305 Result count for “All”

Above Par

A title is quoted as above par when its market price is higher than its nominal value.

Accelerator Certificate

Belonging to the category of Conditional Protected Capital Certificates. Accelerator Certificates are financial instruments that allow for investment in a rising or falling underlying financial activity. Their distinctive feature is the ability to replicate, in proportion, the movement of the underlying asset.

Accrual

Accrual means the additional value of assets and liabilities reflected in a budget, the share of income rather than an ongoing expense which is believed to be attributed to the period of time covered by the budget. We can identify three subcategories: Accrued income, that is, relative to income; Accrued expenses, referring to costs and expenses and, finally, Accrued interest, covering daily interest on fixed-income securities, accrued from the date of maturity of the last coupon to that of trading.

ACEPI

The Italian Association of Certificates and Investment Products. Founded in 2007, with the aim of promoting interest and knowledge of Certificates and investment products with savers and encourage the development of efficient and transparent markets for such products.

Adjustment Coefficient

The Adjustment Coefficient is the value used to adjust the stock market value of a security as a result of an extraordinary Share Capital transaction.

Admission to Listing

The Admission to Listing is the procedure that allows a financial instrument to be admitted to trading on a regulated market.

Admission to Trading

The admission to trading is the procedure that allows a financial instrument already listed to be traded to another market.

Advisor

Entity or individual that performs a function of consulting support during the course of management of corporate finance.

After Hours

The hours during which negotiations may be undertaken in the Italian Stock Exchange other than those established for the MTA (Electronic share market) and SeDeX, listed shares (with pre-set Liquidity requirements), Covered Warrants and Certificates (at the issuers' request).

Airbag Certificate

Airbag Certificates belong to the category of Conditional Capital Protected Certificates which allows investors to benefit from rises in the underlying asset while at the same time protecting the capital by canceling out any fall in value.

Airbag Ratio

In Airbag Certificates the Airbag ratio is the factor that allows the loss of value suffered by the Certificate to be mitigated in the event of a fall in the Underlying below the level of protection. It is always greater than 1 as it derives from the ratio between 1 and protection.

Alpha

The Alpha coefficient measures the ability of a security to vary independently of the performance recorded by the market. The Jensen's alpha (named after the economist who introduced the parameter) measures the risk-adjusted performance of a security or portfolio in relation to the expected market return, assessing the manager’s Alpha.

American Option

It is a derivative contract that gives the holder the right to buy (call) or sell (put) an underlying asset within a certain date at a predetermined price.

Ask

A term that indicates the level of the price at which the holders of a financial instrument are willing to sell. In Italian it is referred to as Letter or 'Lettera'.

Ask Price

The Ask Price is the term that indicates the price level at which the holders of a financial instrument are willing to sell. It is often referred to as Ask.

Ask Size

The Ask size represents the number of financial instruments for which Ask prices are valid.

Ask Volume

An Ask Amount is the number of offers to sell at a given price at a given time.

Asset Allocation

Asset allocation is the decision-making process on the allocation of the investment dividing it between the different categories of real and financial assets. Asset allocation choices are determined by the need to optimize the yield/risk investment in relation to the time horizon and the expectations of investors.

At Par

Definition which indicates a financial instrument whose market price is equal to the Nominal Value or the Issue Price.

At The Money

Term for options whose intrinsic value (the difference between the price of the Underlying and the Strike Price in the case of Call Options or between the Strike Price and the Underlying Put) is zero. In this case for the holder of Option it is irrelevant if is exercised or not.

Auction

Procedure that involves the accumulation of purchase orders and sales and the fulfilment of the same on the basis of pre-established rules. The process of interaction between orders to buy and sell allows for the price to be fixed.

Autocallable

An autocallable is an option included in a financial instrument that allows the issuer to repay the holders in advance of the established date or dates and on verification of predetermined conditions agreed during the issue phase.

Banca d’Italia – Bank of Italy

The Institution which is part of the European System of Central Banks (ESCB) together with the ECB (European Central Bank) and the central banks of other countries belonging to the European union. Among its functions are the supervision of the financial system, the market and payment systems and the participation in and implementation of monetary policy decisions of the ECB.

Barrier

In a Certificate, the barrier is the value or price of the Underlying (called the Barrier Level) that, if reached, the investor loses the capital protection.

Barrier Event

In the case of conditionally capital protected Certificates the Barrier Event is a condition which would be detrimental to the preservation of capital by the investor. This condition is represented by the excess part of the underlying financial asset below a certain level (the Barrier Level) of the price set by the issuer at the time the certificate was issued and appropriately indicated in the official documentation on the instrument.

Barrier Level

The Barrier Level in a Certificate is the point at which the investor loses the capital protection of the certificate.

Barrier Level Up

In the case of Butterfly Certificates this is the value of the Underlying (higher than the initial value) which if breached during the life of the certificate does not allow it to participate in any positive performance of the Underlying asset.

Base Point

The base point is the hundredth part of a percentage point (0.01%).

Basis Point

One basis point is equivalent to 0.01% (1/100th of a percent).

Below Par

A title is quoted as below par as its price (usually the Issue Price or the Redemption Price) is less than its face value.

Benchmark

A Benchmark used to compare the performance of a portfolio with the market trend. Its function is to inform investors, intermediaries and supervisory authorities on the share price of a set of securities (equity/shares, bonds, mixed). It is a preference point that allows the risk profile to be identified and a comparison made with respect to the performance of their investment.

Benchmark Certificate

A Benchmark Certificate belongs to the Non capital protected Certificates group. A Benchmark Certificate allows for upward or downward investments on an underlying financial asset. These are tools that replicate upwards or downwards, the performance of the underlying financial asset without the leverage effect.

Beta

This is the coefficient which measures the behavior of a stock in relation to the market, namely the historical variation that a title assumes compared to changes in the market. In mathematical terms it is obtained by dividing the covariance between the return of generic assets and the returns of the market portfolio and the variance of market returns.

Bid/Ask Spread

Difference between the best bid price (Bid) and the best ask price (Letter) on the book of a particular financial instrument.

