Are a special type of Ordinary Shares. The dividends are the same, but the owners are unable to vote at company meetings.
Do you have more than one account? You can link your GAM accounts and then access them from one username and login.
This is the interest due on a bond or other fixed income securities that must be paid by the buyer to the seller. This amount is worked out at the coupon rate of interest multiplied by the days from the previous payment date, up to but not including the settlement date.
One company takes over another by purchasing its assets and/or shares.
We make recommendations based on the information provided in the financial questionnaire – your investment objectives, attitude to risk, time horizon and individual requirements but the final decision remains with you.
AGM (Annual General Meeting)
A meeting held by companies once a year where shareholders are invited to attend and vote on important issues. The purpose of the meeting is to approve dividends and the annual financial statements, and to appoint or remove directors and auditors. Decisions made at company meetings are carried out by the passing of resolutions.
Alternative Investment Market. The London Stock Exchange’s global market for smaller and growing companies.
American Depository Receipts(ADRs)
A negotiable certificate issued by a US bank representing a specific number of shares of a foreign stock which can be traded on a US stock exchange. ADRs make it easier for US investors to invest in foreign companies; they do not carry the high transaction and custody costs associated with buying the shares in their local market.
This is an accounting procedure that reduces the cost value of a limited life asset or intangible asset through periodic charges to income. The purpose of this is to reflect the resale or redemption value of the asset.
Articles of Association
When companies are set up, part of the process is to register a Memorandum and Articles of Association with the Registrar of Companies. The Articles of Association set out the company’s internal procedures. For example, what happens at meetings, voting rights, powers of Directors etc. Any changes to them have to be agreed by shareholder votes.
The spread of investments across different asset classes. Establishing a diversified allocation of asset classes can reduce the volatility of your portfolio whilst increasing the performance.
Investments such as shares, special situations, commodities and fixed interest.
Authorised Share Capital
The maximum number of shares a company is allowed to issue. This amount is stated in the company’s Memorandum of Association, and can only be changed with shareholders consent.
For cash markets, this is a situation where the offer price of a security is lower than the bid price. For futures markets, it is a market condition in which the futures price is lower in the distant delivery months than in the near delivery months.
Stands for Bankers’ Automated Clearing Service, a United Kingdom scheme for the electronic processing of financial transactions. Is used to withdraw funds from your account and takes 3 business days. Faster BACS arrives the same day but is limited to amounts up to £10,000.
A statement showing at a specific point in time the assets and liabilities of a company.
This is another word for a transaction or a deal.
This is the term for a market which is falling, traditionally defined as where the price is 20% below its recent high.
These do not show the owner’s name, and there is no register kept of all the current owners. If you physically hold the document, then you’re the owner, just like a bank note.
Bed & ISA
This is where shares in an investment account are sold and reinvested in an ISA. The benefit is you can use existing money or investments to take advantage of annual tax allowances rather than having to find new money, which may not be available.
The highest price any buyer has declared that they are willing to pay for a specific security at a given time, determined by the current quotes and orders in the trading system.
This considers various characteristics of the financial instrument concerned: price, costs, speed and likelihood of execution and settlement, the size of the order, the possible execution venues available, liquidity, the settlement currency and any other consideration relevant to the execution of the order. These are weighted accordingly to each of the above criteria and are examined on an order-by-order basis. Usually price will be considered the most important factor in obtaining the best possible result for your orders. See our Order Execution Policy for further details.
The lowest price any seller has declared that they are willing to accept for a specific security at a given time, determined by the current quotes and orders in the trading system.
The rate at which the market or a particular trader is willing to buy the stock from you.
Bid offer spread
The difference between the buying and selling prices of a security.
This security is currently engaged in a bid situation.
A publicly traded company known for the quality and wide acceptance of its products, services and management, and for its ability to profit and pay dividends to shareholders.
The market price of a bond depends on the coupon rate, the market interest rate and the number of years to maturity. Bond prices are inversely related to interest rates.
Debt securities issued by governments and companies as a means of raising capital which generally entitle the holder to a fixed-rate of interest during their life and repayment of the amount of the bond at maturity.
