Glossary

Click on a letter to browse the terms associated with it.

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Cable	A term used in the foreign exchange market for the U.S. Dollar/British pound rate.
CAD	(I)Canadian dollar (II) Cash Against Document
Capital	The overall assets of an individual less liabilities.
Capital Adequacy	A measure of the financial strength of a bank or securities firm, usually expressed as a ratio of its capital to its assets.
Capital growth	In general terms, the increase in value of an asset
Capital Risk	The risk arising from a bank having to pay to the counter party with out knowing whether the other party will or is able to meet its side of the bargain.
Candlestick Chart	A chart that displays the daily trading price range (open, high, low and close). A form of Japanese charting that has become popular in the West. A narrow line (shadow) shows the day's price range. A wider body marks the area between the open and the close. If the close is above the open, the body is white (not filled); if the close is below the open, the body is black (filled).
Carry (Interest-Rate Carry)	The income or cost associated with keeping a foreign exchange position overnight. This is derived when the currency pairs in the position have different interest rates for the same period of time.
Cash Delivery	Same day settlement
Cash market	The market in the actual financial instrument on which a futures or options contract is based.
Cash and Carry	The buying of an asset today and selling a future contract on the asset. A reverse cash and carry is possible by selling an asset and buying a future.
Cash Settlement	A procedure for settling futures contract where the cash difference between the future and the market price is paid instead of physical delivery.
Central Bank	A bank, administered by a national government, which regulates the behaviour of financial institutions within its borders and carries out monetary policy.
Central Rate	Exchange rates against the ECU adopted for each currency within the EMS.Currencies have limited movement from the central rate according to the relevant band.
Chartist	A person who attempts to predict prices by analyzing past price movements as recorded on a chart.
Clean float	exchange rate that is not materially effected by official intervention.
Closing a Position	The process of selling or buying a foreign exchange position resulting in the liquidation (squaring up) of the position.
Closing Market Rate	The rate at which a position can be closed based on the market price at end of the day.
Commission	The fee that a broker may charge clients for dealing on their behalf.
Confirmation	Written acknowledgment of a trade, listing important details such as the date, the size of the transaction, the price, the commission, and the amount of money involved.
Contract	An agreement to buy or sell a specified amount of a particular currency or option for a specified month in the future
Conversion Account	A general ledger account representing the uncovered position in a particular currency. Such accounts are referred to as Position Accounts.
Conversion	The process by which an asset or liability denominated in one currency is exchanged for an asset or liability denominated in another currency.
Conversion arbitrage	A transaction where the asset is purchased and buys a put option and sells a call option on the asset purchased, each option having the same exercise price and expiry.
Convertible currency	A currency that can be freely exchanged for another currency (and or gold) without special authorization from the central bank.
Copey	Slang for the Danish krone.
Correspondent Bank	The foreign banks representative who regularly performs services for a bank which has no branch in the relevant centre, e.g. to facilitate the transfer of funds. In the US this often occurs domestically due to inter state banking restrictions.
Counterpart	A participant in a financial transaction.
Countervalue	Where a person buys a currency against the dollar it is the dollar value of the transaction.
Country risk	The risk attached to a borrower by virtue of its location in a particular country. This involves examination of economic, political and geographical factors. Various organisations generate country risk tables
Covered Arbitrage	Arbitrage between financial instruments denominated in different currencies, using forward cover to eliminate exchange risk.
Covered Margin	The interest rate margin between two instruments denominated in different currencies after taking account of the cost of forward cover.
Cover	(1) To take out a forward foreign exchange contract. (2) To close out a short position by buying currency or securities which have been sold.
Credit Risk	Risk of loss that may arise on outstanding contracts should a counter party default on its obligations.
Cross deal	A foreign exchange deal entered into involving two currencies, neither of which is the base currency.
Cross-Rate	The exchange rate between 2 currencies where neither of the currencies are USD.
Currency	Money issued by a government. Coins and paper money. It is a form of money used as a unit of exchange within a country.
Currency Pair	The two currencies in a foreign exchange transaction. The “EUR/USD” is an example of a currency pair.
Currency Risk	The risk that shifts in foreign exchange rates may undermine the dollar or any other foreign currency value of overseas investments.
Current Account	The net balance of a country's international payment arising from exports and imports together with unilateral transfers such as aid and migrant remittances. It excludes capital flows.
Current Asset	Assets of a company that are regularly turned over and can readily be converted into cash, including stocks, work in progress, marketable securities and debtors.
Custodian Institution	A financial institution that holds securities and other assets for safe keeping and record keeping on behalf of corporate or individual investors
Contango	A futures market in which prices in succeeding delivery months are progressively higher. The opposite of Backwardation.