Arbitration is an alternative dispute resolution mechanism provided by a stock exchange for resolving disputes between the trading members and their clients in respect of trades done on the exchange.
Barcode Labelling :-
A Barcode is a printed code that consists of a series of vertical bars, which vary in thickness. Barcodes are capable of being ‘read’ and decoded by barcode scanners. They are used in various industries as application tools. They are used to identify retail sales items, identification cards, library books and other products. They are also utilised to manage work in progress, to track documents and for many other automated identification applications.
Basis Point (bps) :-
One basis point is one-hundredth of a percentage point.
Book Building :-
A process used to ascertain and record the indicative subscription bids of interested investors to a planned issue of securities. The advantages of this technique of obtaining advance feedback, are that it results in optimal pricing and removes uncertainty regarding mobilisation of funds.
Book Value :-
Book value is the net worth that comprises of equity capital plus reserves and surplus minus accumulated losses divided by the number of shares outstanding as rendered in the latest annual report of a company. The book value of an equity share tends to increase as the ratio of reserves and surplus to the paid-up equity capital increases.
Calendar Spread :-
This is done between futures contracts. The investor buys the near month contract (ex. October gold) when prices rise or sell the positions in the near months and purchase the forward months contracts. This trading is popular in gold, soya, silver, crude, chana, urad, jeera and chilli.
CDs :-
A Certificate of Deposit (CD) is a negotiable promissory note issued by the banks and the Financial Institutions (FIs) with a maturity date of upto a year. It is secure in nature and issued at a discount to the face value (the redemption to investors takes place at the face value).
Collateralised Borrowings Lending Obligation (CBLO) :-
Collateralised Borrowings Lending Obligation (CBLO) is a money market instrument for borrowing against the securities, held in custody by the Clearing Corporation of India Limited (CCIL) for the amount lent.
Commodity Exchange :-
Like stock exchanges in capital markets, a commodity exchange is an association or a company or any other body corporate that is organising futures trading in commodities. The new generation National-level exchanges have been set up in a corporatised/demutualised environment. There are three nationally recognised commodity exchanges in India and 22 regional exchanges. The National exchanges are Multi Commodities Exchange of India (MCX) in Mumbai, National Commodities and Derivatives Exchange of India (NCDEX) and National Multi Commodities Exchange (NMCE).
Commodity:
A commodity is a product having commercial value that can be produced, bought, sold and consumed. It is normally in a basic raw unprocessed state. But products derived from primary sector and structured products are also traded at these exchanges. In India, the list includes previous metals, ferrous and non-ferrous metals, spices, pulses, plantation crops, sugar and other soft commodities.
Trading done in the Commodity Exchanges:
Like the stock market online trading system, commodity exchanges are also typically on the online trading system. It is an order-driven, transparent trading platform, which is reachable to the various participants through the Internet, VSAT and leased line modes operated by members or sub-brokers spread around country.
Demutualisation :-
It essentially means segregating the trading rights to member brokers from the ownership and management of the exchanges. It aims at curbing the clout of member-brokers in running the exchanges.
Due Diligence :-
An internal audit of a target firm by an acquiring firm. Offers are often made contingent upon resolution of the due dilengence process.
Exchange Rate :-
Just as the price of any asset, the exchange rates is the price at which you can buy that currency. If at any given rate, the demand for a currency is greater (lesser) than its supply, its price will r
ise (fall).
ise (fall).
What makes currency rates move ?
The exchange rate reflects the strength of an economy in terms of its growth performance, balance of payments etc. as well as economic expectations that drive the ‘market sentiment’ and how much the market has reacted or ‘discounted’ the anticipated information.
Are exchange rates entirely market-determined ?
Under the current managed float regime, most currencies, including India, let their rates fluctuate according to market forces. But if a currency appears to be ‘overvalued’ or ‘undervalued’ by the market or if rate movements are significantly adversely affecting an economy’s macroeconomic performance, then Central banks intervene to depreciate (or appreciate) their currency. Exchange rates also move on expectations of change in regulations relating to exchange markets and official intervention. In India, the Reserve Bank’s basic philosophy is a flexible one, without any particular ‘target’ for the rupee’s rate. With a broad objective to avoid excessive volatility, facilitate growth of Indian exports and generate confidence among overseas investors.
Futures contract :-
Futures contract is an agreement between two parties to buy or sell a specified quantity and defined quality of a commodity at a certain time in future at a price agreed upon at the time of entering into the contract. This is typically traded at regulated commodity exchanges.
Futures and options :-
A futures contract is an agreement between two parties to buy or sell an underlying asset at a certain time in the future at a certain price. It has a standardised date and month of delivery, quantity and price.
An option gives the buyer the right but not the obligation to buy the underlying asset. A futures contract on the other hand is obligatory on both the buyer and the seller is a transaction between the buyer and seller to buy or sell an asset at an agreed price at a future date. This is a common feature of options trading in shares, stocks and commodities.
Geographic Information Systems (GIS) :-
The GIS are computer systems used to store and process geographic data. The GIS scores over other data management systems in its ability to present spatial relationships in a digital map form that is easy to visualise and understand. Data is the central resource of a GIS system. The GIS systems process two kinds of data-spatial and attribute. Spatial data gives the geographic location of a point of interest (e.g. railway station, school, bank branch, the ATM etc). Attribute data contains other characteristics of that point of interest.
Hot Money :-
Money that moves across country borders in response to interest rate differences and that moves away when the interest rate differential disappears.
