Glossary
Absolute Return
Absolute return is the return that an asset achieves over a given period and does not compare it to any other measure or benchmark.
Absolute Return Fund
This is a fund aiming to deliver returns in both rising and falling markets, usually with flexibility to use derivatives, short positions, and other securities.
Account Number
The number that a bank or other financial institution gives to a particular account. This number plus the BSB identifies that account.
Account-based pension
Previously known as allocated pensions, these are pensions purchased with superannuation money on retirement.
Accounting Conservatism
Accounting conservatism is a principle that requires company accounts to be prepared with caution such that probable losses are recorded as soon as they are known and gains only recorded when they are fully realised.
Accounting Cycle
The accounting cycle is a process of identifying and recording the accounting events of a company beginning with when a transaction occurs and ending with its inclusion in the financial statements.
Accounting Equation
The accounting equation shows on a company's balance that a company's total assets are equal to the sum of the company's liabilities and shareholders' equity.
Accredited derivatives adviser
A person employed by an ASX Market Participant who has been accredited to advise or make a recommendation to retail clients in relation to exchange traded options and warrants.
Accredited futures adviser
A person employed by an ASX Market Participant who has been accredited to advise or make a recommendation to retail clients in relation to ASX futures.
Accretion
Accretion is the gradual growth of assets and earnings due to business expansion, a company's internal growth, or a merger or acquisition.
accrual revenue
ATO term - Accrual revenue is based on the 'economic transaction method'. It reflects the tax liabilities for the period in which an economic activity actually occurred. This approach facilitates comparison with economic events in the same period.
Accumulation index
An index that measures the movement of both the price and the returns of an index, for example, the movement in a share price and the dividends paid. An accumulation index assumes all returns are reinvested and compounded.
Accumulation Phase
Accumulation phase refers to the period in a person's life in which they are saving for retirement. It is followed by the distribution phase when they are retired and spending the money.
Acid-Test Ratio
The acid-test, or quick ratio, compares a company's short-term assets to its short-term liabilities to see if a company has enough cash to pay its immediate liabilities, such as short-term debt.
Acquisition
An acquisition occurs when one company purchases most or all of another company's shares to gain control of that company.
Acquisition Premium
An acquisition premium is the difference between the estimated real value of a company and the actual price paid to acquire it.
Active investment management
An investment management approach where a fund manager buys and sells investments regularly in an effort to outperform a specific market index.
Activist Investor
An activist investor is an individual who buys a stake in a public company in order to influence how the company is run, such as by obtaining seats on its board of directors.
Administrative financial platform
An online platform used to buy and sell units in managed funds and where you can view a summary of your investments and consolidated information for tax reporting.
AFS Licence
An Australian financial services (AFS) licence given by ASIC which allows people or companies to legally carry on a financial services business, including selling, advising or dealing in financial products.
After-tax super contribution
Money deposited into a super fund after you have paid any tax on it.
Age Pension
A regular, fortnightly payment from the government when you reach pension age.
Aggregated transfer from individual
ATO term - When an individual has a credit - and they are not entitled to receive the super money directly - it is sent from the individual's account to their super fund account.
Aggregated transfer to provider
ATO term - Occurs after aggregation when a client's credits are transferred to a funds or an individual or trustee.
aggregated turnover
ATO term - Another definition of group income is anchored in Division 328 of the Income Tax Assessment Act 1997 (ITAA 1997), which describes small business entities. It differs from the 'total business income' definition. It is generally the annual turnover of the business plus the annual turnover of any business connected to or affiliated with it.
Aggregation
ATO term - At periodic intervals all of a fund's individual member's credits are sent to the super fund along with payment details of each member. This payment to the fund is called an aggregation.
Aggregation to individual
ATO term - When an individual has a credit - and they are entitled to receive the super money directly - it is sent to the individual and not to their super fund account.
AGM
The annual general meeting of shareholders required by law where directors inform shareholders of company performance and future prospects. Shareholders vote on board elections and significant company issues.
Agreed value
Car insurance policies are based on either 'agreed' or 'market' value. An agreed value policy has a set dollar value for your vehicle.
Agribusiness scheme
An investment in livestock, farming, horticultural or forestry projects, usually through a managed investments scheme.
Algorithmic trading
A computerised, rule-based method of executing orders to buy or sell a security.
All Ordinaries Accumulation Index
This is an index measuring the performance of securities in the All Ordinaries index taking into account income as well as share price movement. It assumes dividends are reinvested.
All Ordinaries Index (All Ords)
This is a capitalisation weighted index of the performance of the share prices of the 500 largest Australian companies. It began at 500 points in January 1980.
Allocated pension
These are pensions purchased with superannuation money on retirement, now known as account-based pensions.
Allotment of shares
An allocation of shares in a company following an application or offer to take up the shares. Decisions as to the persons to whom shares are allotted and the number allotted to each, are at the discretion of the directors.
American Depositary Receipts
Negotiable certificates that represent a non-U.S. company's publicly traded equity or debt. Depositary Receipts are legal, US. Securities that trade freely on a major exchange or in the over the counter (OTC) market in U.S. Dollars, pay dividends or interest in dollars, and settle, clear and transfer according to standard U.S. practices. The Depositary Receipt evidences the home market security which trades in a foreign country and it is custodised with a local bank, called the custodian.
American exercise, American style
The Depositary Receipt evidences the home market security which trades in a foreign country and it is custodised with a local bank, called the custodian.
American exercise, American style
Type of option or warrant contract which allows the holder to exercise at any time up to and including the expiry date. Most equity options listed on ASX are American Style. See European exercise, European style.
AMV
Measures the combined market value of all the outstanding shares of a company. For example, a company with 50 million outstanding stock, currently trading at a share price of $1 will have an Aggregate Market Value of $50 mllion.
Annual percentage rate (APR)
The interest rate charged to a borrower, excluding expenses such as account opening and account keeping fees. The APR is the basic cost of your credit as a percentage of the total loan amount. Even one credit card may have more than one APR - one for purchases, one for cash advances and one that is charged if you make late payments. A rate that includes all fees is known as a comparison rate
Annual report
Financial report or statement issued by a publicly listed company to its shareholders. Contains a statement of financial performance, a statement of financial position, a statement of cash flow, as well as notice of the Annual General Meeting (AGM) and business resolutions to be discussed.
Annual yield
Also known as dividend yield, it represents the dividend return from an investment. Calculated by dividing the dividend per share by the share price, converted to a percentage. Yield = (Dividend per share / Last market price) x 100.
Annualised return
Return or profit, expressed on an annual basis, that the writer of the option contract receives for buying the shares and writing that particular contract. See buy and write.
Annuity
An investment, purchased with a lump sum that guarantees to pay a set income for either an agreed number of years, or for life. Generally, your money is locked away for a fixed period or for life, though some annuities allow early withdrawals or for a 'residual capital value'. There is no capital left at the end of the specified period. The income payments may be indexed each year, often in line with inflation. Some annuities allow for reversionary beneficiaries.
Approved financial product
Financial Product approved under Section 8 of the ASX Settlement Operating Rules.
AQUA market
Market for the trading of products that can be quoted under the AQUA Rules. Products are third-party issued products that give investors exposure to an underlying asset or set of assets, but where the value of the assets is not under the control of the issuer. The value of the product is linked to the performance of the underlying assets rather than the financial performance of the issuer itself.
Arbitrage
Simultaneous buying and selling of the same or equivalent securities in different but related markets. Purpose is usually to profit from price discrepancies.
ARITA
The Australian Restructuring Insolvency & Turnaround Association is an organisation in Australia for insolvency professionals
Articles of association
Formerly, the rules adopted by a company when it formed that governed the company's internal affairs and other matters affecting the shareholders and the company. These matters are now dealt with in the company constitution.
As at date
Date at which the relevant information is recorded.
ASFA Retirement Standard
The Association of Superannuation Funds of Australia's (ASFA) estimate of how much money you'll need in retirement, depending on your lifestyle.
Assessed value payment
If you hold in the money deliverable warrants but do not exercise them before or at expiry you may be entitled to a cash payment, often called an 'Assessed Value Payment' (or AVP).
Asset
Any property owned by a person or company, including tangible and intangible assets
Asset allocation
Proportion of total capital invested in the different asset classes like shares, property, fixed interest or cash..
Asset backing
Net assets of a company (in $) / number of issued shares. For example: XYZ Ltd with $100,000 net assets and 10,000 shares issued has an Asset Backing of $10.00 per share.
Asset manager
A person or company that manages an investment on behalf of others.
Assignment
Random allocation by ASX Clear to a writer of an exchange traded option exercise obligation. This is carried out by ASX Clear.
Associated company
One company may be associated with another company if certain types of arrangements exist between the two bodies. Companies may also be considered to be associated when one company has an equity interest in the other.
ASX (Australian Securities Exchange)
ASX is a multi-asset class, vertically integrated exchange group that functions as a market operator, clearing house and payments system facilitator. It oversees compliance with its operating rules, promotes standards of corporate governance among Australia's listed companies and helps educate retail investors.
ASX Clear (Futures) or ASXCLF
The clearing facility and central counterparty (CCP) for futures and options in interest rate, equity, energy and commodity products that are traded on ASX Trade24. ASX Clear (Futures) also offers clearing services for certain OTC (over the counter) and block trading related transactions.
ASX code
Unique code used to identify listed companies.
ASX International Services Pty Ltd
Wholly owned subsidiary of the Australian Securities Exchange Limited that executes and settles sales and purchases of participating international securities on behalf of the broker.
ASX Settlement and Transfer Corporation (ASTC)
ASTC is now known as ASX Settlement Pty Limited. It is licensed as a Clearing and Settlement Facility under the Corporations Act.
ASX Settlement Pty Limited
ASX Settlement Pty Limited is licensed as a Clearing and Settlement Facility under the Corporations Act.
ASX Trade
Screen based trading system used for the trading of cash market equities, exchange traded options, interest rate securities and warrants. ASX Trade is a NASDAQ OMX ultra-low latency trading platform based on NASDAQ OMX's Genium INET system.
ASX Trade24
24 hour trading platform for products including including futures and options contracts listed over Treasury Bonds, bank bills, cash rates, S&P/ASX Equity Indices, energy and commodities as well as ASX Listed CFDs.
ASX200
The ASX200 is a stock market index that measures the performance of 200 largest companies, by market capitalisation, listed on the Australian Securities Exchange.
At-the-money
Option or warrant with an exercise price equal to the current market price of the underlying asset.
ATO-initiated amended entitlement
ATO term - After we make a payment, individual tax return or income details may change - super funds may also send updated details. These events can change how we calculate entitlements and this may result in an increase or reduction in a previous payment calculated.
Australian Bureau of Statistics (ABS)
The statistical agency of the Australian Government. The ABS provide statistical information on a wide range of economic, environmental and social issues. This assists and encourages informed decision-making, research and discussion within governments and the community.
Australian Clearing House (ACH)
ACH is now known as ASX Clear Pty Limited. It is a subsidiary of ASX which clears options and futures traded on ASX.
Australian financial services licence (AFSL)
Australian Financial Services Licence that allows people or companies to legally carry on a financial services business, including selling, advising or dealing in financial products.
Australian Government Bond
Bonds issued by the Commonwealth Government which are direct, unconditional, unsubordinated and irrevocable obligations of the Australian Government.
Australian Government Bonds traded on ASX
The holder of an Australian Government Bond (CGB) traded on ASX has beneficial ownership of an Australian Government Bond in the form of a CHESS Depository Interest (CDI). The holder of an AGB traded on ASX obtains all the economic benefits (including payments) attached to legal ownership of the Australian Government Bond over which the CDI has been issued.
Australian Government guarantee on deposits
Refers to the Financial Claims Scheme (FCS) which provides protection to depositors of up to $250,000 per account-holder per authorised deposit-taking institution (ADI) (bank, building society or credit union) in the event of the ADI failing.
Australian National Accounts
Economic statistics produced by the ABS on income, expenditure and production in the economy.
Australian Prudential Regulation Authority (APRA)
The prudential regulator of the Australian financial services industry. It oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance companies, friendly societies, and most of the superannuation industry. APRA is responsible for ensuring Australia has a stable, effiecient and competitive financial system. It also provides statistics on the Australian financial sector.
Australian Real Estate Investment Trusts (A-REITS)
Australian Real Estate investment Trusts (see REITs)
Australian Securities and Investments Commission (ASIC)
The Australian Federal Government agency that enforces laws relating to companies, securities, financial services and credit, in order to protect consumers, investors and creditors.
Authorised capital
Amount of share capital which a company is permitted to issue. Also called nominal capital. See issued capital, uncalled capital, and paid-up capital.
Authorised deposit-taking institution (ADI)
Corporation authorised under the Banking Act 1959. Includes banks, building societies and credit unions.
Automatic exercise
Exercise by ASX Clear of an in the money option at expiry. Requires the client account to be pre-set to automatic exercise by the client's broker.
Average daily volume
Typical trading activity for a day. Calculated by the annual volume divided by the total number of working days in that year.
avoidance
ATO term - Tax avoidance occurs when taxpayers exploit the tax laws to gain an advantage. Such transactions generally serve no commercial purpose and are entered into merely to obtain a tax benefit that was not intended by parliament. The extent to which tax avoidance is included in the tax gap depends on whether it is contestable.
Aware
An entity becomes aware of information if a director or executive officer (in the case of a trust, a director or executive officer of the responsible entity or management company) has, or ought reasonably to have, come into possession of the information in the course of the performance of their duties as a director or executive officer of that entity.
Backwardation
Where futures market prices are progressively lower in the future delivery months than in the nearest delivery month. For instance, if the wool quotation for March is 480/kg and that for July is 450/kg then the backwardation for five months against March is 30/kg. Opposite of contango.
Balanced fund
A fund that invests across a mix of asset classes like cash, fixed interest investments, property and shares.
Bank bill swap rate (BBSW)
The central benchmark interest rate in Australian financial markets at which banks will lend to each other (via bank bills) for periods of 6 months or less.
Bankruptcy
An insolvency procedure that applies to a natural person, not to a company
Barriers/barrier level
Defined level that causes some event to occur in relation to a warrant. The disclosure document will provide details.
Basis point
One per cent of one per cent (0.01%).
Basis risk
Risk that movements in the price of an asset do not correlate exactly with movements in the price of the underlying financial instrument or commodity.
Bear market
When prices are falling and further falls are expected.
Bearish
View that prices will fall.
Benchmark
Yardstick that a fund manager compares the performance of their fund to, such as the All Ordinaries Index which may be used as a benchmark for Australian shares.
Beneficiary
Someone who will receive a benefit or asset in the event of the owner's death. Beneficiaries of a super fund are the members, and their dependants (if the member dies).
Beta
Measure of how changes in a share price correlate to overall movements in the share market as a whole.
Bid
Price at which someone is prepared to buy shares Opposite to offer.
Bid-ask spread
The difference between the bid price and the ask price for shares or other assets is called the spread. You cross the spread when making an offer to buy at the ask price, which is higher than other buyers have bid. You can also cross the spread when selling at the bid price, which is lower than what other sellers have asked.