Also known as a “scrip” or “capitalisation” issue. New shares are given to existing shareholders, free of charge, in proportion to their current holding. It helps a company increase the number of shares available for trading, and reduce the current market price per share.
The original cost of an investment, generally used to compare against the current market value.
To drop to a low price and recover.
A market which is is a rising trend.
A Corporate Action that will occur when a company decides to repurchase shares in existence by offering to buy back some of their shares from existing shareholders. This has the effect of reducing the number of shares, thereby increasing the earnings per share for existing shareholders.
Beneficial Owner – The underlying owner of a security, who has paid for the stock and is therefore entitled to the benefits of ownership.
Tab Content goes Capital Gains Tax (CGT)
A tax on profit made from the disposal of assets over and above their CGT exemption in any one year (applicable to UK residents).
Money from a company’s reserves is converted into issued capital, which is then distributed to shareholders in place of a cash dividend. Also known as a bonus or scrip issue.
A cash payment usually paid out twice a year as an interim and final payment. In the US dividends are generally paid 4 times a year on a quarterly basis.
CDIs (Crest Depository Interests)
These are UK securities representing an underlying interest in an overseas security. For ease, they are settled in the UK & Irish depository CREST.
A paper share certificate, evidencing legal title to a shareholding. It is more and more common to hold shares electronically through a broker’s nominee service.
Change on the day
The difference between the previous days closing price and the current price.
Stands for Clearing House Automated Payment Service – allows you to make a same day withdrawal from your account.
The set of techniques used in technical analysis in which charts are used to plot price movements, volume, settlement prices, open interest, and other indicators, in order to anticipate future price movements. Users of these techniques, called chartists, believe that past trends in these indicators can be used to extrapolate future trends.
The price of a bond without any adjustment for accrued interest.
This is where the settlement date of a sale matches the settlement date of the purchase. This just leaves the loss to be paid for or the profit realised, without the need to pay for the purchase.
The mid price at the time of the close on the previous trading day.
Collective Investment Schemes
These offer investors the ability to spread their risk by investing into just one product along with lots of other investors; the capital generated is then pooled together and invested into a wide variety of equities, bonds, gilts, property etc. One benefit is greater buying power, because all investors’ money is pooled together, which helps lower any potential costs. Examples of these types of investments are Investment Trusts, Unit Trusts and ETFs.
This is the fee charged by stockbrokers for buying and selling shares for customers. When buying shares, commission is added to the total cost, and when selling shares it’s deducted from the amount raised.
A physical substance, such as food, grains and metals.
This is the total amount of the transaction i.e. the amount required to purchase the shares and pay the commission and stamp duty.
Consolidated Tax Certificate (CTC)
A Consolidated Tax Certificate (CTC) details all dividend payments received between the period of April 6th to April 5th of the following year.
Where a company reduces the number of shares it has in circulation by consolidating its share capital.
A contract note details the full title of stock, price, stamp duty (if applicable), consideration, commission, time of deal etc, and is sent no later than the next working day after a transaction is made.
Contracts for Difference
A CFD is a Contract For Difference. The contract is an agreement between broker and a trader to exchange the difference between the share price at the opening and the share price at the closing of a particular trade, so resulting in either a profit or loss. With a CFD, you receive many of the benefits of share ownership (such as dividends and price performance) but you don’t actually own the share. A CFD is a derivative product.
These are bonds that can be converted, at the choice of the bondholder, into the shares of the issuer.
Convertible Preference Shares
These are Preference Shares, which allow the holder to convert them into Ordinary Shares at some date in the future.
A corporate action is an event initiated by a company that affects the shares issued by the company. This includes a wide range of corporate actions, including takeovers, rights issues, demergers, scrip dividends and conversions.
The participant with whom a trade is being transacted.
The annual interest rate paid on a bond. The coupon rate is expressed as a percentage of the nominal (par) value.
Warrants give the owner the “right but not the obligation” to buy or sell an underlying at a fixed price on a future date. The fixed price is known as the “exercise” price, and the future date is known as the “expiry” date. Covered warrants are issued by financial institutions and are “covered” because the institution buys the underlying investments in the market.