Bid

Price level at which buyers of a title are willing to purchase a particular financial asset. In Italian it is usual to use the term 'Money' or 'Denaro'.

Bid (or Money) Price

The Price Bid is the price level at which buyers of a particular financial title are willing to buy it. Among Italian operators, the English term 'Bid' is widely used.

Bid Size

A Money Amount is the number of offers to purchase at a given price at a given time.

Bid Volume

This represents the number of financial instruments for which Bid prices are valid.

Blue Chip

The Blue Chip shares are the most traded of a financial center. These are usually shares with the greatest market capitalization and liquidity.

Bonds

The Bonds are debt instruments representing a portion of debt issued by a company or by a public body to finance part of its financial requirements.

Bonus

In Certificates the bonus is the percentage value that defines the minimum repayment at maturity of the Certificate, if the underlying asset is below the Barrier Level in the planned Valuation Dates.

Bonus Certificate

Belonging to the category of Conditional Capital protected Certificates, Bonus Certificates are financial instruments that allow the underwriter to achieve a minimum premium at expiry, the Bonus, in the event the underlying of the certificate has not reached the Barrier level.

Bonus Level

In the case of Bonus Certificate the investor receives a Premium, known as the bonus, if the price of the Underlying is below the Barrier Level

Borsa Italiana Spa – Italian Stock Exchange

An organization dealing with the organization, management and operation of the Milan Stock Exchange. The primary task of the Borsa Italiana Spa is overseeing the proper conduct of the negotiations, to define the requirements and procedures for admission and stability in the market for issuers and intermediaries, and to manage the information on listed companies. The company which manages the disclosure of listed companies has been part of the London Stock Exchange Group since 2007. (www.borsaitalia.com).

BoD

An acronym of the Board of Directors; the body which is responsible for the management of a company.

BOT

An acronym for the Italian “Buoni Ordinari del Tesoro” (Ordinary Treasury Bills). These are short-term titles (3, 6 and 12 months) issued by the Italian government to collect the resources required to cover requirements of the State. The BOT is a Zero-Coupon bond, issued below par and redeemed at face value. The quarterly and annual BOT auctions are held mid-month, six month titles are planned for the end of the month. BOTs are traded on the MOT and MTS.

Broker

A broker is a professional who works in finance and is identifiable as a financial intermediary who has been trading for third parties through the trading in shares and securities. Third parties are customers who provide an order to the broker who, on their behalf, will operate in the market with the aim of maximizing profits and limiting losses.

BTP

An acronym for the Italian “Buoni del Tesoro Poliennali” (Long Term Treasury Bills). They are medium to long term titles (3, 5, 7, 10, 15 and 30 years) issued by the Treasury Department. The coupon is fixed and paid semi-annually. LTB auctions are usually held once a month and are traded on the MOT and MTS.

Butterfly Certificate

A Butterfly Certificate belongs to the category of Capital Protected Certificates. Butterfly Certificates are tools that combine the features of Equity Protection and Twin Win Certificates: with the first share the guarantee of repayment of the Issue Price while, equally with the latter, allowing both to benefit from the rising and falling financial markets.

Buy-back

An operation that buys back shares previously placed on the market. In Italy this is governed by Legislative Decree 132 of the 24th February 1998 No.58, in line with Article 2357 of the Civil Code. Among the reasons given for this function are: to support or defend the share price; obstruct the entry of members who are "not welcome"; the availability of shares to be exchanged with a stake in another company; in view of a reduction of share capital which has been planned but not yet been decided.

Cac 40

It stands for Cotation assistée en Continu (CAC), is the main French stock index. This basket includes the 40 stocks with the largest capitalization quoted on the trans-alpine market.

Call

Call Option is defined as the type of contract that gives the buyer the right, but not the obligation, to buy at a given Exercise price (Strike price), at the expiration date or before that date (in the case respectively the European Option or the American Option), an underlying asset. Implicit options are also call options, granted to the Issuer of a fixed income security, to repay the same before the deadline. Call is also a term used to identify the demand for immediate repayment made by the lender against the debtor, in the event it has not lived up to its contractual commitments. Finally, Call refers, to the request made by the intermediary to the customer regarding the need to integrate the capital deposited as margin by virtue of changes in the market price of the underlying asset.

Call Options

A Call Option is defined as a type of contract that gives the buyer the right but not the obligation, to buy at a given Exercise price or Strike price, at the expiry date or before that date (respectively European Option or American Option) of an Underlying asset.

Callable bonds

Callable bonds are bonds that can be redeemed by the issuer before their maturity.

Cap

For Certificates this represents the maximum yield obtainable by the investor beyond which it ceases to participate in the changes to the underlying.

Cap Level

In a Certificate, the Cap Level is the value of the Underlying, beyond which the performance of the investment remains constant. It is the maximum percentage of an investment that is returned at maturity if the Underlying has performed favorably.

Capital Gain

Capital Gain is the positive balance (gain) between the sale price (or redemption) of a title and the purchase price (or subscription) of a financial or real asset. Typically, the gain is only part of the return of an investment because it does not take into account the receipt of periodic payments.

Capital Increase

The Capital Increase is the operation that allows a company, through the issue of new shares, to increase its capital. New shares are offered in pre-emption to those who are already members who recognized as having an Option Right.

Capital Loss

The Capital loss represents the negative balance (Loss) of the sale price (or Repayment) of a title and the purchase price (or subscription) of a real or financial asset.

Capital Protected Certificates

Capital protected Certificates are financial instruments that offer the opportunity to invest upward or downward on the underlying financial assets ensuring investor protection at maturity of all or part of the issue price of the Certificate. The level of protection is established in the issue phase.

Cash Collect Certificate

Belonging to the category of Certificate capital conditionally protected, the Cash Collect Certificate allows investors to achieve recurring profit coupons during the life of the certificate and, at maturity, if, within the respective valuation dates the Underlying never goes beyond a predetermined level, also called Barrier Level

CCT

An acronym for the italian “Certificati di Credito del Tesoro” (Certified Treasury Credits). These are medium term government bonds (with maturity at 7 years) with coupon indexed to the yield on Treasury bills. Interest is paid half yearly.

