets

Financial Advisor
Institution or person that provides financial advice. These activities are usually regulated or governed and requires the institution and person to be licensed

Financial Intermediaries
Medium or channel for money or financial assets pass through

Central Banks
Government body that manages the country’s currency, money supply and interest rates

Example: People’s Bank of China, Hong Kong Monetary Authority, Monetary Authority of Singapore, European Central Bank, Federal Reserve

Treasury
Managing liquidity, returns, risks of all money and financial instruments in country or company

Banks
Where you can keep and borrow money. Common services include loans, deposits, remittance, credit cards and investments

Investment Banks
Where businesses and companies can find capital in the form of equity or debt. Common services include underwriting for bonds and equities for IPOs, trading and investment activities.

Brokerage
Buy and sell financial securities on public stock exchange

Dealing Room
Buy and sell global financial assets, usually only for financial institutions

Trading Room
Buy and sell global financial assets, usually only for financial institutions. They may engage in holding positions, for hedging or speculative purposes

Money Changer
Change money from one currency to another

Remittance Services
Transfer money from one account to another (can be to another country)

E-commerce Payment Gateway
Making payment for online transactions.

IPO (Initial Public Offering)
The process of offering stock of a company on a public exchange for the first time.

USD (United States Dollar)
The currency for the United States. Its value is usually expressed with another currency, for example USD/SGD =1.35 (US$1= SG$1.3)

LIBOR (London Interbank Offered Rate)
The average rate in which banks in London will charge to lend to each other. This rate is used as a benchmark for short-term interest rates around the world.

NASDAQ (National Association of Securities Dealers Automated Quotations)
Another major stock exchange in the US, and the second largest exchange in the world, behind NYSE.

SGX (Singapore Stock Exchange)
The Singapore stock exchange

NYSE (New York Stock Exchange)
One of the major stock exchanges in the US, and the largest one in the world.

Exchange
A public platform where people trade. It is centralised and is usually regulated

Example: New York Stock Exchange, Tokyo Stock Exchange, Hong Kong Stock Exchange, Chicago Board of Trade

Regulator
To ensure everyone follows the rule

Capital Market
Money is gathered and arranged to be invested or allocated

Stock Market
Issuing, buying and selling, or related share activities

Bond Market
Issuing, buying and selling, or related bond activities

Commodity Market
Buying and selling of commodities

Money Markets
Short-term debt financing and investments

Derivatives market
Providing instruments for the management of financial risks

Futures Market
Providing standard forward contracts for trading at future dates.

Forward Market
Providing non-standard and private forward contracts for trading at future dates.

Insurance Market
Providing the redistribution of various risks.

Foreign Exchange Market
Buying and selling of foreign exchange.

OTC
Stands for Over-the-counter. Any trade that is private between two parties by a dealer, without going through a regulated exchange

Example of OTC Transactions: FX trades, non-listed bond & stocks & options, forwards and swaps

Primary Market
New or first allocation of investments before buying and selling activities start

Grey Market
Before actual trading starts. The phase between primary and secondary market.

Secondary Market
Buying and selling or trading after new or first allocation

Liquidity
Being able to buy or sell an investment easily without affecting price movements

ECB (European Central Bank)
The central bank for the eurozone (countries that adopt the Euro as a currency).

DJIA (Dow Jones Industrial Average)
A popular stock market index that tracks 30 large companies listed in the US.

STI (Straits Times Index)
A popular stock index used for Singapore-listed stocks. It is measured using 30 large Singapore companies.

HSI (Hang Seng Index)
A popular stock index used for Hong Kong listed stocks. It is measured using 48 large Hong Kong companies.

S&P 500 (Standard and Poor’s 500)
Another popular stock market index that tracks 500 large companies listed in the US.

Currencies
Money in respective countries

CNY is China currency, SGD is Singapore currency, HKD is Hong Kong currency

Savings
Your money deposited into banks

Loans
Your money in banks being loaned or lent

Asset-Backed / Collateral
Loans backed or secured by recognised assets

Example:
$100 savings in the bank and $100 is being borrowed. 100% backed.
$100 of Gold in the bank and $50 is being borrowed.
Disclaimer: Gold value changes. Generally, savings has higher quality than Gold.

Credit
Borrowing or Lending

Leverage

World Bank
Provides loans to developing countries for infrastructure development. A subsidiary of United Nations. Founded in 1944 Bretton Woods Conference

International Monetary Fund
Promote economic co-operation, trade, employment, stable exchange rate and financial assistance to help with balance of payments (trade deficit). Founded in 1945 by 29 countries

Bretton Woods Agreement
A global system for monetary and exchange rate management, pegging USD to Gold

Developed at the United Nations Monetary and Financial Conference held in Bretton Woods, New Hampshire, from July 1 to July 22, 1944.

United Nations
Global organsiation to promote international co-operation