CREST is an electronic settlement and registration system, which organises delivery of cash and shares to the right parties, as well as transferring legal ownership of the shares.
Crest transfer form
This is an official form to be used for transferring certificated holdings to a CREST member such as a broker to be held by that CREST member in an electronic format.
Means ‘with dividend’. If you buy a share that is cum dividend, it you have entitlement to the next dividend payment. The dividend will already have been declared (but not paid) and so its value will be reflected in the share price.
Cumulative Preference Shares
A type of share that gives its owner the right to receive a set amount of money as a dividend. If this money cannot be paid in time, it must be paid later, and before any money is paid to owners of ordinary shares.
An organisation which holds client’s assets in safe custody, ensures that they are not released without authorisation, and ensures that timely and accurate collection of dividends, and other actions concerning your stock, are undertaken.here
The highest price reached by a security or index during the day.
The lowest price reached by a security or index during the day.
Dealers buy and sell securities on behalf of the broking firm (or investment bank).
The amount you can trade up to without having to make a payment until the settlement date.
A password issued by GAM required when placing trades online. If you have lost or forgotten your dealing password, please call us on +350 200 75181 or email firstname.lastname@example.org.
A type of long-term bond, taken out by a company, which it agrees to repay at a specified future date. Usually secured against specific assets (mortgage debentures) or through a floating charge on the firm’s assets.
Companies are able to raise money by borrowing money from investors, and promising to pay them back on an agreed date. For the period of time whilst the money is owed, the company will also pay interest to the investor. These agreements are known as bonds, or if they’re issued by the UK Government then they’re known as gilts.
These are a special type of Ordinary Shares, but owners are only given a dividend after all the ordinary dividends have been paid.
These are shares which are held in electronic form rather than certificated form, which makes them easier to buy and sell.
A derivative is an instrument whose value depends on the performance of an underlying asset or security, which may be a commodity or a financial instrument.
The price of a bond, which includes the accrued interest element.
The act of spreading capital across different investments to reduce risk.
The way a shareholder receives their share in profits made by the company. The dividend amount is calculated in pence per share and UK dividends are usually paid twice a year; the first one is known as the interim dividend, and the second is known as the final dividend.
Should shares in a company be bought for T+10 settlement the day before their Ex-Div Date, the investor is legally entitled to the next dividend payment. However, the shareholder register won’t be updated to show this until after the Record Date. This means the dividend payment won’t be automatically sent to the purchaser; it will still be sent to the seller, who isn’t entitled to it. The money has to be “claimed” from the person who received it, and forwarded on to the purchaser.
The percentage of a company’s share price that it pays out as dividends over the course of a year. The Dividend Yield is calculated as the Total Dividend divided by the Share Price multiplied by 100. The Dividend Yield is displayed as a percentage.
Dow Jones Industrial Average
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq. The DJIA was invented by Charles Dow back in 1896.
Entitlement Issue (Open Offer)
Shareholders are given the right to subscribe for the new fully paid share. The new shares are not issued in nil paid form.
Stands for Exchange Price Information Code. Also referred to as a “symbol” or “ticker”. This is a three or four letter code, unique to each company. It saves you having to type out the company name in full.
Earnings Per Share is calculated as the net income attributable to ordinary shares for a specific period divided by the number of outstanding ordinary shares. Companies usually use a weighted average number of shares outstanding over the reporting term.
Ownership interest in a company in the form of common stock or preferred stock.
An Exchange Traded Commodity (ETC) is an investment vehicle that tracks the performance of an underlying commodity or group of commodities. It is a variation on the Exchange Traded Fund (ETF) and is traded just like normal shares.
Euro – the common currency of the European union.
This is a clearing house for securities traded in the Euromarket. Euroclear specialises in verifying information supplied by two brokers in a securities transaction, and in the settlement of securities.
The opposite of ‘cum’, literally meaning ‘without’. Used to indicate that the buyer is not entitled to the next dividend payment.
Trading has previously commenced “ex” rights on this stock.
Ex Bonus Price
The theoretical value of each share after there’s been a Bonus Issue.
Exchange Market Size (EMS)
Exchange Market Size (EMS) is the maximum number of shares that the market makers are obliged to quote for a particular security. EMS is based on a percentage of the share’s average daily turnover in the previous year.