Certificate

The Certificates are securitized financial instrument derivatives linked to the performance of an Underlying, whether, for example, shares, a stock index, a currency, a commodity or an interest rate. The Certificate are traded both on the SeDeX of the Italian Stock Exchange as well as on the EuroTL X multilateral trading facility.

Certificate Currency

The currency in which the value of the Certificate is expressed.

Cert – X

The Cert-X is the EuroTLX market segment dedicated to trading of the Certificate.

Clean Price

A security is traded on a clean price, where its value does not take into account the rights and entitlements (accrued interest in the case of the bonds or dividends in the case of shares).

Closed-end Fund

In the case of Closed-end Fund, assets and shares are fixed and any increases may only be affected through an increase in share capital.

Closing Auction

The Auction Closing provides for the entry, modification and cancellation of orders at a given time interval aimed at the conclusion of contracts in a given period in time (closing) and at a single price (closing auction price).

CME

Acronym of the Chicago Mercantile Exchange. This market was founded in 1919 for the trading of Futures and Options on indexes, currencies, interest rates and commodities, derivatives linked to economic indicators and meteorological conditions. It is one of the most important Futures markets in the world.

Collar

A contract derived from the rate of interest that combines a long position in an "interest rate cap" and a short position in an "interest rate floor”.

Commodity

The term commodity essentially indicates a basic good such as, for example, metals, minerals, agriculture and livestock and other physical assets, on which investors can trade through the use of derivatives.

Conditional Capital Protected Certificates

Conditional Capital Protected Certificates are financial instruments that allow investors exposure to the upside or downside of the underlying financial asset with the protection of the issue price of the Certificate contingent upon the underlying financial asset: the loss of capital protection occurs when the value of the underlying asset exceeds a certain value, called the Barrier Level.

Consob

The Italian National Commission for Companies and the Stock Exchange is an independent administrative authority established in 1974 with the aim of protecting investors and ensuring efficiency, transparency and the development of the Italian securities market (www.consob.it).

Continuous trading (Continuous Auction)

An organizational method of electronic markets in which trading proposals of market participants are exposed continuously while interacting among themselves. The main feature of continuous auctions is that for each title a plurality of prices is formed, one for each contract (automatic matching).

Convertible Bonds

Convertible bonds pay a periodic Coupon and incorporate an option to convert them into equity (share conversion).

Corporate Banking

The Corporate Banking includes all the services that a bank offers to a businesses customers, whether traditional services or those frequently offered by non-bank intermediaries.

Corporate Governance

Corporate governance is the set of rules, regulations and the mechanisms that govern the decision-making process of a particular company.

Correlation

Correlation indicates the tendency of two variables to move in the same direction in the same time frame. A negative correlation indicates a tendency to move in the opposite direction while a positive correlation indicates a tendency to move in the same direction. The higher the correlation, positive or negative, the more likely is the change in variation in absolute value.

Coupon

The right that allows the holder of a certificate representing a title, to collect interest (in the case of bonds) or dividends (in the case of shares), which have matured as well as during the financial year, on shares, administrative and property rights.

Covered Warrants

Covered Warrants (CW) are financial instruments that give the holder the right to buy (Call CW) or sell (Put CW) an underlying asset at a fixed price to (or within) a future date . While the scope of the Warrants is limited to equities, CW may also be issued on bonds, indices (equity or debt), baskets of securities, currencies, commodities and interest rates.

Credit Risk

Credit risk represents the risk related to the possibility that the borrower will default on its obligations to pay interest and principal repayment.

CTZ

Acronym for the Italian “Certificati del Tesoro Zero-Coupon” (Zero-Coupon Treasury Certificate). The CTZ is a Zero Coupon Bond, issued at a discount and redeemed at face value. The maturity of a CTZ is equal to or less than 24 months.

Currency

The currency is the money the value of a security is expressed in. The term Currency is used to mean the currency in circulation in a given country and which can be taken as a Reference Currency for securities issued in that country. In the banking terms, currency represents the day interest on a certain sum begins to accrue.

Dax30

The index representing the performance of the German Stock Exchange which is composed of 30 of the highest capitalization and liquidity stocks traded on the Frankfurt Stock Exchange.

Daily Lowest Price

The lowest quote or price recorded by a financial instrument in the course of the trading day.

Delisting

The delisting of the Shares is the exclusion of a company from trading on the Stock Exchange. The revocation can be decreed by the Borsa Italiana (Italian Stock Exchange) due to the lack of exchanges, admission of the Issuer to bankruptcy proceedings, negative judgments by the Independent Auditor and the dissolution of the Issuer. The delisting can also be decided by the company itself at the time of an acquisition or in the event that the controlling group did not consider it necessary to have shares listed.

Delta

The Greek letter Delta indicates the change in the price of a derivative associated with the variation (one percentage point) in the price of the underlying asset. It represents the first derivative of the price of a derivative in respect to the price of the underlying asset.

Derivative Instrument (or Derivative)

A Derivative instrument is a financial instrument whose value depends on (or is derived) from the market value of another asset, the Underlying. The Underlying may be financial in nature (equities, interest rates, etc.) or real assets (gold, oil, etc.). Derivatives may be traded on specialized markets and regulated (futures and options) or in unregulated Over-The-Counter markets (such as swaps and forward contracts).

Digital Certificates

Digital Certificates are financial instruments that allow you to invest in an Underlying financial asset while receiving a regular income (also called a Digital Amount). They are divided into Digital Certificate - protected Capital which is characterized by the protection of the amount invested, and in Digital Certificate - conditional Capital protected which instead conditionally protects against the failure of not achieving a certain level, the Barrier level.

Discount Certificate

Discount certificates belong to the category of Non Capital Protected Certificates. Discount Certificate are instruments that replicate the performance of the Underlying linearly and are purchased "at a discount", at a price that is lower than the price at the time of purchase. In the event of a bull/rising market, the maximum gain for the investor is limited to a predefined level also called Cap.