Binding death benefit nomination
Where the superannuation fund, in the event of your death, must pay your superannuation benefit to your nominated beneficiary, unless it would be unlawful to do so.
Block trade
Off-market trading mechanism enabling market users to arrange and transact orders of significant size in specified contracts.
Blue chip
Larger companies with a long history of profitability and stability.
Blue chip share
A share in a well-established company with a record of stable earnings over a long period, typically a market leader or among the top companies in its sector.
Board of directors
Elected body or persons formed to control the planning and implementation of corporate objectives.
Bond
A tradeable debt security, usually issued by a government or semi-government body to raise money. Holders of the bond have lent money for which they receive a fixed rate of interest over a set period of time. The bond is repaid with interest on the predetermined maturity date. Bonds can be traded on the sharemarket.
Bonus dividend
An extra dividend in addition to the normal dividend. See bonus share/bonus issue.
Bonus share plan
Usually a plan whereby shareholders may elect to receive all or a portion of the dividend in shares instead of cash.
Bonus share, bonus issue
Additional shares issued by the company to existing shareholders for free, usually in a pre-determined ratio to the number of shares already held.
Books close date
Date at which a company's share-register is closed off to identify the shareholders and to calculate any entitlement to new issues and dividends.
Borrowing costs
Interest and other costs incurred by an entity in connection with the borrowing of funds.
bottom-up approach
ATO term - A detailed examination of specific data sources (typically individual tax returns through audit or review) to determine the extent of non-compliance across the whole population. Data sources can range from tax returns, audit data, risk registers or data matching. It includes random enquiries, operational data, statistical approaches and model-based methods. These methods are typically used for direct taxes.
Break
Sharp decline or a sharp rise in price, usually after a sustained period of little or no movement.
Break fee
You may be charged a 'break' fee if you break your fixed rate mortgage.
Bridging finance
Short-term finance that covers the period between buying a new property and selling your existing property.
Broker
Trader or trading company given responsibility for the acceptance and/or execution of an order.
Brokerage
Fee paid to a stockbroking firm for buying or selling of shares.
BSB
A number that identifies a specific branch of a bank or other financial institution within Australia. The BSB number plus an account number identifies a particular account.
Building society
Community-based financial institution usually owned by its members that offers traditional banking services like savings accounts and loans, listed on the APRA website as a building society. Also called a mutual building society. See also credit union
Bull market
When prices generally are rising and further rises are expected.
Bullish
View that prices will rise.
business activity statement (BAS)
ATO term - The form lodged by businesses on a monthly, quarterly or annual basis to report certain tax obligations, including pay as you go (PAYG), fringe benefits tax (FBT), luxury car tax (LCT), wine equalisation tax (WET), and goods and services tax (GST).
Business cycle
Also known as the economic cycle. The rise and fall of the economy, from a peak, or boom, to a trough and back to a peak.
Business day
Monday to Friday inclusive, except New Year's Day, Good Friday, Easter Monday, Christmas Day, Boxing Day, and any other day that ASX declares is not a business day.
Business rules
The ASX Market Rules govern the operations and behaviour of Market Participants of ASX and Affiliates. The Market Rules set out the requirements to become a Market Participant (commonly referred to as 'stockbroking organisations') and an Affiliate. The ASX Settlement Operating Rules govern the operation of CHESS, the electronic transfer and settlement system, and the CHESS sub-register.
Buy and write
Strategy requiring the simultaneous purchase of underlying securities and the writing of call options over those securities representing the same number of those securities.
Buy back
Offsetting purchase to "cover" or liquidate a short sale. Also refers to when a company repurchases existing shares to reduce the number of shares on issue.
Buy on open
To buy at the beginning of a trading session at a price within the opening price range.
Buyer advocate
Is a person or organisation paid a fee to work on behalf of a buyer to evaluate and negotiate a property purchase.
Call
No Liability (N.L.) and sometimes Limited Liability (Ltd.) companies have shares that are not fully paid. A call may be made for the payment of part, or all, of this outstanding capital. Holders of shares in N.L. companies may choose not to pay the call and forfeit their shares, hence the name No Liability. Holders of shares in Limited Liability companies cannot forfeit the shares and are legally obliged to pay a call. See contributing share.
Call option/warrant
Option / warrant contract which gives the holder the right, but not the obligation, to buy the underlying asset at the exercise price at or before a fixed expiry date.
Cap
Defined level which limits the upside potential of an investment product.
Capital
For individuals, the money or other assets owned for the purpose of investing. For a company, the funds received from owners or investors to further its business objectives.
Capital depreciation
A decrease in the value of a capital asset.
Capital gain
The difference between what you paid for an asset (including buying costs) and what you got when you sold it (less selling costs).
Capital gains tax
Tax on the profit from the sale of capital assets such as shares or property.
Capital gains tax event
An event such as sale of shares, issue of a loss declaration or cancellation of shares that is recognised by the Australian Tax Office as an event that crystallises a capital gain or loss.
Capital growth
Increase in the value of an asset such as an investment in shares.
Capital guarantee
A product where investors are protected against significant loss of the amount invested. Can contain clauses and performance hurdles that limit the protection. Also called capital protection.
Capital loss
When the proceeds from the sale of a security are less than the cost of the investment.
Capital protected warrants
Warrants where the issuer promises that the investor gets back at least a certain value set out by the issuer.
Capital stable fund
A fund that invests across a range of asset classes but with a significant portion in defensive assets such as fixed interest investments and cash and a small portion in growth assets such as shares and property. This type of fund aims to provide a moderate level of income with some capital growth.
Cash
Currency, coins, cheques, and balances in bank accounts - a current asset.
Cash advance
Cash withdrawn from a credit card account. A transaction fee is usually charged, as well as interest.
Cash commodity
Actual physical asset underlying a futures contract. Sometimes called "spot commodity".
Cash covered
Derivatives position, such as a written option contract, where the option writer meets their margin obligations with cash.
Cash extraction
Strategy where investors apply with their shares to receive a similar amount of instalment warrants plus a cash payment. Not available to self-managed superannuation funds.
Cash investments
Money invested in short-term, interest-paying investments. Having money in a bank account is an example of a cash investment
Cash issues
New issue of shares for cash made to existing shareholders in proportion (e.g. 1 new share for every 2 shares held) to their existing shareholding for the purpose of raising additional capital for the company. It is usually issued at a discount to the market price.
Cash management account
A transaction account used to receive cash from investments such as dividends or proceeds of sales, and from which new investments are purchased.
Cash market
The market for securities and physical commodities. Often referred to as the underlying market.
Cash out facility
Offered by many retailers such as supermarkets, where you can take out extra cash from your cheque or savings account when you pay for purchases with your debit card
Cash price
Price in the market place for actual cash or spot commodities to be delivered via customary market channels.
Cash rate
The interest rate charged on overnight loans between banks. The Reserve Bank of Australia (RBA) sets a target cash rate in order to control monetary policy.
Cash settled warrant
A warrant for which settlement obligations are met by payment of cash from issuer to holder, rather than the purchase or sale of an underlying asset.
Cash settlement
Where settlement is completed by a cash payment rather than sale of an underlying asset.
Caveat
In relation to property law, a caveat is a legal notice that shows who has an interest in your property. You can't register a dealing (for example, to sell the property) until all caveats are removed or you get the consent of any people who hold a caveat. To put a caveat on your property or remove a caveat, contact your state's Land Titles Office.
CDIs CUFS and DIs
A CHESS Depository Interest (CDI) is a financial product quoted on the Australian Securities Exchange which confers a beneficial interest in the foreign financial product to which it relates. CDIs are a type of depository receipt. There are two types of CDIs, CHESS Units of Foreign Securities (CUFS); and Depository Interests (DIs).
Centre Point
ASX trade matching facility for anonymous execution at the prevailing midpoint of the best bid and offer in ASX TradeMatch.
Certificated sub-register
That part of an Issuer's register for a class of its securities that is administered by the Issuer and records legal title to securities through a paper certificate in that class. Note: The register may be of shares, options or other securities.
Chargeback
A return of funds from a retailer or service provider to a consumer's bank account, line of credit or credit card, often initiated by the consumer's bank.
Charting
See technical analysis.
CHESS
ASX's Clearing House Electronic Sub-Register System which is ASX's settlement system and central register for electronic transfer of share ownership and associated cash payments.
CHESS sub-register
That part of an Issuer's register for a class of Approved Financial Products that is administered by ASX Settlement and records legal title to Financial Products through uncertificated holdings in that class. Note: The register may be of shares, options, managed investments or other financial products that are Approved Financial Products under the ASX Settlement Operating Rules.
Child
ATO term - The term 'child' refers to a type of form used by the ATO that has both a 'parent' and 'child' section. It is used when information on the form relates to more than one client. The 'parent' section relates to a super fund while the 'child' section relates to the fund member.
Churning
The process of moving a customer from one financial product to another in order for an adviser or broker to earn a fee. This practice usually has little or no benefit to the customer.
Circulating asset
Assets (e.g. trading stock, debtors) that a company is usually able to use, dispose, and deal with in the ordinary course of business without the need to obtain the secured creditor's consent
Circulating security interest
A security interest held by a secured creditor in circulating assets of a company. Previously known as a 'floating charge'
Class
Securities are in the same class only if the same rights and obligations attach to them. Differences arising from the requirements of the listing rules relating to restricted securities are to be ignored. Example: Partly paid securities are in a different class to fully paid securities. Fully paid securities that rank equally except for the next dividend or distribution are in the same class (but may be traded separately until they merge with the other shares in the class). Fully paid ordinary securities classified as restricted securities are in the same class as fully paid ordinary securities that are not classified as restricted securities.
Class of options
Option contracts of the same type - either call options or put options - covering the same underlying instrument/underlying security.
Classified asset
Asset of a kind referred to in paragraph (a) of the definition of restricted securities in ASX Listing Rules.
Clearing
The process of matching, registering and guaranteeing transactions.
Clearing account
Either an accumulation account (a holder record maintained in CHESS by a broker to facilitate settlement of CHESS approved securities with clients who are not participants) or a settlement account (a holder record maintained in CHESS by a participant non-broker to facilitate settlement of CHESS approved securities with other participants).
Clearing house
Either ASX Clear or ASX Clear (Futures) depending on the instrument.
Clearing participant
Participant of ASX Clear to whom fulfilment of all contracts, registered in their own names, is guaranteed.
Clearout
A clearout occurs when your lender has not been able to get in touch with you, despite making reasonable efforts to contact you.
Closed end fund
Fund that has a fixed number of shares or units on issue.
Closing out
To liquidate a position by taking an equal and opposite position, e.g. a trader who has bought a futures contract, would close out, or get out of the contract, by taking out a contract to sell.
Closing purchase
Trade that liquidates an investor's written position.
Co-borrower
A person who borrows money jointly with you. Each person is responsible for the loan, so if one of you does not pay, the other person must pay the full amount.
Co-cons
ATO term - Co-contributions - A payment made by the government to boost super savings of an individual who has made eligible personal contributions to their super.
Co-contribution
A payment made by the Government to the super fund of a low or middle income earner to reward them for making personal contributions to super. If you earn less than $37,697, the Australian Government will contribute $0.50 for every $1.00 of after-tax super contribution you make, up to a maximum of $500.
Cold call
An unexpected call or visit by an unknown person, trying to sell something.
Collateral
Property or assets you put up as security for a loan.
Collateralised debt obligations (CDO)
A bundle of individual loans such as car loans, credit card debt or corporate debt put together and sold as a single investment
Collectables
Items that are rare or in demand and may increase in value over time. Examples include artwork, antiques, coins and wine.
Commission
A fee paid to an adviser or salesperson as an incentive for selling a particular product. An upfront commission is based on the sale amount of the product. An ongoing commission is based on the balance of the account.
Committee of inspection
A small group of creditors, or their representatives, appointed by the creditors of a company in external administration to assist and advise the external administrator. The committee of inspection monitors the conduct of the external administration, may approve certain steps in the administration and may give directions to the external administrator. The external administrator must have regard to, but is not always required to comply with, such directions
Commutation
Process of converting part or all of a pension or annuity into a lump sum.
Company name
Complete name of listed company, as reported to the Australian Securities Exchange.
Company options (exchange traded options)
Right to take up certain securities on specified terms within or at a specified time.
Company secretary
Person required to be appointed under the Corporations Law and usually having the responsibility for all the record-keeping within the company.
Comparison rate
A rate that helps you work out the true cost of a loan. It includes the interest rate, and most fees and charges relating to a loan, reduced to a single percentage figure.
compliance
In accordance with established legislation and the intent and spirit of the laws and regulations.
compliance activities
ATO term - Direct interventions we initiate to ensure taxpayers comply with their tax and superannuation obligations.
Compound interest
Interest paid on the initial principal and the accumulated interest on money borrowed or invested.
Comprehensive insurance
Cover that provides the policy holder with broad protection. For example, comprehensive car insurance will cover loss or damage to your car and any damage you may accidentally cause to other people's property.
Compromise
Agreement to accept a lower amount in full payment of a debt
Concessional super contributions
Concessional super contributions are payments put into your super fund from your pre-tax income and are tax deductable for self-employed people. They include your employer's super guarantee (SG) contributions.
Condition of release
A nominated event you must satisfy to be able to access superannuation savings. Examples include permanently retiring from the workforce after reaching preservation age, reaching age 65 or becoming totally and permanently disabled.
Confirmation
Written document confirming a transaction between two dealers or a broker and a client which details the costs, type and quantity of shares traded. Also known as a 'Contract note'.
Conflict of interest
A situation in which someone in a position of trust has competing professional and personal interests which could make it difficult for them to remain impartial.
Conservative
Style of investing that seeks to achieve stable returns.
Construction loan
A type of home loan for people who are building their own home.
Consumer credit insurance (CCI)
Insurance that covers you if something happens that affects your capacity to meet the payments on your loan. CCI usually covers risks such as illness, death, disability or involuntary unemployment.
Consumer lease
A consumer lease is an agreement where you get a hire an item (eg tv, fridge, washing machine), receive the item straight away and make regular payments until the term of the agreement finishes. At the end of the agreement term you will have paid more than the purchase price of the goods. These agreements might also be known as a rent to own, rent to buy agreement.
Consumer price index (CPI)
Records the change in purchasing power by measuring changes, over time, in the weighted average price of consumer goods and services such as food, transport and medical care. It represents consumption expenditure by households in Australian metropolitan areas.
Contango
Situation in which futures market prices are progressively higher in the future delivery months than in the nearest delivery month. Contango is the opposite of backwardation.
Contingent asset
An asset that might arise if a certain event occurs (e.g. current legal action taken by a company may result in an asset if the company wins the case)
Contingent liability
A liability that might arise if a certain event occurs (e.g. a current legal action against a company may result in a liability if the company loses the case)
Contract interest
Contract interest is paid daily by holders of long positions and received daily by holders of short positions in ASX CFDs. The Contract Interest Rate is fixed to the target overnight cash rate as determined by the Reserve Bank of Australia.