The rate at which one currency trades against another.
Exchange Traded Funds (ETFs)
A security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange. They have low management fees and unlike investment trusts, do not trade at a discount or premium to NAV.
An exchange is an organised market place that provides access to capital and facilitates securities dealing through trading platforms and services.
Ex Dividend Date
Any shareholder who owns or buys their shares before this date will be entitled to the next dividend payment. Before this date, shares are described as “cum” dividend (“cum” is Latin for “with”). Any shares bought on or after this date are “ex” dividend; without the right to the payment.
A service where the stockbroker simply executes the trade for the client and does not give advice on what to buy or sell.
Exponential Moving Average
A type of moving average that is similar to a simple moving average, except that more weight is given to the latest data. The exponential moving average is also known as “exponentially weighted moving average”.
The full financial amount you are exposed to. This is particularly relevant ot derivatives, where you are trading on margin.
Settlements periods that are above a T+3 settlement are considered as “extended settlements” which can carry a premium from the market maker as they are buying T+3 and selling, say, T+20. This sort of period will carry a premium of approximately 1%, which represents the market maker’s financing costs.
Extraordinary General Meeting (EGM)
These are called as and when special matters arise, which need to be discussed and voted upon by shareholders.
Fill or Kill Order
An order which must be executed immediately at a specified price or better. If this order cannot be dealt in the market your order will be cancelled.
The dividend paid by a company at the end of the financial year.
Financial assets such as stocks, bonds shares or currencies.
Financial Services Commission (FSC)
The regulator of the Gibraltar financial services industry.
The year for which corporate tax rates apply.
A quote whose price is guaranteed. That is, market participants are obliged to deal at the displayed prices or volumes, when their quotes are firm. Firm quotes are displayed during the mandatory quote period.
The process by which a company lists on the market for the first time. Also referred to as an Initial Public Offering (IPO).
An over-the-counter market where traders conduct foreign exchange transactions. Forex is also known as the foreign exchange market.
An index of the share prices of the UK’s 100 largest companies by market capitalisation.
The FTSE 250 is a capitalisation-weighted index consisting of the 101st to the 350th largest companies on the London Stock Exchange (the next 250 companies below the FTSE 100)
This is the main market of the London Stock Exchange, where you find the likes of BP, GlaxoSmithKline and Rio Tinto. Also known as the Official List.
A fund is a collective investment scheme where money is pooled, which is invested in a portfolio of securities with a common investment purpose.
A financial contract obligating the buyer to purchase an asset (or the seller to sell an asset), such as a physical commodity or a financial instrument, at a predetermined future date and price. Futures contracts are standardised to facilitate trading on a futures exchange. Some futures contracts may call for physical delivery of the asset, while others are settled in cash. Futures can be used either to hedge or to speculate on the price movement of the underlying asset.
Gilts are bonds issued by the British Government. A conventional gilt will pay a fixed cash payment every 6 months until maturity, at which point a final payment is made and the return of the initial investment.
Global Depositary Receipts
A global depository receipt (GDR) is a certificate issued by a depository bank, which purchases shares of foreign companies and deposits it on the account. GDRs represent ownership of an underlying number of shares. GDRs facilitate the trading of shares, and are commonly used to invest in companies from developing or emerging markets. Prices of GDRs are close to the value of the underlying shares, but they are traded and settled independently.
Gross National Product. GNP is the total value of all final goods and services produced within a nation in a particular year, plus income earned by its citizens (including income of those located abroad), minus income of non-residents located in that country.
The total amount before anything is deducted.
Guaranteed Stop Loss
This is a stop loss order, which is guaranteed by the CFD provider (a stop loss is simply a market order should a price fall to a certain level, that is subject to gap risk). The CFD provider will charge for this type of order, generally around 30bps.
A hedge is typically accomplished by making approximately offsetting transactions that will largely eliminate one or more types of risk. Investors can use derivatives and ETFs to hedge investments.
The highest price that a security traded at during a certain time period.
Investment Companies with Variable Capital (ICVCs)
These are very similar to Unit Trusts, but they are set up as a company rather than as a trust. They are also known as Open Ended Investment Companies (OEICs).