Dividend

The dividend is the amount distributed by the company to shareholders by way of a return on capital invested. The distribution of the dividend, proposed by the BOD and ratified by the shareholders, is a power available to the company, not an obligation as the shareholders meeting may vote to reinvest profits. Particular types of shares, including Savings and Preference shares, with reduced administrative rights provide a privileged position in terms of payment of the dividend.

DoubleWin Certificate

Double Win certificates belong to the category of Capital Protected Certificates, the DoubleWin Certificate allows investors to record positive returns even in the event of negative performance of the Underlying, provided that the value of the Underlying doesn’t reach a certain threshold, the Barrier Level.

Dow Jones

The Dow Jones Industrial Average shows the trends of the top 30 stocks listed on the US market. Despite the name, it is not tied to any specific industry. The Dow Jones is a "price-weighted" index (the weighted factor is provided by the price of securities) and includes the first 30 titles of the NYSE (New York Stock Exchange).

Downside Participation

The coefficient of downside Participation is the percentage value that indicates the level of participation, in the Underlying performance redeemed at maturity, to the investor who holds the financial instrument that offers such a payoff.

Duration

The Duration of a security, measures the change in the price of the same following the change in the level of interest rates and indicates the risk of interest rate tied to the value of a bond. A higher duration number corresponds to high price sensitivity of the security title in order to calculate the rate of return and vice versa. In the case of Zero-Coupon bonds, the duration number is equal to the registered duration number and is always less than the duration number in the case of coupon bearing bonds.

Earnings per Share

Earnings per Share are an important indicator to the profitability of a company. It is obtained by dividing net income by the number of shares.

EBM (MOT)

An acronym for the electronic bond market known as MOT (Mercato Telematico delle Obbligazioni). The MOT is the market organized and managed by Borsa Italiana where Government and Non-convertible bonds are negotiated. The MOT is in turn divided into two segments: the DomesticMOT and the EuroMOT: the first trades Italian government bonds and other debt securities, while the second trades foreign bonds, Supranational Bonds and Eurobonds.

ECB

An acronym for the European Central Bank. Established in 1998, the body that manages the single currency (the Euro), promotes the payment systems and defines the monetary policy of the EU, having as a primary duty to safeguard price stability in the countries belonging to the Euro by implementing all measures of monetary policy so that the annual increase in consumer prices does not exceed 2%.

Effective Yield

The Effective Yield is the performance of a financial instrument, taking into account all income components (Coupons, Sale of Rights Option, the difference between the purchase price and Cash Amount, taxes and fees paid).

Equity Linked Bond

Equity-linked bonds are structured bonds whose yield is indexed to the performance of a share or a basket of shares. The bond guarantees the repayment of the nominal value at maturity and, if necessary, the distribution of coupons during the life of the instrument. The optional component instead determines the amount of bonus the bondholder collects at maturity.

Equity Protection Certificate

Belonging to the category of Capital Protected Certificates, the Equity Protection Certificate is a financial instrument that allows the investor to benefit from the upward or downward trend of the Underlying financial with the issue price being protected at maturity.

ETC – Exchange Trade Commodities

ETCs (Exchange Traded Commodities) are debt instruments secured by collateral. Unlike ETFs, ETCs can also be issued on a single commodity (e.g. Brent) and can take place even in the physical market and not only through futures contracts.

ETF

An acronym for Exchange Traded Fund. ETFs are funds that mirror the performance of an Underlying and are purchased just like shares. They must guarantee a certain level of diversification and cannot be invested directly in commodities.

Eurex

The Eurex is the German market for derivative products founded in 1998. Over 1,900 products are listed on the Eurex.

Euribor

The Euribor is the Euro interbank offered rate. The Euribor is the rate of short-term interest calculated daily and paid on interbank deposits in Euro. With a base set at 31 December 1998, the Euribor is calculated on transactions having maturities ranging from one week to one year.

Euro

The Euro is the name chosen by the European Council of Madrid for the European single currency introduced from 1 January 1999.

Eurobond

A Eurobond is a bond issued by companies or entities, national or foreign, as well as sovereign states and transnational entities, in a country other than that of the borrower and denominated in a currency other than the country offering the title. The label Eurobond is also applied to hypothetical bonds shared by the countries that are part of the Eurozone.

European option

It is a derivative contract that gives the holder the right to buy (call) or sell (put) an underlying asset at the maturity date at a predetermined price.

Eurostoxx 50

EuroStoxx 50 is a European equity index which measures the performance of 50 blue-chip companies listed on stock markets in Eurozone. The index is reviewed annually in September. It is used as the Underlying in numerous derivatives such as options and Futures contracts.

EuroTLX

EuroTLX is a multilateral trading facility (MTF) for bonds and investment products dedicated to non-professional users. In September 2013, 70% of the share capital of EuroTLX Sim was acquired by the Borsa Italiana (the remaining 30% is held by Banca IMI and Unicredit in equal parts).

Eurozone

The European Union member countries that adopted the Euro as its official currency. As at 2014, 18 out of the 28 European Union member countries are part of the Euro: Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain (EUR-12), Slovenia (EUR -13), Cyprus, Malta, Slovakia and Estonia (EUR-17) and Latvia (EUR-18). So far, the single currency has not been adopted by Bulgaria, Czech Republic, Croatia, Denmark, Lithuania, Hungary, Poland, Romania, Sweden and the UK.

Exchange Risk

Exchange risk is the risk associated with changes in the exchange rate between two currencies, which affects the value of an investment expressed in a foreign currency.

Exercise Price

In an Option, the exercise price is the price at which the holder of Option has the right to buy (call option) or sell (Put Option) the Underlying.

Exotic options

Exotic options are those contracts in which the calculation of payoffs are not standardized elements and for this reason are traded OTC. This includes, among others, package Options, Bermuda Options, composites, with Barrier Options, Binary Options, Asian Options and Rainbow options.

Expiry Date

The date the effects associated with a financial instrument cease and as a result are no longer valid.