Contract month
Month in which delivery or cash settlement is to be made in accordance with a futures, options or warrant contract.
Contract multiplier
Number used to determine the dollar value of an index future, option, warrant or CFD contract.
Contract note
Written document confirming a transaction between two dealers or a broker and a client which details the costs, type and quantity of shares traded. Also known as a 'Confirmation'.
Contract size
The number or quantity of the underlying represented by a futures, options or warrant contract.
Contract unit
Amount of the underlying asset to which the contract refers.
Contract value
Value or worth of a contract at the time of making that contract.
Contracts for difference (CFD)
Leveraged instruments that enable you to gain exposure to shares, indices and commodities. Traders can take positions on both rising and falling markets. Profits and losses are magnified. Both long and short positions are exposed to potential margin calls.
Contributing share
Shares that have been partly paid for. At a future date the shareholder will be required to pay the balance outstanding, unless the company is a no liability company in which case shares can be forfeited instead.
Contributory
A shareholder might be liable to contribute toward a company's debt in a liquidation if their shares are not fully paid
Controller
Person who, in ASX's opinion, has a substantial interest in the equity of the holder of, or a substantial economic interest in, restricted securities and each intermediate entity through which that interest occurs.
Controller
A person appointed by a secured creditor to deal with assets subject to a security interest. This includes a receiver and a receiver and manager
Controllership
When a person appointed by a secured creditor to deal with assets subject to a security interest, is dealing with a company's assets that are subject to that person's control (i.e. an appointment of a controller)
Convergence
Process whereby the price of a derivative contract aligns with the price of the underlying financial instrument or commodity. This usually occurs at maturity.
Conversion ratio
Number of warrants that must be exercised to require the transfer of the underlying instrument.
Convertible debt security
Unsecured note or debenture that is classified as an equity security because it is convertible into an equity security.
Convertible note
Loan made to a company at a fixed rate of interest with the right to be either redeemed (i.e. repaid by the company) for cash or converted into ordinary shares at a predetermined date or within a certain period.
Convertible securities
Bond or other debt instrument that can be exchanged for shares of the issuer.
Conveyancer
A conveyancer helps you meet all legal requirements involved with purchasing your home. They'll handle most of the paperwork and questions you have about the process. They review and explain the terms and conditions of the contract.
Cooling-off period
A period of time in which you can get out of a contract for the purchase of goods or services, if you change your mind. The rules on cooling-off periods vary between states and territories. Details of a cooling-off period will be included in the contract, if the good or service has one.
Corporate action
Action taken by an entity for the purpose of giving an Entitlement to Holders of a class of the entity's securities. Examples of corporate actions include rights issues, bonus issues, dividends or other payments, or offers under a buy- back scheme.
Corporate bond
A debt security issued by a company to investors to raise money to finance its business activities. Sometime called fixed-income securities because the issuer promises to pay a specific amount of interest on a regular basis and repay the principle on a set date.
Corporation
A corporation includes all bodies corporate and certain types of unincorporated bodies, but excludes certain corporate bodies.
Corporations law
The national scheme of Australian legislation dealing with the regulation of companies and the securities and futures industries.
Cost of carry
Cost factored into the pricing of derivatives instruments (excluding CFDs). It reflects the cost of holding the underlying over the life of the contract, less the amount that the contract holder would receive in income from the underlying, such as dividends, during this time.
Coupon
Interest payment paid at regular intervals by the issuer to owners of Interest Rate Securities.
Coupon rate
The annual interest rate on a bond, paid by a bond issuer, relative to the face value of the bond.
Court liquidation
A liquidation that starts as a result of court order, made after an application to the court, usually by a creditor of the company
Cover
To cancel a short position in an asset by the purchase of an equal quantity of the same asset. Also known as short covering.
Covered warrant
Warrant issuer places the securities of an underlying warrant in a trust or other custodial arrangement. See also fully covered warrant.
Credit allowed for stale refund cheque
ATO term - After 15 months, a cheque that has not been presented, replaced or cancelled will be pronounced stale. The amount of the cheque will be credited back to a client's account.
Credit card
A plastic card that gives you access to money the bank has agreed to lend you for a certain period of time.
Credit contract
A document that contains the details of a loan, including the term interest, rate, fees and charges, and repayments. Credit providers must provide you with a credit contract.
Credit file
A file kept by a credit reporting agency that shows your credit history. Lenders access the information in your file to help them decide whether to lend to you.
Credit guide
Anyone engaging in credit activities (for example, by providing credit or credit assistance to you) must give you a credit guide. A credit guide will contain information about the lender, such as their licence number and external dispute resolution(EDR) scheme membership. It will also include the sort of costs you might pay if you take a loan from the lender.
Credit interest
ATO term - The ATO pays interest if we are late paying contributions to the super fund. The transfer is late if it occurs more than 60 days after we have all the relevant information required to calculate the entitlement. Interest will also be applied to most USM claims paid after 1 July 2013.
Credit limit
The maximum amount a bank will lend you under a loan or a credit contract.
Credit offset
ATO term - A credit which has been offset against another debt.
Credit rating
An assessment of the credit-worthiness of individuals and corporations, based on their borrowing and repayment history.
Credit report (credit reference)
A report that details your credit history, including every time you have applied for credit or defaulted on a repayment. It is held by a credit reporting agency and a lender must ask you for permission to get this report.
Credit reporting agency
An organisation that collects and sells credit information on individuals and companies.
Credit transferred in from superannuation
ATO term - Occurs when a payment has been transferred from another ATO account into a customer's super co-contribution account.
Credit union
Community-based financial institution owned by its members that offers traditional banking services like savings accounts and loans, listed on the APRA website as a credit union. See also building society
Creditor
A person who is owed money
Creditor-defeating disposition
The disposition of property for less than the market value of the property or the best price reasonably obtainable, and which prevents, hinders or significantly delays the property from becoming available to benefit creditors in the winding up.
Creditors' trust
A separate legal arrangement to deal with creditor claims. Creditor claims are often transferred to a creditors' trust as part of a deed of company arrangement
Creditors' voluntary liquidation
A liquidation for insolvent companies, initiated by the company's director(s) and shareholders
Critical Information Summary (CIS)
A document supplied by a telecommunications provider that contains information about what you will pay and what you will get for your money. The information is presented in the same way so you can easily compare one provider's price and service with others.
Crossed trade
Where both the buy and sell parties (unrelated entities) are from the same market participant.
Cum (general)
Meaning "with". Cum dividend means that shares are being traded with the current dividend attached and thus the buyer rather than the seller receives the dividend declared. Cum-Rights Shares quoted "cum-rights" entitle the buyer to participate in a New Issue of shares then current.
Cum-dividend
Cum means 'with'. Shares quoted cum dividend entitle the buyer to the current dividend. The price of the shares will usually reflect the amount of the dividend. Similarly, shares 'cum rights' entitle the buyer to participate in the new issue of shares. The opposite is ex-dividend.
Cumulative preference dividends
Dividends on preference shares that accrue as a commitment of the company if they are not paid in any year. Arrears of cumulative preference dividends must be paid before any dividends are paid to ordinary shareholders. Unless specifically stated to be non-cumulative, dividends on all preference shares are deemed to be cumulative.
Currency risk
The risk that the value of your investments will be affected by changes in foreign currency exchange rates.
Currency warrants
Give holders exposure to movements in two different currency exchange rates.
Current assets
Cash or other assets of the entity that would in the ordinary course of operations of the entity be consumed or converted into cash within twelve months after the end of the last financial year of the entity.
Current delivery (month)
The derivatives contract which matures and becomes deliverable during the present month; also called the spot month.
Current liabilities
Obligations that are expected or could be required to be discharged on demand or within twelve months. In a company's annual report, this figure shows the amount of debt due to be repaid within twelve months.
Current ratio
A measure of liquidity that shows a company's ability to pay its short-term debts.
Current Ratio = (Current assets / Current liabilities) = number of times covered
Daily settlement price
The official daily quotation for each option contract available for each delivery or cash settlement month as determined by the Exchange for the purpose of margining by the Clearing House.
Day orders
Orders which automatically expire at the close of the day's trading if not filled during the day on which they are received.
DCS
ASX Clear operates the Derivatives Clearing System (DCS) to clear and settle equity-related derivative products.
Death benefit
A payment made from a super fund to a beneficiary when you die. For example, from a super fund or insurance policy.
Debenture
Loan to a company at a fixed rate of interest and for a fixed term, usually one to five years. The debenture is secured by a trust deed over an asset, or assets, of a company.
Debenture
A document acknowledging that a company undertakes to repay a sum of money lent to the company by the holder of the document
Debenture
A medium-term investment issued by a company where investors lend them money in exchange for a regular and fixed interest amount for the term of the investment. The invested funds (principal) are repaid at the end of the term (maturity) and are usually secured by tangible property. They may be offered at call or for a set period.
Debenture trustee
The debenture trustee undertakes a range of functions on behalf of debenture holders, including acting as a liaison between the issuer company and the debenture holders
Debit card
A plastic card that gives you access to your bank accounts via ATM and EFTPOS.
Debt agreement
A legal agreement for the repayment of unpaid debts that is less formal and intrusive than bankruptcy. The agreement is between you and all of your unsecured creditors and allows you to pay back your debts over an extended period of time at an amount per week you can afford.
Debt consolidation
When several loans are combined into one, with the aim of reducing repayments. Also known as loan consolidation.
Debt funding/finance
Process of financing through issuing debentures or bonds; or increasing other liabilities to finance operations. Alternative to equity funding.
Debt investment
Comprises cash and fixed interest investments. You lend money to an organisation in return for interest payments. The company you lent to now owes you or is indebted to you.
Debt security
As defined in the Listing rules
Debt to equity ratio
Relationship between funds provided by borrowing and funds provided by shareholders. The debt to equity ratio shows to what extent a company is financed by debt (also called the gearing or leverage ratio). Debt to equity ratio = (total debt / shareholder equity) x 100
Debtor
A person who owes a debt
Declaration of indemnities
A declaration that must be provided to creditors by a voluntary administrator or a liquidator in a creditors' voluntary liquidation informing creditors about any indemnities given to the voluntary administrator or liquidator to cover fees or other debts incurred by them in acting as a voluntary administrator or a liquidator of the company. The declaration provides information to allow creditors to decide whether they wish to replace the voluntary administrator or liquidator over concerns about independence
Declaration of loss
A declaration by registered liquidators, pursuant to Section 104-145 of the Income Tax Assessment Act, that they have reasonable grounds to believe there is no likelihood that shareholders will receive any distribution for their shares.
Declaration of relevant relationships
A declaration that a voluntary administrator or a liquidator must provide in a creditors' voluntary liquidation informing creditors about certain relationships. The declaration provides information to allow creditors to decide whether they wish to replace the voluntary administrator or liquidator over concerns about independence
Deed administrator
The external administrator appointed to oversee a deed of company arrangement
Deed of company arrangement
A binding arrangement between a company and its creditors governing how the company's affairs will be dealt with. It may be agreed as a result of the company entering a voluntary administration. It aims to maximise the chances of the company, or as much as possible of its business, continuing, or to provide a better return for creditors than an immediate winding up of the company, or both
Default fee
An amount of money that you may be charged if you fail to make a repayment when it is due on a loan or credit card.
Defensive asset
Cash or fixed interest investments that are generally low risk and less volatile than growth investments.
Deferred delivery
Shares quoted "dd" are the result of a reconstruction of the company's share capital where shareholders have surrendered old scrip to the company but the company has yet to issue new scrip. Shareholders who wish to sell must do so on a "dd" basis so buyers know that they cannot yet expect delivery of scrip.
Deferred establishment fee
A fee charged by a lender when a loan is paid off before a set period has elapsed e.g. 3 years. Also known as an exit fee. It's to cover the costs the lender incurred in setting up the loan.
Deferred payment
A debt that can be paid off at some time in the future.
Deferred settlement
Settlement in which the obligation to settle on a trade date plus two (2) business days (T+2) basis is deferred until the time following the despatch date that ASX fixes.
Defined benefit fund
A super fund where your retirement benefits are calculated by a predetermined formula. Retirement benefits are usually calculated using your average salary over the last few years before you retire and the number of years you worked in the company or public service. In general, market fluctuations have limited effect on the value of your benefit, although in periods of prolonged economic downturn, your defined benefits could be affected. If the fund performance is poor, the trustee will generally ask an employer to help pay member benefits as required.
Delisted
When a company is removed from the Official List and its shares are no longer quoted.
Deliver not enforceable
Securities quoted as "del" are the result of a new issue for which CHESS statements have not yet been issued.
Deliverable types
The actual types or grades of the underlying asset which may be delivered in settlement of a futures contract for which the underlying is a commodity.
Deliverable warrant
Settlement of a warrant by transfer of the underlying asset rather than by payment of cash.
Delivery
The tender and receipt of the underlying physical asset, or warehouse receipts covering such commodity, in settlement of a futures contract.
Delivery month
Specified month during which actual delivery of the physical asset may be made under the terms of a futures contract.
Delta
Measure of the sensitivity of an option or warrant price to movement in the price of the underlying asset.
Dependant
A person who relies on you for financial support e.g. children under 18 or your non-working spouse.
Deposit bond
Can be used in place of a deposit when a buyer exchanges contracts on a property. It guarantees that the buyer will pay the full deposit by an agreed date.
Depreciation
A decrease in the value of an asset.
Deregistered company
A company that is struck off the register of companies by ASIC and ceases to exist as a legal entity.
Derivative
Instrument that derives its value from an underlying instrument (such as shares, share price indices, fixed interest securities, commodities, currencies etc). General usage includes futures, exchange-traded options, contracts for difference and warrants. Often involves leverage. Corporations Act characterisation may differ from general usage for example some warrants are not classified as derivatives under the Corporations Act.
Direct debit
A payment collection method that allows loan or service providers to draw money from your bank account on a regular basis.
Direct market access (DMA)
Where a Market Participant gives their clients the ability to submit orders to the Participant, which then routes the orders through its internal systems and controls and onto the trading platform.
Director
A natural person appointed as a director of a company who is then responsible for directing and managing the affairs of a company. This also includes a shadow director
Discount
When a derivative is trading at a price less than its fair value. With futures, sometimes used to refer to the price differences between futures of different delivery months, as in the phrase "July at the discount to May", indicating that the price of the July future is lower than that of May.
Discretionary account
An investment account for which an authorised adviser makes investment decisions on behalf of the client in accordance with the adviser's authority.
Dispute resolution
A way to resolve issues instead of going to court. All Australian Financial Services (AFS) licensees, banks and other credit providers must belong to a dispute resolution scheme.
Distribution
Payment to unit holders of a fund out of the profits of the fund. These are allocated on a per unit basis.
Distribution from employer
ATO term - The super guarantee entitlement received from your employer.
Diversification
Spreading investments over a variety of investment categories with different performance characteristics, in order to reduce risk.
Diversified portfolio
Portfolio that holds a variety of assets with different performance characteristics.
Dividend
Distribution by a company to shareholders. Usually expressed as a number of cents per share. Many ASX listed companies (see listed company) pay dividends twice each year, usually as a smaller 'interim' dividend and a larger 'final' dividend. Also used to describe a sum paid to creditors out of the assets of an insolvent company.