Is the dividend or interest received from an investment.
An index consists of a ‘basket’ of securities’ prices which are used to show how a particular market is performing.
These are instruments which pay coupons which are initially set in line with market interest rates. Their coupons, however, are adjusted in line with movements in the RPI. Their redemption value may also be index-linked.
A quote whose price and volume are not guaranteed. Indicative quotes are displayed during the pre-mandatory quote period, and market participants are not obliged to deal at these prices.
Individual Savings Account (ISA)
This is a tax efficient investment wrapper available to UK residents. It allows you to shelter certain investments from capital gains and income tax.
Initial margin requirement
The initial margin requirement is the amount required to be deposited and subsequently maintained in order to open a derivatives position.
Initial Public Offering
An initial public offering (IPO) is a type of public offering where shares of stock in a company are sold to the general public, on a securities exchange, for the first time. Through this process, a private company transforms into a public company.
Is buying or selling shares based on specific, unpublished information, which would be likely to affect the share price if it were made public knowledge. An “insider” can’t deal based on the information, can’t encourage others to deal, or give the information to anyone else. To do so is a criminal offence.
The inability of a person (or a company) to settle debts.
Something that has financial value such as stocks, bonds shares or currencies.
International Order Book (IOB)
An order-driven trading service for international equities, provided by the London Stock Exchange.
A group of investors, usually friends or work colleagues, who contribute periodically to a central fund to invest in shares.
Investment Trusts are companies whose shares are listed on the London Stock Exchange, and are therefore closed-ended, unlike unit trusts and OEICS, which have the ability to create new units should there be further investments in the product. They invest their money into shares and bonds of other companies.
An ISIN (International Securities Identification Number) is an international code for a listed security. An ISIN consists of a two-character country code, a nine-digit number and one check digit.
Issued share capital
The number of shares a company has made available for shareholders. The company’s issued share capital can never be greater than their Authorised Share Capital.
These are sub-investment grade (BBB and above) bonds
Know Your Customer (KYC)
The financial regulations requiring financial institutions to take sufficient steps, before taking on a customer, to determine the financial position, investment objectives of the client and sources of their funds.
Last trade price
The most recent price at which a specific security was traded.
Level 2 prices
Level 2 is professional information that brokers and city traders use. It shows the inner workings of the stock market by revealing market maker order books, and allows you to view live prices without the need to refresh the screen.
In finance, leverage is a general term for any technique to multiply gains and losses.
The London Interbank Offered Rate is the rate banks charge each other for short-term loans.
A limit order is an order to buy or sell a specified amount of a financial instrument at a specified price or better, which is better than the prevailing market price.
Liquidity is the ability to buy and sell easily, without causing a significant movement in the price.
A company whose securities have been admitted to the UKLA’s Official List and admitted to trading on the London Stock Exchange.
The up-to-date price.
London Stock Exchange (LSE)
The London Stock Exchange at the heart of the global financial market and home to some of the largest, most successful and dynamic companies in the world. From conducting its business in the coffee houses of 17th century London, the exchange has built on a long history of integrity, expertise and market knowledge to become the world’s most international stock exchange with around 3,000 companies from over 70 countries admitted to trading on its markets.
A long position denotes an investor has purchased an underlying instrument with the expectation that its price will rise.
The lowest price a security reached in a certain period of time.
Any order to buy or sell a specified number of shares, which may be executed either in part or in full, at the prevailing prices in the market at the time the order is executed.
The amount of money you need to fund a position. Usually you only need between 5% and 25% of the nominal value of an instrument.
The amount of money you must have access to when you are trading on margin.
Is a civil offence (unlike Insider Dealing, which is a criminal offence). It is defined as a failure of a person(s) to behave in a way expected of a regular user of a market. It may include acting based on information not widely available to the market, creating a false or misleading impression, or distorting prices. For example, spreading rumours, submitting incorrect trade details, buying lots of shares to increase a price and then reversing the purchases.
The number of shares in circulation multiplied by their current market value.
A securities firm which is obliged to offer to buy and sell securities in which it is registered throughout the mandatory quote period.