Express Amount

In Express Certificates, the Express amount is the premium paid to the investor in the event that the certificate meets one of the conditions set out in the statement for the financial instrument. In the context of the payment of the Express amount, the issue price of the Certificate is repaid.

Express Certificate

Express Certificates are part of the Conditional Capital Protected Certificates category. An Express Certificate is a derivative financial instrument that has the unique ability to expire prematurely in the event the value of the underlying financial asset reaches a certain level, called Level of premature Exercise. In the event of early expiry of the Certificate the investor receive a premium called Early Exercise Amount (Express) in addition to the issue price of the Certificate.

Fair value

The term fair value is generally referred to as an equilibrium value around which the consensus of two parties who intend to trade can agree, and that, as such, is not affected by subjective influences, arising from the characteristics derived from the contracting parties.

Federal Reserve

The Federal Reserve (or simply Fed) is the US Central Bank. Founded over 100 years ago in 1913, it has three stated goals in the statute: the maximum level of employment, price stability and moderate interest rates. The monetary policy decisions taken by the Fed affect all financial markets in the world.

Financial Assets

Financial assets are economic activities (other than the production of goods and services) for example used as a means of payment, financial instruments and economic activities of a similar nature to financial instruments. Included in this category, for example, are the following: cash, bank and postal deposits, shares, bonds, currencies, shares of a mutual fund.

Financial Due Diligence

This activity is aimed at collecting and verifying the information of a financial nature, financial assets, capital, and managerial, strategic, fiscal and environmental aspects in respect of a person or entity to obtain a detailed picture of the reality of their current position.

Financial Index

A Financial Index is an indicator that tracks performance of its component securities in a given period of time.

Financial Intermediaries

Financial intermediaries are registered professionals, working with the public on professional financial activities such as the granting of loans, equity participation, trading on foreign exchange, as defined by the Legislative Decree of the Ministry of Economy and Finance dated 17 February 2009, No.29 (Official Gazette of 3 April 2009 SG 78).

Fixed Interest Rate

An interest rate is fixed when the rate, and therefore the return to the lender, is calculated as a percentage of the nominal value, is constant for the duration of the contract.

Fixed Rate Bonds

Fixed interest rate bonds are debt securities in which the return to the investor is via periodic fixed rate Coupons which are identical for the duration of the title.

Fixing

The process of "fixing" official prices for different asset classes, including commodities and currencies.

Floating Rate Bond (Variable rate bond)

The Floating Rate Bonds are debt securities in which the return to the investor is represented by periodic coupons calculated at a rate of interest which may vary during the life of the loan. The interest rate may be predetermined or indexed to a benchmark to which a spread may be added.

Floor (or Interest Rate Floor)

In loan operations the Floor is the minimum interest rate that is paid (by the issuer) and cashed (by the investor). From the technical point of view it is a derivative contract in which the buyer pays a premium and receives from the seller, for a certain period of time and at fixed dates, an amount equal to the product of the notional capital, the positive difference between the rate fixed by the contract (Floor rate) and a market rate (e.g. Euribor), and the length of the reference period. In the case where the difference between the two rates is zero or negative there is no flow associated with the contract. It can be used to protect against declines in market rates.

Foreign Spot Exchange Transactions

These are currency transactions that provide an immediate exchange between two currencies at the current exchange rate; where it has, in essence, the immediate transfer of a sum expressed in a currency in exchange for another sum expressed in another currency.

Foreign Forward Exchange Transactions

These are currency transactions involving the exchange, at a future date, between two currencies at an exchange rate that is fixed at the time of conclusion of the transaction.

Free Float

A term that indicates the number of Shares of a company available for circulation, then traded on the market. Shareholding with controlling interests or those bound by shareholder agreements and restrictions on the transferability (such as lock-up clauses) of longer than six months are not included in the Free Float calculation.

FTSE100

An acronym for the Financial Times Stock Exchange or the FTSE100 index. The FTSE100 is an index representing the 100 most highly capitalized shares listed on the London Stock Exchange. It is the result of a joint venture between the influential Financial Times and the London Stock Exchange, the index is currently managed by the FTSE Group.

FTSE Mib

The FTSE MIB is the main share index of the Borsa Italiana or Italian Stock Exchange. This index, which covers approximately 80% of the domestic market capitalization, is composed of shares of 40 most quoted Italian and foreign companies listed on the markets managed by Borsa Italiana or Italian Stock Exchange.

Fundamental Analysis

The analysis of the share price based on the study of the economic and financial items of a company or a market reference, as well as the macroeconomic environment. Through fundamental analysis the shares or markets that have a discrepancy between the market price and the theoretical value can be identified.

Fund of Funds

Fund of Funds are Mutual Funds whose portfolio is composed by shares of Mutual Investment Fund (in place of securities).

Futures

Futures are a term based derivative contract to which the parties agree to exchange an (financial or real) Underlying asset on a specified future date at a predetermined price. It is a symmetrical contract as each participant must perform. Typically the contract is not concluded with the physical delivery of the Underlying (operators prefer to close positions by selling, or buying, the contract purchased, or sold previously). At maturity, it is possible to settle the contract or physically deliver the Underlying asset in settlement.

Gamma

The Greek letter Gamma indicates the change in Delta of a derivative associated with the variation (one percentage point) in the price of the underlying asset. It represents the first derivative to delta of a derivative instrument in respect of the price of the Underlying asset.

Global Coordinator

As part of a placement, the Global Coordinator is the financial intermediary acting in a coordination and advisory capacity.

Government bonds

Government bonds (or public debt securities) are those securities that are issued by the Ministry of Finance or the Treasury for financing the needs of the State.

Greeks

Letters of the Greek alphabet that indicate the price sensitivity of an Option to the variation in parameters that influence it: Underlying Price (Delta and Gamma), volatility (Vega), time to maturity (Theta) and interest rate (Rho).

Greenshoe

The Greenshoe Option allows members of the Placement consortium to underwrite a portion of the shares at the offer price by a certain deadline.