Dividend amount
Dividend shown as cents per share. For example a figure of 19 represents $0.19 and a figure of 7.5 represents $0.075.
Dividend cover
Ratio showing the number of times a company's dividend is covered by its net profit. Dividend Cover ratio = (net profit / dividend paid)
Dividend imputation
Tax credits passed on to a shareholder who receives a franked dividend. Imputation credits entitle investors to a rebate for tax already paid by an Australian company.
Dividend in arrears
Dividends on cumulative preference shares that have not been declared each period in accordance with the terms of their issue. See cumulative preference dividends.
Dividend income
See dividend.
Dividend or distribution plan
Plan which gives holders of securities the opportunity to accept securities in place of dividend, distribution or interest payments (either partly or wholly). Also called a 'Dividend Reinvestment Plan'.
Dividend Reinvestment Plan (DRP)
An alternative to cash dividends, allowing shareholders to receive new shares instead of cash.
Dividend type
Either interim or final. The last dividend in the company's financial year is classified as final and all others are classified as interim. Some dividends may also be classified as 'special' in accordance with the advice given by the company about the dividend. Ordinarily the term 'special' is used to indicate that the dividend is not one that is paid regularly each year but the term may be used differently by different companies.
Dividend yield
A financial ratio that measures how much a company pays out in dividends each year relative to its share price.
Division 293 tax
An extra 15% tax on the super contributions of high income earners. This tax is charged if your income plus your concessional super contributions are above $250,000. There are different tax rules for members of defined benefit super funds. More details are available on the Australian Tax Office website. Find out more about tax and super.
DPS adjusted
Total dividend, in cents per share, for the year, adjusted by a dilution factor to take account of issues and reconstructions.
Early termination fee
A fee which may be applied if a loan is repaid earlier than the stated term.
Earnings
Income or profit of an entity. May be expressed as gross or net.
Earnings Per Share (EPS)
Measures of earnings attributed to each equivalent ordinary share over a twelve month period. Calculated by dividing the company's earnings by the number of shares on issue in accordance with AASB 1027 'Earnings per share'.
economic group
ATO term - Financially or administratively connected entities with a common source of control (majority or effective ownership of greater than 50%).
Effective interest rate
An annual interest rate that takes into account the effect of compound interest and fees. Also known as an effective yield or the annual percentage rate (APR).
EFTPOS (Electronic Funds Transfer at Point of Sale)
EFTPOS is an Australian network for processing credit cards, debit cards and charge card payments at the 'point of sale'. EFTPOS also allows users of the system to withdraw cash at the time of purchasing a product or service through the merchant's EFTPOS terminal. This function is known as 'debit card cashback' in many other countries.
Electronic holding statement
Evidence of securities ownership in the form of a holding statement. All security holdings on ASX are registered electronically.
Eligible employee creditor
A creditor (including the Australian Taxation Office for superannuation guarantee charge) who, in a winding up of a company, would normally be paid their employment related entitlements ahead of (known as "priority") other unsecured debts. These creditors have a special right to vote on a deed of company arrangement proposal that seeks to modify the priority payment order
Eligible rollover fund (ERF)
A holding account designed to receive the super benefits of lost members and those with low account balances that are no longer receiving contributions.
Eligible unsecured creditor
A creditor entitled to have a say in a pooling determination made by a liquidator. The term generally covers the external unsecured creditors of a group of companies, but excludes debts owing between companies in the pooled group. A pooling determination relates to a decision to treat the affairs of a group of companies as if it were a single external administration
Emerging market
Low to middle income economy typically undergoing significant economic and political reform as it transitions from a developing to a developed nation. They tend to have relatively underdeveloped economies, legal systems and regulatory frameworks, and a high government presence in their market.
Employee incentive scheme
For the purposes of ASX Listing Rules, a scheme for the issue or acquisition of equity securities in the entity to be held by, or for the benefit of, participating employees or non-executive directors of the entity or a related entity.
Employer share scheme
An employer scheme that gives employees shares, or the opportunity to purchase shares, in the company, sometimes at a discount to market rates. Shares may be offered as part of an employee's remuneration or bonus, or through a loan or salary sacrifice arrangement.
Enduring power of attorney
Like an ordinary Power of Attorney (PoA), an enduring power of attorney authorises your nominated representative to make property and financial decisions for you. Unlike an ordinary PoA, an enduring PoA continues to have effect if you become mentally incapacitated at a later date.
Enhanced regulatory sandbox
The Australian Government's enhanced regulatory sandbox (ERS) allows individuals and businesses to test innovative financial services and credit activities.
Entry fee
Fee set by the fund manager for buying units in a managed investment expressed as a percentage of the amount invested. The fee is deducted from the amount invested by the fund manager.
EPS
Earnings Per Share, a financial ratio calculated by dividing the company's earnings (profits) by the number of shares on issue. The higher the EPS, the more a share is potentially worth.
Equities
Often used as a synonym for shares. Represents part-ownership of a company, as distinct from debt securities such as bonds and debentures.
Equity
The value of an asset such as your house or property, less any money owing on it.
Equity capital or equity funding
Capital raised by a company by issuing shares. An alternative to debt funding.
Equity investment
An investment where you buy and hold shares in a company or property from which you expect to receive income and capital gains.
Equity release
A way of accessing the equity in your home to provide you with additional funds in retirement.
Equity securities
For the purposes of ASX Listing Rules: 1. shares in a body corporate or an unincorporated body other than redeemable preference shares which are Loan Securities in accordance with paragraph; (c)of the definition of Loan Securities 2. prescribed interests except those referred to in paragraph (d) of the definition of Loan Securities 3. renounceable and non-renounceable rights to subscribe for Securities other than Loan Securities
Equity warrants
Warrants for which the underlying asset is a security (for example, shares in companies).
ERF
A holding account designed to receive the super benefits of lost members and those with low account balances that are no longer receiving contributions.
error
ATO term - Mistakes made in submitting information to us, including when lodging a tax return. An error can be intentional or unintentional.
Escrow
Depositing an instrument of title to securities with a third party custodian in order to prevent the holder from transferring those securities during a period agreed.
Establishment fee
A one-off fee which may apply to set up a personal or other loan.
Estate
All of a person's assets, whether real property or personal property, and their liabilities or debts.
Ethical investment
An investment strategy that promotes positive environmental, social or ethical issues. Avoids investment in industries and companies that produce goods harmful to health, society or the environment e.g. chemicals, tobacco, armaments. Each fund will have its own interpretation of the values it wants to protect or promote. You will find details in the company's PDS
European exercise, European style
Where the holder of an option or warrant can exercise their right to buy or to sell only on the expiry date.
evasion
ATO term - The act of evading tax obligations. Tax evasion occurs when people break the law by not reporting all of their income, or dishonestly overstating deductions to reduce the amount of tax they need to pay. Examples of tax evasion include under-reporting income, not reporting cash wages, not lodging tax returns or not paying employee superannuation entitlements.
Ex rights
Securities entitling the seller to retain the right to participate in a New Issue then current.
Ex-bonus, ex-bonus date
Where the seller retains the bonus shares being issued. The ex bonus date occurs two business days prior to and including the Record Date. The share price may fall on the ex bonus date to reflect the dilution effect as the company's assets are spread over a greater number of shares on issue.
Ex-date
Date on which shares change from being quoted "cum" to "ex". It is usually the business day prior to the record date.
Ex-dividend
Shares which, when sold, entitle the seller to retain the current dividend. Shares are usually quoted ex-dividend one business day before company's Record Date.
Ex-dividend date
One business day before the company's Record Date. To be entitled to a dividend a shareholder must have purchased shares before the ex-dividend date.
Excess
In relation to an insurance contract, it is the amount of an insurance claim that consumers have to pay. The amount is specified in the insurance policy.
Exchange for physical
The exchange of a physical holding in the underlying to a futures or CFD position or the exchange of a futures or CFD position for a physical holding in the underlying. EFPs are not always transacted at market and therefore do not have to be traded within the current market bid and offer. They are omitted from the calculation of first, high, low and last prices.
Exchange rate
The price at which the currency of one country can be exchanged for the currency of another.
Exchange Traded Commodity (ETC)
ETFs that invest in and track the performance of a commodity such as silver or gold rather than an equity index and which allows for applications and redemptions in the primary market on a daily basis either in -specie or in cash.
Exchange Traded Fund (ETF)
Investment fund designed to track the performance of an asset such as a share price index and which allows for applications and redemptions in the primary market on a daily basis either in -specie or in cash.
Exchange Traded Options (ETO)
Option contracts where counterparties are novated with ASX Clear interposed between taker and writer and which are bought and sold on the options market operated by ASX.
Exchange-traded treasury bond (eTB)
A type of Australian Government Bond quoted and traded on the Australian Securities Exchange that is a medium-to long-term debt security with a fixed face value ($100) and a fixed annual interest rate.
Exchange-traded treasury indexed bond (eTIB)
A type of Australian Government Bond quoted and traded on the Australian Securities Exchange. It is a medium to long-term debt security with a fixed interest rate but a face value that is adjusted for movements in the Consumer Price Index (CPI).
excise
A tax on alcohol, tobacco, fuel and petroleum products produced or manufactured in Australia. Collectively, these products are referred to as excisable goods.
excise clearance data
ATO term - The excisable units (litres, numbers or kilograms) of excisable products cleared for home consumption and reported by excise clients on their excise return.
excise equivalent goods (EEGs)
ATO term - Imported alcohol, tobacco, fuel and petroleum products (including LPG, LNG and CNG) that are subject to duty are treated consistently with goods manufactured in Australia.
Excluded employee
An employee who has also been a director of the company, or a relative of a director, at any time in the 12 months before the appointment of an external administrator. Excluded employees are only entitled to limited priority for repayment of their outstanding entitlements
Exclusion
In relation to an insurance contract, it is something that is specifically not covered under the insurance policy. Depending on the type of policy these may include specific events, illnesses or pre-existing conditions.
Execution risk
When a lack of market liquidity causes a gap between the price at which you place a trading order, and the price you receive.
Executor
A person specified in a will, or appointed, to administer the will.
Exercise
Notification by the buyer (taker) of an option or warrant of their decision to buy or sell the underlying asset or in the case of cash settled contracts to receive a cash payment.
Exercise price
Price at which the taker (buyer) of an option or warrant may buy/sell the underlying asset. Also known as the strike price.
Exit fee
Fee set by a fund manager for selling units in a managed investment expressed as a percentage of the amount invested. The fee is deducted from the amount invested by the fund manager.
Exotic instruments
More complex instruments which may involve one or a number of unusual features.
Expiry, expiry date, expiration
Date on which all unexercised options, warrants in a particular series or futures in a particular expiry month expire.
External administration
Companies under external administration include companies in voluntary administration, provisional liquidation, liquidation or subject to deed of company arrangement. It does not include companies under receivership or controllership
External administrator
A defined term for a registered liquidator formally appointed to control the affairs of a company and its property. Includes a provisional liquidator, liquidator, voluntary administrator and an administrator of a deed of company arrangement. It does not include receivers or controllers
External Dispute Resolution (EDR) Scheme
Nearly all financial services, energy, water and telecommunications businesses belong to an external dispute resolution (EDR) scheme. The EDR scheme hears complaints for free and can be a simpler alternative to resolving disputes in court.
Face value
The value of a security set by the company issuing it that will be the amount payable on maturity. This may differ from the market value, that is, the amount it trades for.
failure to take reasonable care
ATO term - Occurs when a taxpayer does not do what a reasonable person in the same circumstances would have done. Circumstances include age, health, knowledge and education.
Fair value
Current value of the underlying shares or index, plus an amount referred to as the 'cost of carry'. An estimate of the price an option should sell at in an efficient market.
Fee for service
An amount paid to a service provider such as an accountant, adviser or lawyer, for specific work, completed at your request, for your benefit. Different to a commission
FEG
The Fair Entitlements Guarantee - an Australian Government payment scheme administered by the Attorney-General's Department to assist employees who have lost their jobs as a result of their employer's liquidation or bankruptcy and are owed employee entitlements. The FEG operates in relation to claims for assistance for certain unpaid entitlements for all employer liquidations and bankruptcies that occur on or after 5 December 2012
FHSA
First Home Saver Account - a tax effective way for eligible Australians to save for a first home through a combination of government contributions and low taxes.
Fidelity fund
Fund available in limited circumstances for clients who have suffered a loss because of a defalcation or fraudulent misuse of money or other property by the broker. Funds are not available to compensate for trading losses.
Final payment (loan amount)
Usually the second payment amount outstanding for an Instalment, which must be paid to take delivery of the underlying asset. May also be referred to as the exercise price.
Finance broker
A go-between who negotiates with banks and other credit providers to arrange loans on behalf of others.
Financial adviser
A person or authorised representative of an organisation licensed by ASIC to provide advice on some or all of these areas: investing, superannuation, retirement planning, estate planning, risk management, insurance and taxation. May also call themselves a financial planner.
Financial Claims Scheme (FCS)
An Australian Government-backed safety net that protects deposits of up to $250,000 per account holder per authorised deposit-taking institution (ADI) (bank, building society or credit union) in the unlikely event of the ADI failing. It also covers most general insurance policies for claims up to $5,000, with claims above $5,000 eligible if they fulfil certain criteria.
Financial counsellor
A person who gives free, confidential and independent assistance to people with financial problems. Financial counselling services are usually provided by community or welfare organisations.
Financial Institutions Duty (FID)
Financial Institutions Duty.
Financial plan
A plan, usually created with help from a financial planner or adviser, that defines your financial goals and sets out investment strategies to reach your stated goals, with reference to your personal circumstances.
Financial planner
A person or authorised representative of an organisation licensed by ASIC to provide advice on some or all of these areas: investing, superannuation, retirement planning, estate planning, risk management, insurance and taxation. May also call themselves a financial adviser.
Financial product
A facility that helps you to save, invest, get insurance or borrow money.
Financial service
A service dealing with the management of money. It includes providing advice on financial products, dealing in financial products, making a market for financial products, operating a registered scheme or providing a custodial or depository service.
Financial Services Guide (FSG)
A guide that contains information about the entity providing you with financial advice. It should explain the financial service offered, the fees charged and how the person or company providing the service will deal with complaints.
First Home Owners Grant
A grant provided by state governments to first home buyers, to offset the effect of the GST on buying or building a home. For more information see the Government's First Home Owner's Grant website.
First Home Saver Account
A Federal Government initiative that was set up to help people save for their first home. These accounts were abolished from 1 July 2015 and existing first home saver accounts have now been converted to ordinary savings accounts.
First payment
Initial payment (capital plus interest and fees) to purchase the shares via an Instalment Warrant.
Fixed interest
Security for which the return when held to maturity is fixed. Fixed interest securities normally receive periodic interest payments and repayment of principal at maturity.
Fixed interest investment
A type of investment that offers a set rate of interest for a specified amount of time, with the principal repaid at maturity. Covers a broad range of investments, with varying degrees of risk, such as term deposits, government bonds, corporate bonds, capital notes, debentures and income securities.