The price of a security. This consists of two prices – the bid price and the offer price.
The date on which the principal or nominal value of a bond becomes due, and is payable in full to the holder.
When companies are set up, part of the process is to register a Memorandum and Articles of Association with the Registrar of Companies. The memorandum includes the company name, country of domicile, Plc status, objects (what their business does) and their Authorised Share Capital.
A Merger is the term used to describe the situation when two similar size companies agree to combine and go forward as a single new company.
The mid price is the price you see quoted in the financial pages and on your valuation. It is the halfway point between the bid and offer prices.
A collective investment scheme in the US that pools investors’ money to be invested in stocks, bonds and other securities.
A US market dominated by large technology stocks such as Microsoft, Cisco Systems and Yahoo!. It stands for National Association of Security Dealers Automated Quotations.
Net Asset Value (NAV)
This is an accounting ratio, which is calculated by dividing the net assets of an entity by the number of shares or units in issue.
Is also known as the “par” or “face” value, and is mainly used for book-keeping purposes by the company. For example, ordinary 50p shares or preference £1 shares.
An organisation in whose name a security is registered; however the true ownership is held by the underlying shareholder. This is usually described as a non-trading company, to ensure there is no risk to the client’s assets.
Non-Cumulative Preference Shares
If the company fails to pay a preference dividend, the entitlement to that dividend is simply lost. There is no accumulation of the dividends that have not been paid.
Normal Market Size
See Exchange Market Size.
The New York Stock Exchange (NYSE), the world’s largest stock exchange.
OEICs (Open Ended Investment Companies)
Also known as ICVCs.
This is the price at which you can buy. Your broker will always quote you a two-way price which includes the offer price (the price you can buy at) and the bid price (the price you can sell at).
This is the main market of the London Stock Exchange. To become listed, companies have to apply to the UK Listing Authority, which is operated by the FSA.
One Cancels the Other Order (OCO)
An order that states that if one part of the order is filled then the other part of the order is cancelled. For example, an investor can place a stop-loss order and a limit order on one stock as a one cancels other order. If the price of the stock declines then the limit order is cancelled and the stop order is executed in order to minimize losses. If the price of the stock increases then the stop order is cancelled and the limit order is executed.
This is an offer to existing shareholders, giving them the option to subscribe for further shares, pro-rata to their holding, usually at a discount to the current market price.
These instuments confer the right (but not the obligation) to buy or sell securities at a fixed price within a specified period.
Order book security
A security that is admitted to trading on the order book.
An automatic execution facility operated by the Exchange. Order books facilitate the trading of order book securities.
An offer to buy or sell a tradable instrument. An order can take a multitude of varities – at market, limit, fill or kill etc.
Ordinary shares allow the owner to vote at company meetings. Ordinary Shares carry no guarantees, and reflect the success (or failure) of the company.
Over the counter (OTC) contracts
OTC contracts are off-exchange contracts.
When your investment value has fallen in value but you have not realised that loss by selling at that moment in time.
When only a part of an order is executed.
Participating Preference Shares
Normally the fixed rate dividend paid to Preference Shareholders is worked out as a percentage of their Nominal Value. For example, a 1% £1 preference share will entitle the owner to a fixed Dividend of 1p per share held. Sometimes a company’s Articles of Association may give “participating rights” to the Preference Share owner. This means that if the company has a particularly profitable period, it may offer to pay the Participating Preference Shareholder even more than their fixed dividend offers.
Indicates that an order which has been placed.
Permanent Interest Bearing Shares (PIBS)
Permanent Interest Bearing Securities (PIBS) are deferred shares issued by building societies, listed and traded on the London Stock Exchange. As building societies are mutual organisations, they cannot raise capital via a rights issue like banks, so issuing PIBS is a way of raising money without demutualising. Generally, they have a fixed coupon and are irredeemable or callable at the issuer’s option. Often, the coupon is reset to a floating rate if the call is not exercised.
Pink Sheets are the leading provider of pricing and financial information for the over-the-counter (OTC) securities markets in the U.S. They provide market maker quotations, historical prices and corporate information about OTC issues and issuers.