Grey Market

The Grey Market is a market in which shares which are not yet listed on the official Stock Exchange can be traded.

Hang Seng

Benchmark Index for the Hong Kong Stock Exchange. It is a market capitalization weighted index of companies representing approximately 70% of the stock market in Hong Kong.

Hedge Fund

A hedge fund is an investment fund that aims to generate steady returns over time and is not correlated to market trends, through the use of a wide range of investment strategies.

Hedging

Through the use of Hedging the investor aims to reduce or eliminate the risks arising from an open position. Through Hedging investors buy or sell one or more derivatives contract linked to the same risk source as the position to be covered or from a correlated source, minimizing the risk.

Highest Daily Price

The highest quote or price recorded by a financial instrument in the course of the trading day.

IDEM – Italian Derivative Equity Market

An acronym for the Italian Derivatives Equity Market. It is a regulated market managed by Borsa Italian SpA where Futures and Options, having indices and individual shares as underlying assets, are negotiated.

Implied Volatility (or Expected Volatility)

Variability of the price of a real or financial asset, derived from the market value of the options to buy or sell the asset by applying formulas such as Black-Scholes.

Inflation

The rate of inflation, or simply 'Inflation', is a financial index which measures the increase in prices of goods and services in a given period of time. In Italy the main indicator to measure inflation is the index of consumer prices for employees with families and blue collar workers.

Initial Value

The Initial Value in a derivative contract is the value of the Underlying observed at the issue date.

In The Money

With regard to the options, an option is said to be in the money when the price of the Underlying is greater (in the case of a call option) or smaller (for a put option) than the strike price. The option (if it is a European style option) is exercised in the event it is 'In the Money' at maturity.

In the Money Option

The In-the-Money Option is one in which the price of the Underlying is greater than the strike price (in the case of a call option) or less (for a put option). In the event that the option (if a European option) is In The Money at maturity, it is exercised.

Information prospectus

A prospectus is a document containing information about the nature of the financial instrument and the risks associated with an investment. The Prospectus is drafted and published by the Issuer who intends to carry out activities and promote public participation in an investment.

Initial Margin

The Initial Margin is the amount of money stipulated by derivative contracts that must be paid in order to operate in the markets for these instruments.

Insider Trading

Insider trading is the exploitation of information, not yet in the public domain, the disclosure of which will result in sudden changes in the quoted prices of a particular security. It is an illegal practice used to operate on the stock market taking advantage of highly confidential information in advance of it becoming public.

Institutional Investors

Institutional investors are intermediaries that invest assets on behalf of other parties. Institutional investors are organizations for collective investment (OCI), mutual funds (securities, real estate, and hedge funds), the SICAV Fund, pension funds and insurance companies.

Interest Rate

The interest rate measures the cost of a financing transaction and represents the compensation paid to the bank for the loan of a certain amount of money. It is expressed as a percentage and with reference to the year.

Intermediate Evaluation Date

When referring to certificates, Intermediate evaluation dates are the days in which the price of the Underlying is evaluated in order to verify the fulfilment of predetermined conditions; for example, the measured value may trigger the repayment of the financial instrument (e.g. Express Certificates) or the payment of a premium (e.g. Digital Certificates).

Investment Bank

An investment bank is a bank specializing in financing enterprises in the form of long-term loans, often through acquisition of their shares. Very often this type of credit operator provides financial advice services for mergers & acquisition, the issuing of bonds and IPOs.

Investment Certificate

Investment Certificates are securitized financial instrument derivatives linked to the performance of an Underlying, whether, for example, a share, a stock index, a currency, a commodity or an interest rate. The Certificates are traded both on the SeDeX of the Italian Stock Exchange and the EuroTLX MTF.

Investment Grade

Indicators of the reliability of shares or other financial instruments deemed appropriate by institutional investors. These are identifiable through a rating: in the case of shares these are companies that have good balance sheets, substantial capitalization; in the case of fixed income instruments the lower BBB threshold rating is considered. By implication, therefore, the classification Investment Grade implies a medium-high quality of the financial instrument.

IPO

An Acronym for Initial Public Offering. The IPO is a specific type of public offering offered for sale and subscription for listing on a regulated market.

ISIN

An acronym for Instrument Security Identification Number. This is the 12-digit alphanumeric code that uniquely identifies a financial instrument. The first two letters of the code identify the country of reference and the numbers represent the local code attributed to the title. ISIN code management is the responsibility of NNAs (Numbers National Authorities) and in Italy the coding function for Italy is carried out the UIC, the Italian Exchange Office.

Issue date

The date the financial instrument takes effect from. For example the date a bond is issued and from when interest on the bond starts to accrue.

Issue Price

The Issue price is the price at which a share is offered on the Primary Market. It is determined by the Issuer (or the Placement consortium) in the case of placements for the public retail or for transactions reserved for Institutional Investors the price may be determined by an auction.

Issuer

The issuer is the entity that issues financial instruments in order to raise finance. The most common issuers of financial instruments tend to be: Public and private companies, the State or transnational organizations.

Issuer Risk

The Issuer risk is the risk tied to the eventuality that a financial instrument fails to fulfil its obligations to pay interest and/or equity related to the instruments issued.

Issuing Company

The Issuer raises finance through the securities or financial instruments it issues. Companies, public and private, the State or supranational organizations are among the most important issuers of financial instruments.

Joint Venture

The joint venture is an agreement between two or more companies seeking to create an investment or a project and that creates a new legal independent entity. Duties and responsibilities of the parties in a joint venture are commensurate with the proportion of capital held.

Junk Bond

A Junk Bond is a bond with a Rating below investment grade. The return is higher than investment grade bonds as the level of risk is higher.

Last Closing Price

The Last Closing Price is the price at which contracts are concluded in the closing phase.

Last Day of Sale

The Last Day of Sale is the last day for trading a listed instrument.

Lead Manager

The Lead Manager is a financial intermediary who manages and coordinates the Placement Consortium. The Lead Manager, together with the Issuer, establishes the terms of the offer and collects purchase orders from institutional investors.