Fixed interest rate
Interest is paid at a fixed rate over the term of a loan or investment. Opposite of variable interest rate
Fixed rate home loan
Allows you to lock in an interest rate on your loan, typically for 1 to 5 years. Protects against interest rate rises but also means you won't benefit from falling interest rates.
Float
Initial capital raising by public subscription to an offering of securities.
Floating rate note
A type of fixed income investment where the principal is repaid at maturity but the interest rate is linked to a market interest rate such as the bank bill swap rate. As the benchmark rate changes (usually adjusted quarterly) so does the investor's income.
Foreign transaction fee
A fee that may be charged by credit card providers for purchases, cash advances or transactions that are made with overseas-based merchants or financial institutions, or with Australian-based merchants who process payments overseas.
Forward agreement
Contract to exchange a particular good or financial instrument at a set price on a future date.
Franked dividend
Dividend paid by a company out of profits on which the company has already paid tax. The investor is entitled to an imputation credit, or reduction in the amount of income tax that must be paid, up to the amount of tax already paid by the company.
Franking credit
Your share of the tax a company has already paid on the profits you received as a dividend or distribution.
Franking rate
Tax rate at which the dividend is franked.
fraud
Wrongful or criminal deception intended to result in financial or personal gain. In a tax context this includes claiming tax refunds and money laundering, using false or stolen identities, claiming GST credits for goods or services that GST was not paid on, and claiming deductions for expenses not incurred or legally deductible.
FSG
A guide that contains information about the entity providing you with financial advice. It should explain the financial service offered, the fees charged and how the person or company providing the service will deal with complaints.
fuel excise
A tax on fuel and petroleum products (excisable goods) produced or manufactured in Australia. Imported fuel and petroleum products are subject to customs duty at a rate equivalent to excise. This is to ensure they are treated consistently with goods manufactured in Australia. These imported goods are referred to as excise equivalent goods (EEGs).
Fully covered warrant
Warrant series for which the warrant issuer has placed the underlying shares in a trust or cover arrangement.
Fully franked dividend
A share dividend on which the company has already paid tax. This means shareholders are entitled to a credit for the amount of tax the company has already paid. This credit is known as an imputation credit or franking credit.
Fund choice
Allows employees to choose the super fund their employer pays their super contributions into.
Fund manager
Individual or organisation responsible for investing funds on behalf of a financial institution. See also investment manager
Fundamental analysis
Method of analysis using ratios and percentages calculated from financial data of a company to assess the company's quantitative and qualitative aspects.
Funeral bond
A capital guaranteed managed fund to accumulate benefits to help meet the future cost of funeral expenses. Funeral bonds have tax and Centrelink advantages.
Futures
Legally binding contracts to buy or sell a particular asset, currency or other index, for a specified price on a specified future date.
Futures contract
An agreement to buy or sell an asset or cash equivalent at a date in the future at a price agreed today. The contracts are traded on a futures market. The contract is then novated with a clearing house interposed between buyer and seller.
Gearing
The extent to which an investor or business is using borrowed money.
General interest charge (GIC)
ATO term - GIC is an interest charge imposed where there is a late payment of a tax debt. GIC is only applicable to certain unpaid superannuation debts.
Global Industry Classification Standard (GICS)
Set of global sector and industry definitions. See Standard & Poors.
Government bond
A medium to long term fixed interest investment issued by domestic or foreign governments which pays fixed interest rate (coupon rate) for the term of the investment. The original invested amount (face value) is repaid at the end of the term (maturity).
Government co-contribution
A contribution made by the Australian Government to a person's superannuation account based on that person's income, source of income and personal super contribution. It is designed to help lower income earners build up their super before retirement.
gross tax gap
ATO term - The net gap plus the amount of revenue we raise and collect through our compliance activities.
Growth asset
Assets such as shares and property that not only produce an income but have the potential to grow in value over time.
Growth fund
A fund that invests in growth assets. A growth fund is more likely to produce higher returns over the long term but is usually more volatile in the short term.
GST
Goods and Services Tax.
Guarantor
A person who guarantees a loan for someone else. The guarantor is legally responsible for paying the other person's debts if the debtor can't pay them.
Hardship variation
A change to the terms of a loan, due to financial hardship, to make the loan easier to manage. The variation could give you more time to pay, or temporarily pause or reduce repayments.
Hedge
Transaction which partly or totally offsets the risk of a current holding.
Hedge fund
A fund that pools capital from a number of investors and invests in shares and other securities. It aims to achieve positive returns in both rising and falling markets, while using strategies to reduce the chance of loss. Often uses complex strategies including short selling, derivative contracts, leverage and arbitrage.
high wealth private groups
ATO term - A private business group that controls net wealth of $50 million or more.
Historic volatility
Annualised standard deviation of daily changes in the price of the asset underlying a futures, options or warrant contract.
Holder identification number (HIN)
Number identifying registration on the CHESS subregister.
Holding lock
Facility that prevents securities from being deducted from, or entered into, a holding pursuant to a Transfer or Conversion.
Home reversion
Allows you to sell a proportion of the future value of your home while you live there. You get a lump sum, and keep the remaining proportion of your home equity. When you sell your home, you pay the home reversion provider their share of the proceeds.
Honeymoon or introductory interest rate
An interest rate offered for a short time at the start of a loan, credit card or savings account. For a loan it is a lower interest rate that will eventually revert back to a standard rate. For savings accounts it is a higher rate that will revert back to a standard deposit interest rate after the honeymoon period.
HOT or High yield instalments
Instalments containing a high gearing level (usually between 70% to 110%).
Hybrid ETFs
Exchange Traded Fund (ETF) that can either be based on an index or be actively managed.
Hybrid security
A financial product that combines features of debt and equity securities and generally pays a fixed or floating rate of return until a specified date. In some cases they can be converted into shares in the issuing company. Includes convertible notes, preference shares and capital notes.
Hybrids
Preference share which is a type of interest rate security.
Identity fraud/theft
Using someone else's personal details in order to steal money or gain other benefits by pretending to be that person.
Imputation credit
Tax credit passed on to shareholders who receive partially or fully franked dividends. The tax credit is in consideration of the tax the company has paid on its profits before passing those profits on to shareholders.
In-the-money
Call (put) option or warrant with an exercise price below (above) the current market price of the underlying asset.
Income producing asset
Any asset that generates an income. For example, dividends are paid on shares, investment properties generate rental income, bonds and bank accounts produce interest.
Income protection insurance
Provides you with an income if you can't work because of illness or injury. Most policies offer cover for up to 75% of gross wages for a specified number of years.
Indemnity
An agreement between the external administrator and a third party to cover some or all of the fees and other debts incurred by the external administrator
Index
A statistical measure of change in the value of a market, asset class or industry sector. The value of an index increases or decreases with changes in the value of the underlying security or sector it's measuring. For example, the ASX All Ordinaries Index measures the change in the overall value of 500 largest companies by market capitalisation listed on the Australian Securities Exchange.
Index (indices)
A measure of a change in value for a group of assets.
Index arbitrage
Where a trader tries to profit from pricing discrepancies, between an index based derivative a related index product or the shares comprising the index.
Index fund
A managed fund with a portfolio constructed to match or track the return before fees of a particular market index, such as the ASX 200 or the ASX Small Ordinaries Index.
Index futures
Futures contract which has as its underlying asset an index, typically a share price index.
Index LEPOs
European call option over a share price index with a 1 point strike price.
Index options
Options over a share price index. Index options are European style and cash settled on exercise.
Index warrants
Warrants over a share price index. Index warrants are European style and cash settled on exercise.
Industry fund
A superannuation fund that originally catered to workers from a particular employment industry or industrial award. Most are now open to the general public. They are usually low cost, have limited investment options and return profits to members.
Industry sector
A classification used to group companies that are related in terms of their primary business activities. Major industry sectors include consumer discretionary, consumer staples, energy, financials, healthcare, industrials, information technology, metals and mining, telecommunications and utilities.
Inflation
The increase in the cost of goods and services over time.
Infrastructure fund
Managed investment that invests in infrastructure assets, such as transport, telecommunications, materials handling and utilities.
Initial margin
Minimum deposit determined by the Clearing House on all futures contracts and exchange traded options and exchange traded CFDs. This margin must be paid by the Clearing Participant to the Clearing House. The client must pay the Clearing Participant.
Initial public offering (IPO)
When a company lists on a stock exchange and offers shares to the public for purchase. Also known as a float.
Insider trading
The trading of financial products while in possession of information, or having received information, that is not generally available to the public. Penalties include heavy fines and imprisonment.
Insolvent
Unable to pay all debts when they fall due for payment
Instalment warrant
A financial product issued by banks and other financial institutions that lets investors buy shares (or other securities) over a period of time, making an initial payment and paying the balance later. A form of leverage as it involves borrowing to invest, and investors are charged interest and fees on the outstanding amount but get the benefits of owning the whole investment, such as receiving dividends.
Insurance bond
An insurance bond is a long term investment offered by insurance companies and friendly societies where investors' money is pooled and invested according to the investment option chosen. There are tax advantages for higher income earners if the investment is held for at least 10 years and certain conditions are met.
Insurance policy
A written legal agreement that sets out what is being insured and for how much.
Insurance premium
Money charged by an insurance company for coverage.
Intangible asset
An asset with no identifiable physical form (e.g. a contractual right, copyrights, patents and goodwill)
Interest
Payment for the use of money over time. You earn interest by lending your money. If you borrow money, interest is the amount you pay to borrow the money.
interest (as in business interest in another business entity)
ATO term - Majority or effective ownership of a business entity within an economic group.
Interest cover
Ratio showing the number of times interest payments are covered by earnings before interest and tax (EBIT). The higher the interest cover, the greater the company's ability to meet interest payments. Interest Cover = Earnings Before Interest and Tax (EBIT) / Net Interest Payments = number of times covered.
Interest rate
The relationship between the amount of money borrowed or lent and the money paid in return for the use of that money. Usually expressed as a percentage per year.
Interest rate security
Security that pays a fixed or floating rate of return. The issuer usually promises to pay a specified rate of interest per annum over the life of the security and to repay the principal at maturity.
Interest-free deal
Allows you to buy goods or services now and pay for them later. You don't have to pay interest for a set period. You are usually required to make regular repayments during the interest-free period. Any money outstanding at the end of the interest-free period will incur interest, often at a very high rate.
Interest-free period on credit cards
The days where you don't have to pay interest on your credit card purchases. Interest-free periods usually start on the first day of your billing cycle, not when you make a purchase.
Interim dividend
When a dividend is paid more than once a year, dividends other than the final one are called interim dividends. Typically, dividends are paid twice a year, one interim and one final dividend.
International transaction fee
A fee that may be charged by credit card providers for purchases, cash advances or transactions that are made with overseas-based merchants or financial institutions, or with Australian-based merchants who process payments overseas.
Intestate
Dying without leaving a will
Intrinsic value
Difference between the current market price of the underlying asset and the exercise price of the option or warrant, but not less than zero. For warrants, the conversion ratio needs to be taken into account.
Investment
An asset bought with the aim of producing an income and/or an increase in value over time.
Investment bond
A long term investment offered by insurance companies and friendly societies where investors' money is pooled and invested according to the investment option chosen. There are tax advantages for higher income earners if the investment is held for at least 10 years and certain conditions are met.
Investment manager
Individual or organisation responsible for investing and managing the assets of others. See also fund manager or responsible entity.
Investment platform
An administrative system for your investments. Platforms offer a range of investments and services, all in the one place. Reporting for all investments is usually in the one report.
Issue date
Date by which an Issuer must have entered Financial Products into holders' uncertificated holdings. Generally would result from corporate actions such as dividend reinvestment plans, rights issues, share buy backs, share purchase plans and initial public offerings (IPOs).
Issued capital
Value of securities allotted in a company to its shareholders and debt holders.
Issued shares
Shares of a company that have been allotted to shareholders.
Issuer
A legal entity that creates, registers and sells securities in order to raise money to finance its operations. Issuers include domestic or foreign governments, companies and investment trusts.
Issuer sponsored sub-register
Register of shares managed by the listed entity itself for the registration of shares in their company alone.
Joint account
An account with a financial institution that is in the name of more than one person. Any individual whose name is on the joint account can operate the account; but it is possible to restrict any withdrawals by requiring both people to sign.
Joint tenants
When property is held by two or more people together in equal shares. On the death of one joint tenant the property automatically passes to the other joint tenant(s), regardless of what may be set out in the deceased person's will
Lay-by
When goods are paid for over time by payment of a deposit and then regular amounts over a certain period. You cannot take home the goods until you have paid the full price.
Lease
A document that grants someone the use of a property for a given period in return for rental payments. The document will specify the terms and conditions of the agreement.
Lenders mortgage insurance (LMI)
Lenders mortgage insurance (LMI) protects a credit provider if borrowers are unable to repay their loan. LMI is usually a one-off cost to a home loan borrower, payable when the amount borrowed exceeds 80% of the value of the property. LMI does not benefit the borrower, it only protects the lender.
Leverage
The use of financial instruments or borrowed capital to increase potential gains or losses. For example, borrowing money to invest in property or other assets, buying a share in a 'geared' managed fund or investing in derivatives.
Liability
A debt or money owed, for example, a bank loan or credit card debt.
LICs
Listed Investment Companies.
Life cover
An insurance policy that pays a set amount of money to an insured person's beneficiaries when the insured person dies. Also known as term life insurance or death cover.
Life insurance policy
A life insurance policy pays a set amount of money to you or your family after an unexpected event, like an illness, injury or death.
Limit
Price limit for an order, e.g. a bid of $3.00 means that the buyer is not willing to pay more than $3.00 for the security.
Limit order
Instruction to a broker to buy or sell a security at a specified price or better.
Limited liability company
Company whose members have liability limited by shares or guarantee. In the case of the former, liability is limited to the amounts unpaid on the shares, in the case of the latter by the amount undertaken to be contributed in the event of a winding up of the company.
Limited recourse loan
A loan used to purchase a single asset or group of assets where the lender's claim on assets is limited to the asset(s) purchased with the loan, if the borrower defaults on the loan.
Line of credit loan
Allows you to use a single account for your home loan and everyday spending. Interest is added to the loan each month and repayments are not necessary while the loan is within its credit limit.
Liquid assets
Assets that can be bought or sold easily and with little impact on price.
Liquid market
Where buying and selling can be accomplished with ease and with little impact on price because of sufficient volume on offer.
Liquidator
A person appointed to administer the liquidation of a company
Liquidity
How easily an investment or financial product can be converted to cash. Shares in large publicly listed companies that are regularly traded on the ASX (Australian Securities Exchange) are considered liquid assets, while direct property investments are less liquid, due to difficulties and time delays that may be experienced when buying and selling. Liquid markets have enough trading activity to allow both buyers and sellers to easily transact as they wish.
LISC
ATO term - Low income super contribution - a government super payment to help low-income earners save for retirement. The LISC policy has been repealed as from 1 July 2017. LISC will be paid in relation to eligible concessional contributions made in the 2012-13 to 2016-17 financial years, with final determinations for LISC made by 30 June 2019.