Is a small and mid-cap stock exchange for London. It is a recognised investment exchange (RIE) in the UK, authorised to operate both secondary (trading) and primary (listing/quotation) markets.
A single movement up or down on a chosen instrument.
Where various people invest (varying amounts of money) into a fund.
These are normally fixed-income shares whose holders have the right to receive dividends before ordinary shareholders but after debenture and loan stock holders have received their interest.
Changes in prices.
Price to-Earnings Ratio (P/E Ratio)
Is the relationship between a company’s earnings and its share price, and is calculated by dividing the current price per share by the earnings per share.
Is used to fund the Panel on Takeovers and Mergers. Currently, a £1 PTM Levy is charged on all trades worth over £10,000.
Is a method of flotation in which a company issues shares to the public at large, including private and institutional investors.
An offer to buy or sell a quote driven security. Quotes are displayed by market makers that are registered in that security.
This occurs when the price of an instrument starts to recover.
Is also known as the register date, or books closed date. The company captures how its shareholder register stands on that date, and will send dividend payments to everyone on that list.
Redeemable Preference Shares
These are preference shares with a fixed redemption date, on which the company will refund the owner with the nominal value of the shares.
The date on which a security (usually a fixed interest stock) is due to be repaid by the issuer at its full face value. The year is included in the title of the security; the actual redemption date being that on which the last interest is due to be paid.
An organisation responsible for maintaining a company’s share register.
Real Estate Investment Company (REIT)
Is a quoted company that owns and manages income-producing property, either commercial or residential, and is designed to offer investors income and capital growth from rented property assets in a tax efficient way.
These can’t be settled through the usual CREST system, therefore the exchange of shares and cash has to take place outside of CREST.
At company meetings, decisions are made by the passing of Resolutions.
Retail Price Index (RPI)
A monthly index that shows the movement in the prices of goods and services purchased by most households in the UK.
Retail Service Provider (RSP)
An RSP is a firm that provides the price feed for the online electronic quoting system similar to a computerised market maker. GAM uses a number of RSP’s to help execute your order at the best price available electronically from an RSP.
An invitation to existing shareholders to purchase additional shares in the company.
How much you are willing to risk for the chance of a profit. Trading is about probabilities, not certainties, so we advise basing the position size on the capital in your account. We do not advocate risking more than 5% on each trade. By having a risk/return ratio of at least 2:1 you are targeting a profit that is substantially bigger than the potential loss, meaning that over time you aim to win more than we lose.
Standard & Poors Composite Index – an index comprising shares of 500 US companies reflecting the general trend in the US stock market.
Scheme of Arrangement
A non-optional event proposed by a company on its share capital.
See Bonus Issue.
The Stock Exchange Automated Quotation system is a system for trading mid-cap London Stock Exchange (LSE) stocks. Stocks need to have at least two market-makers to be eligible for trading via SEAQ.
Tradeable financial instruments such as equities and bonds.
This security has been suspended from trading by the Exchange.
Stock Exchange Daily Official List code, a 7 digit alphanumeric reference for a listed security.
Stock Exchange Electronic Trading Service (SETS)
Is the way in which FTSE 100 and other highly rated shares are bought and sold. Firms need to be authorised to place orders on the SETS order book, where buy orders are automatically matched to sale orders. If there’s no match available immediately, then the trade stays on the order book until it can be completed. The SETS system is fully switched on between 8am and 4:30pm, so continuous matching happens during these times.
Is a hybrid electronic trading system, which gives the options of trading through market makers, or directly entering orders on the order book. The introduction of SETSmm has revolutionised the trading of FTSE mid and small cap companies, due to tighter spreads, greater liquidity and a growth in the overall size of the market.
Is a trading platform for securities that are less liquid than those which trade on SETS.
Once a sale or purchase of shares has been agreed, arrangements need to be made for it to settle. This process involves organising payment for purchases, or receiving shares for sales and delivering them to the respective parties.
Are also referred to as stocks or equities. They represent ownership in a company.
Sharegift allows you to donate shares that are of little or no value to charity free of charge.
The owner of a share in a company.
Shorting a stock or ‘going short’ is the selling of something not owned. Speculators go short if they think the price of the underlying instrument is likely to decrease.