Independent Director :-
An independent Director is a non-executive Director on the board of a company who has integrity, expertise and independence to balance the interests of the various stakeholders. The idea of having them is to bring objectivity to the board decisions and to protect general interests of the company, including that of the minority and the small shareholders. The independent Directors are expected to improve the corporate governance in a company.
Who cannot be an independent Director in a listed company ?
According to the SEBI, having a ‘pecuniary’ relationship with the company or its arms, other than receiving the Director’s remuneration, is a disqualification. The independent Director must not be related to the promoters or anyone in the senior management position from one level below the board. He should not have been an executive of the company or of its audit, consulting or legal firms in the past three financial years.
Which listed entities are outside the scope of the revised Clause 49 ?
The Clause will apply to the listed entities which are not companies but body corporates such as the private and the PSU banks, the Financial Institutions (FIs) and the insurance companies, only to the extent that it does not violate the laws governing them. Revised Clause 49 does not apply to mutual funds.
Inter-exchange arbitrage :-
This is popular among liquid commodities like gold and silver, where the arbitrage can take place between the Indian exchanges and the foreign exchanges, where contract specifications are similar.
Interest Rate Swaps (IRS) :-
Interest Rate Swaps (IRS) are Over-The-Counter (OTC) products that involve an exchange of cash flows between the two counter parties at pre-determined specifications wherein the fixed rate interest payments are exchanged for floating rate payments.
Islamic Banking :-
It is banking practiced as per the Islamic principles as prescribed in the ‘shariah’ known as ‘Fiqh al-Muamalat’ (Islamic rules on transaction). The Islamic law prohibits interest on both the loans and the deposits. Interest is also called ‘riba’ in Islamic discourse. The argument against interest is that money is not good and profit should be earned on goods and services only and not on control of money itself.
What are the different products offered ?
Investment finance is offered by these banks through ‘Musharka’, where a bank participates as a Joint Venture (JV) partner in a project and shares the profits and losses. Investment finance is also offered through ‘Mudabha’, where the banks contribute the finance and the client provides the expertise, management and labour and the profits are shared in a pre-arranged proportion, while the loss is borne by the bank.
Where is it practised ?
Islamic banks have come into being since the early 70s. There are nearly 30 Islamic banks all over the world, from Africa, Europe to Asia and Australia and are regulated even within the conventional banking system.
Kaizen :-
Kaizen comes from two words : Kai, which means ‘to change’ and zen, which means ‘good or for the better’. Together, the words mean continuous change for the better. It is not just a philosophy of the workplace, it also means continuously improving in every facet of life, including business, industry, commerce Government and diplomacy, among others. In full implementation, it becomes the foundation of all activities. Kaizen requires everyone in the organisation to be involved in the improvement process executives, management, supervisors and workers.
Letter of Offer :-
A Letter of Offer is a document addressed to the shareholders of the target company containing disclosures of the acquirer/Persons Acting in Concert (PACs), target company, their financials, justification of the offer price, the offer price, number of shares to be acquired from the public, purpose of acquisition, future plans of acquirer, if any, regarding the target company, change in control over the target company, if any, the procedure to be followed by acquirer in accepting the shares tendered by the shareholders and the period within which all the formalities pertaining to the offer will be completed.
Merchant Banker :-
An intermediary who provides various financial services, other than lending money, such as managing public issues, underwriting new issues, arranging loan syndications and giving advice on portfolio management, financial restructuring, mergers and acquisitions.
Mid-cap stock :-
The name 'mid-cap' originates from the term medium capitalised. It is based on the market capitalisation of the stock. The National Stock Exchange (NSE) defines the mid-cap as stocks whose average six months' market capitalisation is between Rs.75 crore and Rs.750 crore. In the US, the midcap shares are those stocks that have a market capitalisation ranging from Rs.9,000 crore to Rs.45,000 crore. In India, these shares are classified as large-cap shares.
MIFOR :-
MIFOR is an interest rate derivative, which is calculated by adding dollar London Interbank Offered Rate (LIBOR) rates with the rupee-dollar forward premia. The MIFOR rate is hence, the borrowing cost from overseas. It is utilised to hedge against the movement of global interest rates. LIBOR is the term money benchmark for the Euro-dollar market.
Net worth :-
Net worth is the difference between the total assets and total liabilities.
Participatory Notes (PNs) :-
Participatory Notes (PNs) are a derivative instrument issued by the FIIs to their overseas clients, who are not registered with the Indian regulators.
Plea Bargaining :-
Plea Bargaining is the import of principles of contract into criminal law.
Penny Stocks :-
Penny stocks is a term used to define cheaply available stocks of typically loss-making companies. Penny stock is used in the context of general equities. The stocks that typically sell for less than $1 share, although it may rise to as much as $10/share after the Initial Public Offering (IPO), usually because of heavy promotion.
Podcasting :-
A term based on the name of Apple’s portable media player, allows customers to download audio and now video segments for free, to their computers and portable devices.
Profit Booking :-
Selling shares when their prices have risen above their purchase price.
Profit taking :-
Selling commodities, securities etc. at a profit, either after a market rise or because they show a profit at current levels but will not do so if an expected fall in prices occurs.
Settlement :-
Settlement refers to the import of principles of contract into civil or administrative law.
The Cash and Carry Arbitrage :-
This is the easiest form of arbitrage, where the investor has to buy the commodity in the spot market and sell it in the futures market. This is largely successful in gold and silver and is also popular among various agricultural commodities.
The Price Earning ratio (P/E ratio) :-
The P/E ratio is the ratio between the Market Price of the Share (MPS) and the Earning Per Share (EPS). This ratio tells us how many times the market price of the shares is vis-à-vis its earning per share.