Listed company
Company which has agreed to abide by ASX Listing Rules so that its securities can be bought and sold on ASX.
Listed property trust
Trust funds listed on a securities exchange and managed by an investment manager (also known as real estate investment trusts (REITs). May invest in a specific type of property such as residential, industrial, office buildings, shopping centres or hotels, or in a diversified portfolio of real estate assets either in Australia or overseas.
Listing rules
Rules governing the procedures and behaviour of all entities listed on ASX.
LISTO
ATO term - Low income superannuation tax offset - a government super payment to eligible individuals that will generally ensure low income earners do not pay more tax on superannuation than their take-home pay. LISTO will apply to concessional contributions made from 1 July 2017.
Loan to value ratio (LVR)
The amount of a loan as a percentage of the value of the asset it was used to buy. It is calculated by dividing the loan amount by the value of the asset.
Long
Trader who has bought or who holds a position that will benefit from rising prices.
Loss declaration
A declaration by registered liquidators, pursuant to Section 104-145 of the Income Tax Assessment Act, that they have reasonable grounds to believe there is no likelihood that shareholders will receive any distribution for their shares.
Lot
Unit of trading equivalent to one futures contract.
Low exercise price options (LEPOs)
European style options with a strike price of 1 cent, in the case of stock LEPOs, or 1 point, in the case of index LEPOs.
Low-doc loan
A loan that requires less financial documentation to prove income, assets and liabilities than a standard loan. Typically used by self-employed people and small business owners, they are usually offered at higher interest rates and may include terms that restrict borrowers.
luxury car tax (LCT) payable
ATO term - The amount of luxury car tax payable, as reported at label 1E on the business activity statement.
Managed discretionary account (MDA)
A personal investment account where you own investment assets, such as company shares or units in a managed fund. You give someone else (the MDA provider) the authority to buy and sell investments on your behalf. Financial advisers often use MDAs to manage portfolios for their clients.
Managed fund
An investment fund where your money and that of other investors is pooled and used to buy assets such as cash, shares, bonds and property trusts.
Managed investments
Professionally managed portfolio of assets.
Management Expense Ratio (MER)
Fee paid to the manager of an investment fund. The MER is normally expressed as an annual percentage or "basis point" charge (where one basis point equals one hundredth of a percent) on the fund's net asset value.
Managing controller
A managing controller is a receiver and manager, or any other controller who has functions or powers of management of the company
Mandatory settlement
Process whereby cash options or futures contracts still open at expiry are closed out by mandatory cash settlement.
Margin
Amount calculated by the clearing house as necessary to cover the risk of financial loss on options contracts, futures contract and CFDs.
Margin call
Occurs when the value of an asset falls below the agreed loan to valuation ratio. The lender will ask the borrower to deposit enough money to bring the loan back to the agreed lending ratio.
Margin interval
Probable maximum one day move in the underlying asset as calculated by the clearing house. Expressed as a percentage, and used in the calculation of margins for options and futures.
Margin loan
A loan that is taken out to invest in shares or managed funds.
Marginal tax rate
The highest rate of tax a taxpayer will pay on their income.
Market announcements office
The office designated by ASX to process company announcements for release to the market.
Market capitalisation
Total number of shares on issue multiplied by their market price. This can be applied to work out the market value of one company or of the value of all companies listed on the exchange.
Market index
A statistical measure of change in the value of a market, asset class or industry sector. The value of an index increases or decreases with changes in the value of the underlying security or sector it's measuring. For example, the ASX All Ordinaries Index measures the change in the overall value of 500 largest companies by market capitalisation listed on the Australian Securities Exchange.
Market order
Order to a broker to buy or sell at the current market price at the time the order is given.
Market participants
Organisations that meet ASX's requirements are recognised as Market Participants. Includes Trading Participants and Clearing Participants.
Market price
Prevailing price of shares traded on ASX. May be the last price at which the shares traded, or the most recent price offered or bid for the shares.
Market risk
Risk of a general decline in the market.
Market sector
A group of companies that produce or buy and sell such similar goods that they are in competition with each other. Examples include the mining, retail and technology sectors.
Market-linked investment
A pooled investment scheme where the value of the investment depends on the movements of a particular market.
Master trust
Allows individual investors to pool their funds so that they can invest in a wide choice of investments, usually at wholesale prices. Typically used by financial planners for reporting convenience. Also known as an investment platform or wrap account.
Maturity
The date on which a debt or investment and all outstanding interest payments must be paid in full.
median adjustment
ATO term - The midway point of all label adjustments made. The median differs from the mean, which is the arithmetic average (adding all adjustments and dividing by the number of labels adjusted). The reason we use median rather than mean is because it is a more accurate representation of adjustments, as it reflects the sample size being used. For example, a small number of large value adjustments will overstate the true value of adjustments in the sample.
Member (of a company)
A shareholder
Members' voluntary liquidation
A liquidation for solvent companies, initiated by the company's shareholders
Memorandum of association
Part of a company's constitution, the formal document subscribed by those wishing to form a company and giving details of the company, e.g. its name, objects and particulars of capital.
Merger
When two or more companies combine either by takeover or creation of a new entity.
Mining tenement
A license, permit or lease providing rights to explore for and/or extract minerals under the surface of an area of land.
MINIs
Highly leveraged share-tracking warrants providing exposure movement in the price of an underlying asset on a one to one basis for a fraction of its price. They can be considered as a CFD - style product with an embedded stop loss feature.
Money transfer request
When one individual or entity asks another to send them money.
Mortgage
A charge over property given by the owner (borrower/mortgagor) to a lender (mortgagee) to secure repayment of a loan or to ensure satisfaction of a debt.
Mortgage broker
A person who matches borrowers to lenders and arranges mortgage contracts between the two parties.
Mortgage fund
A type of investment fund where investors' money is on lent (as mortgage loans) to a range of borrowers who use the money to buy or develop properties. It might also be used for other investments (for example, investing in other mortgage funds). In return the fund manager promises to pay investors a regular income.
Mortgage scheme
A scheme that invests in mortgage loans or in companies that lend money for mortgages.
Mortgage-backed security
An investment in a collection of loans for which the lender holds a mortgage over the property the loan was used to purchase. The loans are written by a financial institution, then sold to an intermediary, who packages (or securitises) the loans into different groups, based on their level of risk. The packaged group of loans is then offered to investors.
Mortgagee
Someone who lends money in a mortgage arrangement.
Mortgagee sale
When a mortgagee sells a property to recoup their costs because a mortgagor defaults on their repayments.
Mortgagor
Someone who borrows money in a mortgage arrangement.
Mutual fund
American term to describe a managed investment.
National Guarantee Fund (NGF)
The NGF is a compensation fund available to meet certain types of claims arising from dealings with Participants of ASX and, in limited circumstances, Participants of ASX Clear.
Negative gearing
Borrowing money to invest where the return from the investment is less than the borrowing costs.
Net Asset Value (NAV)
Book value of a company's assets divided by the number of shares on issue.
Net position
Difference between the open derivatives contracts held long and the open derivatives contracts held short in any one contract.
Net Tangible Assets (NTA)
Calculated as the total assets of a company, minus intangible assets such as goodwill and less all liabilities.
net tax gap
ATO term - The difference between theoretical tax according to the law, and actual tax paid voluntarily or collected as a result of compliance activities.
Net worth
The difference between the total value of everything you own (assets), and the total value of all of your debts (liabilities).
New
When recently issued shares do not rank equally with existing shares in terms of dividends.
No liability company
Mining company not entitled to calls on the unpaid issue price of shares. Such companies are denoted N.L.
No Negative Equity Guarantee (NNEG)
Protects you from owing more on your reverse mortgage than your home is worth. The NNEG puts a limit on the amount owed.
No-Interest Loans Scheme (NILS)
A community program that provides interest-free loans for individuals or families on low incomes.
Non-binding nomination
Guides your super fund trustee on who will get your super if you die. The trustee is not bound to follow these instructions.
Non-circulating assets
Assets that the company may not dispose of without the consent of the secured creditor
Non-circulating security interest
A security interest held by a secured creditor in non-circulating assets of a company
Non-commutable income stream
An income stream that cannot be converted into a lump sum payment.
Non-concessional super contributions
Non-concessional super contributions are payments you put into your super from your savings or from income you have already paid tax on. They are not taxed when they are received by your super fund.
non-detection
ATO term - Some errors are not identified in bottom-up methodologies. To fully estimate the gap, we increase the amounts that we do identify to account for amounts we don't. We refer to this increase as an 'uplift factor'. Non-detection is inherently difficult to estimate and we will revise the uplift factors applied as our methodologies improve.
non-payment
ATO term - Debts to us that have been written off or are currently outstanding.
Non-recourse loan
A type of loan secured by collateral such as property or shares, where if the borrower defaults the lender can only seize the assets put up as collateral for the loan. The lender cannot seek further compensation from the borrower even if the assets used as collateral do not cover the full amount of the loan.
Non-renounceable rights
Rights offer that may only be taken up or forfeited, and cannot be traded on the market.
Novation
Process undertaken by the clearing house whereby it substitutes itself between the buyer and the seller of a trade, acting as the 'middleman' to guarantee the obligations of each party.
Off market transfer
The transfer of shares between parties without going through the market place. Off-market transfers are executed through the use of an "Australian Standard Transfer Form".
Offer
Price at which someone is prepared to sell securities. (opposite of bid).
Offer period
In relation to a takeover bid, the period for which offers under the bid remain open; or in relation to a Scheme, the period from the date an announcement of intention to propose a Scheme is first received by the Exchange until the date on which the Scheme is effected.
Officer (of a company)
A director, secretary or external administrator (in most cases) of the company
Official list
Names of securities permitted quotation and so, trading on ASX. Referred to in the Listing Rules as the Official list.
Offset account
A transaction account that is linked to a mortgage account. It reduces your interest payable as interest is only charged on the net balance, i.e. your mortgage balance less your offset account balance.
Open ended fund
Managed investment where there is no restriction on the number of units in the fund that will be issued. ETFs are open ended funds.
Open interest / open position
Number of contracts outstanding or 'open' in a particular class or series of options or futures.
Opening price(or range)
Price (or price range) recorded during the period when an instrument commences trading.
Option
A contract between two parties that gives the buyer/seller the right, but not the obligation, to buy/sell an asset, at a set price, on or before a specific future date.
Ordinary share
The most commonly traded security in Australia. Holders of ordinary shares are part-owners of a company and may receive payments in cash, called dividends, if the company trades profitably. They have no preferential rights as to either dividends out of profits or capital on a winding up.
Original co-contributions
ATO term - The original co-contribution entitlement.
OS
Trading condition code. See overseas trade.
OSXT
Combination of two trading condition codes, OS and XT. One market participant buying / selling outside Australian market hours.
Out-of-the-money
Call (put) option or warrant for which the current market price of the underlying asset is below (above) the exercise price.
Overdraft facility
An arrangement that allows you to withdraw more funds than you have in your account.
Overdrawn account
When the limit on a credit card or bank account (including any overdraft facility) has been exceeded.
Overseas home exchange
Defined in the Listing Rules as the place of an entity's primary listing.
Overseas trade
A trade consummated in a foreign country outside of Australian market hours by a resident of that country through an approved exchange during their open hours.
Paid-up capital
Amount paid by shareholders or recorded as paid on issued shares.
Parent company or entity
Controlling company or entity.
Pari passu
On an equal footing, or proportionately. A term frequently used with respect to share issues to indicate that the new shares being issued will rank equally in all respects with previously issued shares either immediately or at some specified time in the near future.
Participating dividend
Dividend paid to preference shareholders in addition to the normal preference dividends payable.
Participating preference shares
Share with a claim to profits ahead of ordinary shares. These shares may also have access to any additional dividends to be paid after ordinary shareholders have received theirs.
Partly paid shares
Shares which have been issued with only part of their value paid, for example shares may be issued with a par value of $1.00, of which only 50 cents has been paid, with a further 50 cents still owing. Also known as Contributing Shares.
Passively managed
A 'buy and hold' investment management approach where a fund manager holds a portfolio of assets aimed at generating a return before fees similar to the index it is tracking, such as the ASX All Ordinaries Index or the ASX200 Index. (Also known as an index fund.)
pay as you go (PAYG) withholding
ATO term - The value of income tax withholding payable by employers on employee salary and wages. Other withholding not from salary and wages (including non-resident interest, dividend or royalty withholding, no-ABN and no-TFN) are excluded.
Payday loan
A cash advance against your next pay. These short-term loans charge a high interest rate and must be paid back by a certain date.
Payment dishonour
ATO term - A payment which has not been credited to the account due to insufficient funds.
Payment reversal
ATO term - The payment has been removed the account as if no payment had been made.
Payment variation advice (PVA)
ATO term - A statement used by super funds in two different situations: providing information when returning a payment/remittance from the ATO that cannot be accepted and credited to a member's account, advising that a recovery notice issued to the fund, requiring a payment of a previous remittance, cannot be satisfied and why
Pension
An income stream that makes regular income payments. Examples include the government age pension or an account-based pension from your super fund.
Percentage franked
Dividend paid by a company out of profits on which the company has already paid tax. The shareholder is entitled to an imputation credit, or reduction in the amount of income tax that must be paid, up to the amount of tax already paid by the company. The % figure represents the % of tax already paid by the company. Sometimes the percentage franked is also referred to in company announcements as a franked amount or imputed credit.
Personal insolvency agreement
Similar to a debt agreement but more structured and formal and costs more. Your property comes under the control of a trustee who must investigate your financial affairs. Your name, some personal details and details of the controlling trustee and creditors meeting must be advertised in a local or national newspaper.
Personal loan
A low-value loan for personal use such as to buy a car or take a holiday.
petroleum resource rent tax (PRRT)
ATO term - A profits-based tax that only taxes profits above a specified rate of return from the sale of petroleum resources. PRRT is not a royalty or a traditional income tax. It is rather a tax on 'rents' in the sense of excess returns that only taxes assessable receipts when they exceed deductible expenditure on a project-by-project basis. PRRT will only arise when a project has recovered all eligible outlays associated with the project (after deducting eligible exploration expenditure transferred from other projects), including the achievement of a threshold rate of return on the outlays.
Phishing
Emails or text messages that attempt to trick you into giving out your personal information such as usernames, passwords or banking details.
Physical market
Underlying market on which the derivative is based. For example, shares, equity indices, interest rate, physical commodities and currencies.
pillars of compliance
ATO term - The four pillars of compliance are correctly registering in the system, lodging tax information on time, reporting complete and accurate information and paying tax obligations on time.
Placement
Allotment of shares, debentures, etc. made directly from the company to investors.
Plain vanilla option
A simple, standard type of option, with an expiration date, a strike price, and no additional features.