The difference between the buying price and the selling price.
Spread Betting is a way of trading on a financial instrument such as a share or a commodity without physically owning it. This involves betting on the price movement of the share, index, commodity or bond. As is is structured as a bet, any gains are exempt from capital gains tax.
Is a type of UK tax paid when buying certificated shares. It’s currently 0.5% of the Consideration for UK shares, and 1% for Irish shares. This charge is rounded up to the nearest £5 when you buy Residual Shares.
Stamp Duty Reserve Tax (SDRT)
Is charged when there’s no physical transfer document; when shares are traded electronically. When buying certificated shares this tax is known as Stamp Duty instead. Like Stamp Duty, SDRT is calculated as 0.5% of the consideration for UK shares, and 1% for Irish shares, only this time rounded up to the nearest penny.
A securities firm which provides advice and dealing services to the public.
Stock is ownership, or equity, in a company. Investors buy stock in the form of shares, which represent a portion of a company’s assets and earnings (capital).
Stop Loss Order
A stop-loss is an order which is placed at a price below the current price trading in the market. If the price hits the stop-loss limit your order will be triggered and traded at the best available price.
These are products based on derivatives that are linked to the performance of an index, commodity or other asset class, for a fixed period. Depending on the provider of the product, your initial investment may be partly or fully protected if held till maturity. There is still, however, counterparty risk to consider as well as the dividends, which are usually foregone.
This corporate action increases the number of issued shares and the nominal value decreases. For example, one ordinary £1 share is split into five ordinary 20p shares. A company may decide to do this if their share price was high, and they wanted to increase their attractiveness to investors. The subdivision will reduce the price at which the shares can be bought or sold, and may therefore encourage trading.
Suspension of trading
Any cessation of trading imposed by the Exchange, including a trading halt.
The term T+ is used to denote the settlement date of any given trade, where T stands for trading day and the number represents how many days after the purchase or sale the trade settles.
The acquisition of one business or company by another.
An offer to purchase some or all of shareholders shares in the company in which they have a holding. The price offered is usually at a premium to the market price.
The best buying and selling prices available on the stock exchange in a given security at any one time.
The date on which an order to buy or sell a security is executed.
If you sell a share for which you have the holding in certificated form, you will need to complete a transfer form – a CREST Transfer Form for trades settling in CREST or a Stock Transfer Form for trades executed off the London Stock Exchange.
These are open-ended funds where private investors pool their money to be invested in a portfolio of securities. Unit trusts issue units to investors and being open-ended, the unit price is closely aligned to the net asset value (NAV) of the fund.
Venture Capital Trust (VCTs)
A listed company which invests in small unlisted and AIM companies. VCTs offer generous tax relief to UK residents.
A statistical measure (standard deviation) of the dispersion of returns for a given security or market index. Generally, the higher the volatility, the riskier the security.
The daily cumulative volume for each security.
The entitlement of ordinary shareholders to vote in person or by proxy at annual general meetings or extraordinary general meetings.
This form must be completed in order to trade in US equities. Obtaining this documentation ensures that we can give you any appropriate tax relief on income paid to you from US stocks and shares. If the form is not provided, we are required to withhold 30% of any sale proceeds.
Warrants give the owner the “right but not the obligation” to buy new shares at a fixed price on a future date. The fixed price is known as the “exercise” price, and the future date is known as the “expiry” date. They differ from covered warrants as they are issued by the company direct, rather than by a separate financial institution.
Describes an average in which some values count for more than others. Most indices use weighted averages, so that lower valued shares do not affect the index excessively.
The percentage return obtained from a stock or bond in the form of dividends or interest payments.
Zero coupon bonds
Zero coupon bonds are debt securities that trade at a discount from the face value and mature at par. Thus, the bond pays no interest to the bondholders during its lifetime.
Zero Dividend Preference Shares (ZDPs)
These preference shares are issued by split capital investment trusts which have limited lives and pay no dividends during their lives but are instead designed to provide a pre-determined, but not guaranteed, capital entitlement on expiry. As preferred capital, entitlements of ZDPs rank higher than ordinary capital.