Leverage Certificate

A Leverage Certificate is a financial instruments that through the financial leverage effect provides an exposure more than proportional to changes in the price of the underlying.

Leverage Effect

Using the leverage effect it is possible to invest an amount of financial resources in excess of the capital actually used, therefore obtaining greater exposure in proportion to price changes of the Underlying financial asset.

Libor

An acronym for London Interbank Bid Rate. The short term (3 to 6 months) Interest rate on the London interbank market represents the rate at which banks are willing to lend to each other. It is a variable rate and is often used as a Benchmark for financial operations.

Liquidity

Liquidity is the ability of an investment in real or financial assets to be quickly transformed into real money and in favorable economic conditions, i.e. without decreases compared to the price of current market.

Liquidity Provider

The Liquidity Provider is an operator that ensures an adequate level of liquidity in financial instruments traded on regulated markets always quoting a Bid and Ask price on the trading book.

Listing

The term Listing means the admission to the stock market of a security or a financial product.

Listing

A listing is the official price of a financial instrument that is recorded in the course of trading. The term Listing may also be used to indicate the process of inserting a financial instrument in the list of listed securities of a particular securities market.

London Stock Exchange

The Company responsible for the organization, management and operation of the London Stock Exchange. The Borsa Italiana was integrated with the London Stock exchange in 2007, creating the London Stock Exchange Group. It is now a leading operator for listing and trading of shares and also for the trading using electronic systems for ETFs, securitized derivatives and fixed income securities.

Long Position

The position taken by the holder of a financial instrument when it is purchased. Conversely, if the instrument is sold it is said to be in a Short position compared to the instrument.

Margin Guarantee

The margin guarantee is the sum of money required for the opening and maintaining of positions in derivative contracts.

Market Capitalization

The market capitalization of a listed company is the result of the product between the unit price of the share and the number of outstanding securities.

Market Maker

A Market Maker is a financial intermediary that has the task of ensuring, on a continual basis, the tradability of certain financial instruments.

Maturity

Expiry or Maturity is the date a financial instrument ceases to exist or matures.

Merger

A merger is the process by which two (or more) companies come together constituting a new one. In the case of a company merger another company is incorporated.

Minimum Lot

A minimum lot indicates the minimum number of financial instruments that can be traded on an organized market.

Minimum Investment

Amount of money needed to negotiate the minimum amount for a particular financial instrument.

Minimum Redemption

Certificates the Minimum Redemption is the minimum portion of the capital returned at maturity.

MSCI

This stands for Morgan Stanley Capital Index. The most famous MSCI indices are the MSCI World, which brings together more than 1,600 equity securities globally, and the MSCI EaFe, which include European, Asian and Australian titles.

MTA

An acronym for Mercato Telematico Azionario or the Online Stock Exchange. A market managed by Borsa Italiana (Italian Stock Exchange) where shares, convertible bonds, warrants, rights and option certificates representing shares of mutual funds are traded. Trading takes place according to auction principles (opening and closing) and continuous trading.

MTS

MTS is an acronym for' Mercato all'Ingrosso dei Titoli di Stato' or Wholesale Market of Government Securities. It is a Secondary Wholesale Market (the minimum trading amount is fixed at 2.5 million Euro) in which only specialized operators can operate. Government securities (Italian and foreign) and securities backed by the State are traded on the MTS.

Multiplier or Exercise ratio

The number of financial instruments associated with the exercise of an Option. For example, if a Call Warrant has an exercise ratio of 0.5 it is necessary to have two warrants to subscribe to one share. The reverse of a Multiplier is Parity.

Mutual Investment Fund

Mutual funds fall into the category of Undertakings for Collective Investment (UCI) and are vehicles that are intended to collect together the financial resources of most savers in one special fund that is invested in financial assets.

Nasdaq

An acronym for National Association of Securities Dealers Automated Quotation. The Nasdaq is the US electronic stock market, established in 1971 and initially intended for small and medium-sized companies with high growth potential. The pre-market session on the Nasdaq starts at 4am and ends at 9:30 am (New York time), the trading of securities takes place between 9:30am and 4 pm and afterhours between 4pm and 8pm. The main index is the Nasdaq Composite Index.

Net Income

Net income is the annual income produced by a company. Net income is the result obtained by the difference between total revenue and total cost of production, net of taxation.

Net Worth

The Net Worth of a company is the difference between accounting assets and liabilities contained in the balance sheet of a company. It represents what remains to shareholders after deducting all third party liabilities from the assets.

Nikkey225

Stock index which measures the performance of the 225 most highly capitalized stocks listed on the Tokyo Stock Exchange.

Nominal Value

In the case of a share is the percentage of the capital represented by the share, while for Bonds is the amount on which interest is calculated.

Non Capital Protected Certificates

Non Capital Protected Certificates are financial instruments that follow the dynamic evolution of the value of the underlying financial asset. Depending on the type of Certificate, investors may benefit from the rising or falling movements of the underlying asset. The investor is exposed to the lack of capital protection, in the same way as a direct investment would be in the underlying asset. The movements of the underlying asset may be increased or reduced by the Certificate where a participation factor other than 100% is expected.

Nymex

An acronym of the New York Mercantile Exchange. Founded in 1872, it is the market where Futures and Options on energy Commodities (oil, natural gas), industrial metals (aluminum, copper) and precious metals (gold, silver) are traded. The headquarters is in New York.

NYSE

NYSE is an acronym for the New York Stock Exchange. Located in New York's famous Wall Street, it is the largest worldwide stock market and the second after the Nasdaq for number of listed companies.

Offer document

A document attached to a public offer for purchase (IPO) that enables the launch of a public offer for purchase or an exchange offer to share the information needed to allow the public to form an opinion on the IPO itself.

OPA

An acronym for Offerta Pubblica di Acquisto (Tender offer). The tender offer is a public offer made by an agency which seeks to acquire financial instruments.

OPAS

An acronym for Offerta Pubblica di Acquisto e di Scambio (Tender offer and exchange). It is the operation by which the bidder proposes to investors to purchase securities that are paid partly in cash and partly in other financial instruments.