PoA
A document that appoints someone to act on your behalf in a legal or business matter. A Power of Attorney (PoA) may be general or specific and may be unlimited or limited to a specific act. It is different to an enduring power of attorney
Poll (of creditors)
A voting procedure where the chair of the meeting must consider both the number of creditors voting the same way and the value of their debts in deciding if a resolution is approved or not
Ponzi scheme
A type of fraud that uses money from new investors to make interest payments to earlier investors. The schemes typically offer high rates of return and fall apart when no new investors can be found.
Pooling
The practice of treating the affairs of a group of companies as if it were a single external administration
Portfolio
The collection of assets held by an investor. Can include shares, fixed interest, derivatives, property, collectables, managed investments and cash.
Power of Attorney
A document that appoints someone to act on your behalf in a legal or business matter. A Power of Attorney (PoA) may be general or specific and may be unlimited or limited to a specific act. It is different to an enduring power of attorney
Preference shares
Shares that rank before ordinary shares in the event of liquidation.
Premium
In relation to an insurance contract, it is the price charged by an insurance company for providing the insurance cover.
Premium (option)
Amount payable by the taker of the option to the writer of the option on buying the option.
Premium margin
Current market value of an exchange traded option based on the previous day's closing market price and represents the current cost of liquidating the position.
Prescribed provisions
Provisions that the Corporations Act 2001 (Corporations Act) takes to be included in a deed of company arrangement, unless the deed specifically excludes them
Preservation age
The age at which you can withdraw your super. You must also meet a condition of release.
Preserved benefit
A super benefit that remains in a super fund until the member reaches preservation age and, in most instances, retires from the workforce.
Price earnings ratio (P/E ratio)
A financial ratio that can be used to work out whether the price of a share is over or undervalued compared to its competitors. To work out a P/E ratio, the current price of the share is divided by the earnings per share (EPS).
Price range for day or week
Highest and lowest price at which an instrument has traded over the course of a day or week.
Price sensitive announcements
Information that is expected to have a material effect on the price or value of the entity's securities.
Price-Earnings Ratio (PE)
The number of times the price covers the earnings per security over a twelve month period. Investors commonly use this ratio to measure the attractiveness of particular shares and to compare shares in one company with those in another. P/E ratio = Price per Share
Earnings per share
Primary card holder
The individual in whose name a credit card account is created. You are solely liable for all transactions on the account, including any secondary cards.
Principal
The original sum of money invested, or the amount borrowed or still owing on a loan.
Priority
The order set down by the Corporations Act for the payment of unsecured creditors of an insolvent company by an external administrator
Priority creditor
An unsecured creditor entitled to be paid ahead of other creditors (e.g. employees)
Private equity fund
Investment fund not available to the general public that often makes concentrated investments directly into companies.
Pro rata issue
Iissue offered to all holders of securities in a class on a pro rata basis.
Probate
A document issued by a court certifying the validity of a will and authorising the executor to administer the estate in accordance with the provisions of the will.
Product disclosure statement (PDS)
A document that financial service providers must provide to you when they recommend or offer a financial product. It must include information about the product's key features, fees, commissions, benefits, risks and the complaints handling procedure.
Promissory note
An unconditional written promise to pay a specified sum of money on demand or at a specified date.
Proof of debt
A prescribed form creditors complete setting out details of their claim against the company, including how the debt arose and the amount claimed
Property development
The business of buying land or property and developing or improving the asset for the purpose of selling at a profit.
Property trusts
Trusts that enable investors to purchase an interest in a diversified portfolio of real estate assets. Investors in property trusts gain exposure to the value of the real estate the trust owns, and receive rental income through distributions the trust pays to investors.
Prospectus
A document issued by a company that wants to raise money from the public by offering equity (shares) or debt (bonds) securities in the company or a trust. It must contain all the information needed to make an informed decision about investing in the company.
Provisional liquidator
A registered liquidator appointed by the court to preserve a company's assets until the court decides a winding-up application
Proxy
Written authorisation given by one person to another so that the second person can act in place of the first person, e.g. attending and voting at shareholders' meetings. The person authorised to act is also known as the proxy.
Proxy form
A form that creditors or shareholders must complete to appoint a proxy for a creditors' or shareholders' meeting
Public examination
An external administrator, ASIC or a person authorised by ASIC can apply to court to question an externally administered company's directors or any other person who may be able to give information about the affairs of the company
Public trustee
Government agency or business that provides professional and independent services such as making wills, acting as an executor in deceased estates, managing trusts and Powers of Attorney.
Pump and dump scam
When scammers artificially inflate the share price of a stock by posting positive news items (not necessarily true) to increase trading. Once the price increases, the scammers sell the shares at the inflated price.
Put option
An option contract that gives you the right to sell (but does not lock you into selling) the underlying asset at a specified price, at or before a certain time in the future. You would use a put option when you expect the price of an asset to decrease.
Put option / warrant
Option / warrant contract giving the holder the right, but not the obligation, to sell the underlying asset at the exercise price.
Pyramid scheme
Illegal form of multi-level marketing where you receive benefits for recruiting others to join the scheme. Most of the income is earned by recruiting others, rather than selling the good or service.
Quotation
Securities in a listed entity are quoted on ASX for trading. Defined in the Listing Rules as Official Quotation.
random enquiry program (REP)
ATO term - A process for selecting tax returns for evaluation that ensures all tax returns have the same likelihood of being chosen.
Real Estate Investment Trusts (REITs)
Trusts providing exposure to the value and rental income from properties owned by the trust.
Realise
Convert assets into cash, often by selling them
Receiver
A registered liquidator appointed by a secured creditor to realise enough of the assets subject to their security interest to repay the secured debt. Less commonly, a court may appoint a receiver to protect the assets or to carry out specific tasks. When ASIC refers to receivers, we mean receivers, receivers and managers and managing controllers (e.g. a person who has control of company property to enforce a debt owed by the company or a person appointed by the court)
Receiver and manager
A receiver who has, under the terms of their appointment, the power to manage the company's affairs
Receivership
An insolvency procedure where a receiver, or receiver and manager, is appointed over some or all of the company's assets
Recognised trustee
Under the ASX Settlement Operating Rules a trustee company within the meaning of State or Territory Trustee Companies legislation or a Public Trustee of a State or Territory.
Reconstruction
An alteration to the issued capital of a company. Includes share splits, consolidations, capital reductions (partial repayments) schemes of arrangement and name changes.
Record date
The date used in determining who is entitled to a dividend or other entitlement associated with a security. Those on the register on the record date are eligible for the entitlement. To allow for settlement of trades, ex-dividend dates and other ex-entitlement dates are usually set to one business day prior to the record date.
Record of Advice (ROA)
A simple document that confirms the advice received from a licensed financial planner or adviser. Similar to a Statement of Advice (SOA) but shorter and less formal. Often given to existing clients to confirm changes to, or implementation of, advice provided in a previous SOA.
Redeemable preference shares
Shares issued on the terms that they may be redeemed by the company at a later date, either by payment out of profits which would otherwise be available for dividends or out of proceeds of a fresh issue of shares.
Redemption
Paying off or cancelling of a debt.
Redraw facility
Gives you access to any extra money you have deposited into your home loan.
Refinance
When you replace or extend an existing loan with funds from either the same or a different bank or financial institution.
Registered liquidator
A suitability qualified person registered by ASIC to practice as a registered liquidator. Only registered liquidators can act as an external administrator of companies
Regulatory risk
The risk that changes in government policy or regulation may affect your benefits e.g. changes in superannuation policy. Changes typically happen after elections or around the time of the Federal Budget. See also taxation risk.
Related company
Company which controls or is controlled by another company via ownership of subsidiaries.
Renounceable rights
Issue of rights where the offeree can choose to take up the rights offered, let them lapse, or trade them on the market. See also rights issue.
Rent to buy
A purchasing arrangement where you rent an item, such as an appliance or piece of furniture, for a specific time. At the end of the rental period, you can continue to rent the item or buy it outright. This should not be confused with rent to buy home ownership schemes which are high risk and often targeted at people who do not qualify for home loans from traditional lenders.
Rental bond
Deposit paid by a tenant to the landlord when renting a property. It's a form of security for the landlord in case you damage the property or owe rent when you move out. The amount varies between different states and territories, but is usually equivalent to at least 4 weeks rent.
Rental income
Income received from an asset that a property trust owns which is then distributed to unit holders.
Renter's insurance
Insurance cover for the contents of a rental home.
Repaid refund
ATO term - Occurs when a refund is repaid into the account, usually when a cheque is returned to us unclaimed.
Report on Company Activities and Property (ROCAP)
A prescribed form required to be completed by the directors and secretary of a company in liquidation, voluntary administration or receivership, giving details of the company's assets and liabilities
Reset date
In relation to Rolling Instalments, the Reset Date is the date upon which the Final Payment for the Loan Amount is reset for the next period.
Responsible entity
A licensed entity or body that operates a managed investment scheme.
Restricted securities
Defined in the Listing Rules as certain types of securities which during the escrow period restrict the holder from disposing of the restricted securities, creating any security interest in them or doing, or omitting to do, any act which would have the effect of transferring effective ownership or control of the restricted securities.
Retirement savings account
An account offered by financial institutions that is used to save money for retirement. These are simple, low cost, low return accounts.
Return, return on investment
Earnings from investments over a given period - usually expressed as a percentage per year of the amount invested.
Reverse mortgage
A type of loan often used in retirement as a way for people to access the equity in their home. The loan amount depends on your age, the value of the home and how it is taken (lump sum, regular payments or draw down as needed). Interest is added to the loan and compounds. The loan does not have to be repaid until the borrower moves out or the house is sold, usually as part of a deceased estate.
Reversionary beneficiary
The person who will receive the balance of your superannuation income stream after you die. This could be your spouse, child or other dependant.
Reward scheme
Offered by credit card providers or retailers, whereby you receive reward points depending on how much you spend. Reward points can then be exchanged for goods and services. Credit cards that offer rewards usually come with higher annual fees and interest charges.
Reweighting, rebalancing
Changing the proportion of the total portfolio which each investment represents.
Rights issue
Privilege granted to shareholders to buy new shares in the same company.
Risk
Chance or probability that an investment will result in a loss to an investor. Can also be referred to as the level of volatility returns attached to a particular investment.
Risk tolerance
The degree of uncertainty you are prepared to accept in relation to investment returns, in particular the extent to which you are prepared to experience a negative investment return while trying to achieve positive investment returns.
Risk_margin
Margin for futures and exchange traded options required to cover the likely one or two day probable worst case movement against the position.
Roll
Close out one position and at the same time open another over the same underlying asset with a later expiry date.
Rolling instalments
Type of instalment, having a longer life (up to 10 years) with a periodic reset date (usually yearly). On the reset date, the issuer may adjust the exercise price (often called the 'Loan Amount' of the Instalment) with the objective of maintaining a desired gearing level.
Routine transaction statement
Statement sent by the Issuer outlining all investor's transactions in that security.
S&P ASX 200
Investable benchmark for the Australian equity market. The S&P/ASX 200 is comprised of the S&P/ASX 100 plus an additional 100 stocks.
S&P500
The S&P500 is a stock market index that measures the performance of 500 largest companies, by market capitalisation, listed on exchanges in the United States.
Safe harbour
Provisions in the Corporations Act giving directors an exemption from insolvent trading liability where they are developing a course(s) of action that is 'reasonably likely' to lead to a 'better outcome' for the company than administration or liquidation. There is a list of factors to be considered by directors in attempting to use the safe harbour provisions and directors should seek appropriate advice from a suitably qualified professional
Salary sacrificing
When you and your employer agree to pay a portion of your pre-tax salary as an additional contribution to your superannuation. This can be a tax-effective strategy and usually suits middle to higher income earners.
Savings account
A deposit account held at a bank or other financial institution that offers a higher interest rate than most basic transaction accounts. Account holders can usually access their account at any time.
Scam
A trick designed to cheat you of your money.
Secondary card
An additional credit card given to a person you have nominated where any money they spend will be borrowings against your credit card account. You are liable for transactions on both cards.
Secondary market
Trading on market after the primary issue.
Secured creditor
A creditor who holds a security interest in some or all of a company's property
Secured loan
A loan that is backed by an asset. The lender may sell the secured asset to get its money back if you cannot repay the loan. Opposite of unsecured loan.
Secured note
A type of fixed interest investment that has a first ranking security interest over other property, for example a debt. Issued by companies as a way of raising capital whereby they promise to pay a fixed rate of interest and repay capital at a date in the future.
Securities Exchanges Guarantee Corporation (SEGC)
Trustee of the National Guarantee Fund (NGF).
Security
In relation to financial assets, a security is an investment such as shares or bonds which can be traded in financial markets.
Security for a loan
An asset that is put up to guarantee a loan. If the loan is not repaid, the lender may sell the asset to get its money back. See also mortgage.
Security interest
A form of security taken by a creditor over company assets, including personal property and real property (previously known as a 'charge'). Personal property of the company includes tangible and intangible property other than real property (e.g. motor vehicles, equipment, intellectual property and company shares). A mortgage and a hire purchase agreement are each a type of security interest
Security reference number (SRN)
Allocated by an issuer to identify a holder on an issuer sponsored or certificated subregister.
Self-managed super fund (SMSF)
A private super fund you can manage yourself. SMSFs are regulated by the Australian Taxation Office and can have one to four members.
Sell a contract
Enter into a futures contract to sell a specified underlying asset at a future date.
Senior debt holder
A holder of a debt security such as a corporate bond or secured note, in which the debt holder has priority over unsecured (subordinated) debt holders in the event that the company is wound up.
Series
All option contracts of the same class having the same expiry date (see expiry, expiry date, expiration) and the same exercise price.
Settlement
When the title or legal ownership of a financial product, such as shares or ETFs, is exchanged for money. A broker, or an agent of the broker, handles settlement.
Settlement day
The day in which cash settlement or delivery resulting from expired futures or options contracts is conducted.
Settlement month
The calendar month in which the last day that the contract can be traded falls.
SG
ATO term - Super guarantee - a prescribed minimum level of super that an employer must contribute on behalf of employees. The ATO administers the Super Guarantee Act, ensuring employers meet their obligations to employees.
SHA
ATO term - Superannuation holding account - money placed in a temporary holding account administered by the ATO pending transfer to an appropriate super fund.
shadow economy
ATO term - Also often known as the 'hidden economy', 'cash economy' or 'non-observed economy'. Refers to the 'economic underground' boundary of an Organisation for Economic Co-operation and Development (OECD) framework. It involves economic activity not declared, which may be a result of attempts to avoid tax obligations.
Share
A share is part ownership of a company. Shares are also known as equities or stocks.
Share capital
Company's issued and paid-up capital.
Share certificate
Also known as a scrip. A document with an identifying number that states that the person is a registered holder of a number of securities. Replaced by electronic holding statement in January 1999.
Share fund
A managed fund in which the investment manager invests in range of shares to satisfy a specific investment goal, such as maximising capital growth, dividend income or franking credits. May focus on a specific geographic region or industry sector.
Share indices
Measure of movement in the price of a nominated group of shares.
Share registry
Organisation which, on behalf of a company, records changes in share ownership, issues share holding statements and makes adjustments for dividend payments, bonus and rights issues.
Shares
Part-ownership in a company.
Short
Trader who has sold or who holds a position that will benefit from falling prices.
Short selling
The practice of selling a security or commodity that you do not own. You borrow the commodity or security from a third party (usually a broker) and immediately sell it to a buyer. You then buy identical securities back at a later date, to return to the lender.
Single Traded Auction Price (STAP)
The single traded auction price methodology: The STAP algorithm matches at a single price the most trades possible. Accordingly there is only one traded price each day. The indicative STAP price is visible to all during the market pre-open period.
Sophisticated investor
An investor who has had a gross annual income of $250,000 or more in each of the previous two years or has net assets of at least $2.5 million, as prescribed by the Corporations Regulations 2001 (reg 6D.2.03 and reg 7.1.28).
SPAN
SPAN = Standard Portfolio Analysis of Risk. SPAN is the margin calculation engine used by ASX Clear and ASX Clear (Futures) to calculate margins.
Special transaction statement
Defined in the Listing Rules as a statement of transactions in a security holder's account issued by the entity at the request of the holder.
Specific cover
CHESS Securities lodged as collateral to cover call options written over those specific CHESS securities. For example 1,000 BHP shares lodged to cover one written BHP call option.
Speculative investment
An investment that has the possibility of making an extraordinary profit but also a high possibility of losing most or all of an investor's initial investment.
Split
Share split or stock split involves the increase of the total number of shares outstanding, accompanied by a proportionate decrease in the price of each share. The aggregate value of the shares on issue remains the same.
Split holder
Splitting shares into units of lesser value.
Spot month
Nearest expiry month to the present.
Stamp duty
A state tax imposed on certain transactions, such as car registrations, mortgages and property transfers.
Standard deviation
Measures the dispersion of a set of data from its average. The higher the standard deviation the wider the spread of data. For investment returns, a higher standard deviation indicates a wider range of returns which indicates more volatility in a particular market.
Stapled security
Security where investors are purchasing both a trust and a related company through one security. This structure binds the investment portfolio together with a related business that may include a funds management company and/or property development company.
Statement of Advice (SOA)
A document that sets out the advice given to a consumer by their licensed financial planner or adviser. It must include the basis on which the advice is given, details of the providing entity, and information on any payments or benefits the adviser or licensee will receive.
Statutory warranty
A guarantee required under law that says traders and manufacturers must ensure their products are suitable for the purpose for which they are supplied.
STIR
Short Term Interest Rate.
Stock
Equities or shares. Can also be used to describe inventories held by a business.
Stock exchange
A market on which securities are bought and sold.
Stocks
A stock is part ownership of a company. Stocks are also known as equities or shares.
Stop loss
Predetermined sell (buy) order at a price below (above) the current price intended to minimise losses in event of further falls (rises).
Store card
A form of credit card offered by large retailers. Store cards are used like regular credit cards but usually charge much higher interest rates
Strata levy
A fee paid by property owners for the management of the common property of buildings established under a strata title
Strata title
A building, flats or units divided into blocks, each of which has a title and common property that is part of the land and building in the strata plan.
Strike price
Price at which the taker (buyer) of an option or warrant may buy/sell the underlying asset. Also known as the exercise price.
Subordinated note
A type of debt security in which the note holder's claim to the company's assets ranks behind those of secured note and senior debt holders if the company is wound up.
Subscribers
Initial purchasers in the primary issue.
Subsidiary
Company controlled by another company. The subsidiary company is an entity in its own right and pays its own tax.
Substantial shareholder
Person/company holding more than 5% of a company's voting rights.
Superannuation (super)
Money that you and your employers put into a special fund during your working life to provide you with money to live on when you retire.
Superannuation guarantee (SG)
The minimum amount that your employer must pay into your superannuation fund. It is currently 9.5% of your gross salary.
Superannuation withholding tax
ATO term - Tax deducted from super payments made directly to an individual.
Swaps
In a swap agreement, a counterparty agrees to pay the difference between the value of the ETF's assets and the value of the assets or index it is designed to track. When a synthetic ETF enters a swap agreement, this creates counterparty risk.
SYCOM
Sydney Computerised Market (SYCOM) is the previous name for the automated dealing system used to trade futures and ASX Listed CFDs. Now called ASX Trade24.
Tailor made combination
Multi-legged options order traded at a net price.
Takeover
When one company successfully makes a bid for the shares of another company and takes control of that company.
Taker
Buyer of an option contract.
Tangible asset
An asset with a physical form (e.g. stock or real estate)
Tax file number
A unique number assigned to taxpayers by the Australian Taxation Office for tax administration. You need to quote the number to employers, benefit and allowance providers, banks and other investment bodies.
tax gap
ATO term - An estimate of the difference between the amount of tax theoretically payable (assuming full compliance of tax law by all taxpayers) and the amount actually reported or collected for a defined period.
Tax-driven scheme
A scheme that attracts investment mostly for the tax benefits it offers, such as an agricultural or film scheme. An investment is said to be 'tax-effective' if investors pay less tax on it than they would have on another investment that gives the same return.
Tax-free threshold
The level of annual income, as set by the Australian Taxation Office (ATO), on which you do not have to pay income tax.
Taxation risk
The risk that changes to the tax system could affect the outcome of your investments.
Technical analysis
Method used to identify investment opportunities through the study of price action. A chart representing past price movements is the principle tool used to identify trends on which analysts can base their future predictions.
Telecommunications Industry Ombudsman (TIO)
A free independent service to help resolve telephone and internet complaints.
Tenancy
A person's right to occupy land or buildings as per the terms of a lease or other agreement.
Tenants in common
Where two or more people hold shares in a property. Each owner has the right to deal with their share of the property separately to the others. Tenants in common may pass on their share to a nominated beneficiary in their will
Term
The length of time a loan or an investment will run for.
Term deposit
An account with a financial institution where money is deposited for a set period of time. The interest rate is usually fixed for the term of the deposit and is generally higher than a transaction account but not always higher than some other at-call high interest savings accounts. Also known as a fixed deposit.
Terms of the scheme
As defined in the Listing Rules, it includes terms, conditions, rules, regulations or guidelines formulated to introduce or administer an employee incentive scheme.
Third party property insurance
A type of car insurance that covers damage you cause to other people's property (e.g. their car or home), as well as your own legal costs.
Third party, fire and theft insurance
A type of car insurance that covers damage to other people's property, and provides limited cover for damage to your own car, as a result of theft or fire.
Tick
Smallest allowed movement in price.
Time value
Amount by which an option premium exceeds intrinsic value.
Today's dollars
When an amount is expressed in today's dollars, it means the result has been adjusted for inflation (the rising cost of living) and for the cost of rising community living standards.
top-down approach
ATO term - Uses independent aggregated data sources to estimate the size of the theoretical tax base. These methods are typically used for indirect taxes.
Total and permanent disability (TPD) insurance
A type of life insurance that helps cover the cost of rehabilitation, debt repayments and the future cost of living if you are totally and permanently disabled. Each insurer has different definitions of what is and isn't considered to be permanently disabled, so always read the fine print so you know how the policy defines the cover.
total business income (TBI)
ATO term - All ordinary income earned in the ordinary course of running a business for the income year.
Trading halt
Defined in the Listing Rules as an interruption to trading at the request of an entity that is not a suspension from quotation.
Transaction account
An account with a financial institution where your money is readily available for day-to-day transactions.
Transaction fees
Charges for any account transactions you conduct i.e. withdrawals, deposits, transfers.
Transfer balance cap
A lifetime cap on the amount of super that you can transfer into 'retirement phase accounts' to pay a tax-free income stream.
Transition to retirement scheme
A scheme that allows you to reduce working hours in the lead-up to retirement without reducing take-home pay, or to continue working full-time and make significant tax savings by salary sacrificing heavily into super and supplementing take-home pay with a super pension.
Trauma insurance
A type of life insurance that provides cover if you are diagnosed with a certain illness that will make a significant impact on your life, such as cancer or a stroke. Trauma insurance pays a set amount that can be used for things like medical costs, repaying debt, or adjustments to housing or lifestyle changes.
Trust deed
Lays down the rules for a Trust, its investment guidelines and how benefits will accrue to beneficiaries and account holders.
Trustee
A person or firm that holds and administers property or assets for the benefit of a third party
Trustee (super fund)
People or a company appointed to manage a super fund on your behalf.
Trustee securities
Securities that meet the legal requirements of relating to the use of funds by trustees.
Trusts, unit trusts
Collective fund which holds a portfolio of securities on behalf of the investors who hold units in the trust.
Uncalled capital
Total amount of capital that as yet has not been called up on the shares which are currently issued.
Unclaimed money
Unclaimed money arises because organisations are unable to locate the owner of funds such as dividends, sale of shares, superannuation, insurance policies, wages, rent, bonds, proceeds from home sales, bank accounts etc.
Uncommercial transaction
A transaction that was unreasonable for a company to have entered into. It may be set aside by the company's liquidator provided it occurred within two years prior to the winding up, and when the company was insolvent or if the company became insolvent by entering into the transaction
Underinsurance
When there is not enough insurance to cover the value of the insured property.
Underlying instrument underlying security
Asset that the holder of a derivative has the right to buy or sell, or against which a cash payment is made on exercise of an option or warrant. The underlying instrument may be a security (such as shares in a company), a share price index, a commodity or a currency.
Underwriting underwriter
Party that agrees, for a fee, to purchase any unsold shares in an issue of shares.
Unfair preference
A payment made or other benefit given to a creditor by an insolvent company that causes the creditor to be in a more favourable position than other unsecured creditors in a liquidation. The company's liquidator can seek to recover an unfair preference provided it occurred within six months prior to the liquidation, and when the company was insolvent or if the company became insolvent by making the payment or giving the benefit
Unhedged
An investment fund where no steps have been taken to limit the effect of currency fluctuations on overseas investment returns.
Unit nav
Unit NAV = fund net asset value/number of units on issue in the fund.
Unit price
The value of a company or investment expressed as a single unit. A unit is similar to a company share.
Unit trust
A legal structure that holds assets for the benefit of unit holders. A trustee administers the trust, makes decisions about trust assets and is responsible for distributing income and capital according to the number of units each investor holds. Any profits made by the trust must be distributed to unit holders at the end of the financial year.
Unlisted company
A company that is not listed. Securities issued by unlisted companies generally cannot be traded on ASX.
Unlisted mortgage scheme
A mortgage scheme that is not listed on a public market, such as the Australian Securities Exchange.
Unlisted property trust
A property trust that is not listed on a public market, such as the Australian Securities Exchange.
Unsecured creditor
Someone owed money and who does not hold a security interest over a company's property
Unsecured loan
A loan for which no asset has been used as security. The interest rate is usually higher than for a secured loan as there is a higher risk to the lender of not getting their money back.
Unsecured note
A type of fixed interest investment issued by a company whereby it promises to pay regular interest payments and return the capital at the end of the investment term. There is no security offered for the investment. Find out more about unsecured notes.
Unsecured notes
Loan made to a company for a fixed period of time at a fixed rate of interest. They are issued mainly, but not only, by finance companies for between three months and three years. They offer a higher rate of interest than a debenture of the same maturity, but do not have the same security as a debenture.
Unsolicited calls
An unexpected call or visit by an unknown person, trying to sell something.
USM
ATO term - Unclaimed super money - An accumulated super benefit transferred to the ATO from an inactive account, which is immediately payable. Can also apply to accounts for a former temporary resident and a small or insoluble lost member.
value-added tax (VAT)
ATO term - A tax on consumer spending. The tax is placed on a product or service when there is value added at the stage of production or at the final sale to the consumer. Each business in the supply chain charges VAT on their sales and is entitled to a refund of VAT paid on their inputs or purchases. Australia's GST is a value added tax on goods and services for domestic consumption.
Variable interest rate
Where consumers receive interest on an investment or pay interest on a loan at a rate that may go up or down during the term.
Variable rate home loan
A home loan where payments increase or decrease in line with rises or falls in official cash rates. Opposite of fixed rate home loan.
Variation margin
Call made by the clearing house for additional funds or eligible security to be lodged to cover an unfavourable movement in the price of futures, options or exchange traded CFDs.
Vendor finance
Where the seller of a house or other asset, such as a car, offers to lend you money to buy the property or asset as part of the sale.
Volatility
The extent to which the return on an asset fluctuates over time. It is measured by the rate at which the price of a security moves up and down. The higher the frequency of movement in the price of a security, the higher the volatility and the greater the risk.
Voluntary administration
An insolvency procedure where a financially troubled company appoints a registered liquidator (called a 'voluntary administrator'). The appointment can be made by the directors, a liquidator or provisional liquidator of the company, or a secured creditor that holds a security interest in the whole, or substantially the whole, of the company's assets.
Voluntary administrator
A registered liquidator appointed to carry out the voluntary administration of a company. The role of the voluntary administrator is to take control of the company, investigate the company's affairs, report to creditors and recommend to creditors whether the company should enter into a deed of company arrangement, go into liquidation or be returned to the directors.
VWAP
Volume weighted average price.
Warrant
A financial product issued by a bank or other financial institution which gives you the right to buy shares (or currency, an index or a commodity) at a set price within a specified time and traded on the Australian Securities Exchange.
Warrant code
Six-letter code used to identify and to trade ASX quoted warrants. The first three letters of the code identify the underlying security. For most equity warrants this is the same as the three-letter ASX code of the underlying company shares. The fourth letter of the code identifies the type of warrant, the fifth letter the warrant issuer, the sixth letter is a sequential code.
Warrant series
All warrants with the same terms of issue and underlying asset and having the same warrant issuer, exercise price, expiry date (see expiry, expiry date, expiration) and settlement procedure. Each warrant series has a separate warrant code.
Warrants
Financial instruments traded on ASX. Broadly split into products with investment purposes and those for trading purposes; warrants may be issued over securities (such as shares), a basket of securities, a share price index, currencies or commodities.
Warranty
A document which guarantees that a product will remain in working order for the term of the warranty. It contains information on how the seller or manufacturer will repair, replace or refund the product if it is defective.
Will
A legal document that sets out how you want your assets and other belongings to be distributed when you die.
Winding-up order
A court order for the winding up of a company (liquidation). The first step in a court liquidation, usually made after an application by a creditor
wine equalisation tax (WET)
ATO term - A tax on wine consumed in Australia. It is based on the value of the wine sold and generally applies to the last wholesale sale (usually between the wholesaler and the retailer) although it may apply in other circumstances.
Worthless shares
Shares determined to be of little or no value by reference to the circumstances leading to a delisting or suspension, the length of a suspension, share trading history and last on-market share price, most recent financial and cash flow statements, prospects (including likelihood of re-financing) and other factors such as whether the entity is in external administration.
Wrap account
Allows managed investments to be combined or 'wrapped' into a single account. Generally used by financial planners for convenience.
Writer
Seller of an option contract.
XT
Trading condition code. See crossed trade.
Yield
Return on an investment expressed as a percentage.
Yield to maturity (YTM)
A total return measure for bonds which takes account of both capital gain (or loss) and income earned. YTM is calculated using purchase price (not face value) and assumes the instrument is then held to maturity.