Open-end Fund

Type of fund in which the assets vary continuously as a result of (decreasing) redemptions and (increasing) new subscriptions.

Opening Auction

The Opening Auction is that auction which provides for the entry, modification and cancellation of orders in a given period in time aimed at the simultaneous conclusion of contracts in a single instant (opening) and at a single price.

Opening Price

The Opening Price is the price at which, at the opening of the markets, contracts are concluded. The price, identified automatically, is what allows for the maximization of the total amount exchanged.

Options

Options are derivative contracts that give the buyer the right to buy (call) or sell (put) the Underlying asset at a fixed price on or by the due date.

Ordinary shares

Ordinary Shares give the holder the right to vote, the right to appeal budgets, the right to a dividend, the option rights and the right of withdrawal in the event of a change in the corporate structure.

OTC (Over The Counter)

The OTC market is a market which is not regulated. The contracting methods are not standardized and it is possible to enter into 'atypical' contracts. The lack of liquidity is one of the main disadvantages to OTC.

Out of The Money

An Option is said to be Out-the-money when the price of the Underlying is lower than the strike price (in the case of a call option) or higher (for a put option). The intrinsic value of the option is zero. When the option is out of the money the exercise of the same is not beneficial.

Out of the Money Option

An Out of the Money Option is one in which the price of the Underlying is lower than the strike price (in the case of a call option) or higher (for a put). The intrinsic value of the option is zero. When the option is out of the money it is not beneficial to exercise the option.

Outperformance Certificate

Outperformance Certificates belonging to the category of Non Capital Protected Certificates; Outperformance Certificates, in the long version, allow for full participation in any increases in price and with a leverage effect in a rising market. In the event of a fall in the Underlying, the Certificate marks a performance equal to that of the underlying asset.

P-E or Price to Earnings.

Price to Earnings is the Relationship between the market price of a share and it's Net Income per Share. It is also expressed as the ratio of the market capitalization of the issuer and the profits.

Parity

The number of financial instruments associated with the exercise of an option, a warrant or a covered warrant. It is the reverse of a multiplier.

Performance

The performance of a financial instrument indicates the percentage change in the value of the same in a given time frame. Performance can be expressed both in absolute and relative terms.

Placement

Business done by authorized intermediaries through which newly issued financial instruments or those already in circulation are placed and distributed in the market.

Placement Consortium

Group of brokers coming together to carry out the placement of financial instruments on behalf of the Issuer. A placement consortium has two main functions: to contact all potential buyers of securities acting as a consultant in respect of the manner and time of issue; provide funds directly to the Issuer by underwriting the securities being placed.

Plain Vanilla Bonds

Plain Vanilla Bonds are bonds that provide for the payment, on a periodic basis or in a lump sum, the Interest represented by Coupons and the return on capital invested at Maturity. The term Plain Vanilla refers to the basic version of the ice cream in the Anglo-Saxon countries.

Plain Vanilla Option

A Plain Vanilla Option is a Standard option contract (call or put), characterized by a maturity date, an Exercise Price and no additional features. The term Plain Vanilla refers to the basic version of the ice cream in the Anglo-Saxon countries.

Preference Shares

Preference shares provide the holders with priority rights in the distribution of profits and capital repayment, as well as a right of priority over ordinary shareholders. However the holders will have reduced administrative rights, for example the right to vote, challenging resolutions, withdrawal, or on options).

Premature Exercise Level

The premature exercise level is the level of the predetermined price that when reached by the underlying asset will cause the certificate to mature prematurely redeeming to the investor the issue price plus a premium.

Premium

In option contracts, the premium is the amount of money that a buyer pays the seller to have the right to buy or sell an Underlying asset at or by a future date at a predetermined price. Relating to Bonus Certificates the premium is represented by the Bonus and is paid to the investor if the value of the Underlying, (if it is a European-style certificate or continuous basis if an American-style certificate), at maturity does not reach the Barrier Level.

Primary Market

The Primary Market is the market where newly issued financial instruments are offered.

Private Placement

The offering of securities addressed to a limited number of investors.

Protection

The term protection means the minimum percentage of invested capital that is returned at maturity.

Protection level

In a Certificate, when the protection level of the Underlying is reached, the performance of the Certificate remains constant. The investor, as a result, does not incur any greater losses. If expressed as a percentage value, it expresses the minimum repayment to the investor at maturity.

Public Debt

The Public Debt is the amount of debts that the State (taking into account all public entities) has contracted to deal with the budget deficit.

Public Exchange or PE (OPSC)

An acronym for Public Exchange. It is the operation by which the bidder proposes to investors to purchase securities offering in exchange other securities.

Public Offer (PO)

An acronym for Public Offering. It is the process by which a company offers newly issued shares to one or more categories of investors. In the event that the OPS is the purpose of listing it is referred to as IPO (Initial public offering).

Public Sale Offering PSO (OPV)

An acronym of Public Sale Offering. This occurs when one or more shareholders of a company relinquish all or part of the shares held.

Put

A Put Option is a derivative instrument under which the buyer through the payment of a premium, acquires the right, but not the obligation, to sell an Underlying asset at a given Exercise price (Strike Price) at the maturity date or before that date (in the case of European or American options respectively). The Put Option is used if the expectation is the price of the asset will be affected by a decline during the term of the Option.

Put Option

A put option is a derivative instrument under which the buyer through the payment of a premium, acquires the right, but not the obligation, to sell an Underlying asset at a given Exercise price (Strike Price) at maturity date or before that date (in the event European or American option respectively). The Put Option is suitable if it is expected that the price of the asset will be affected by a decline during the term of the Option.

Quanto

A Quanto Clause may be present in the Certificate. The Quanto clause allows the investor to remove the risk arising from fluctuations in the exchange rate of the underlying financial asset.

Rate of Inflation (Inflation)

The rate of inflation, or simply 'Inflation', is a financial index which measures the increase in prices of goods and services in a given period of time. In Italy the main indicator to measure inflation is the index of consumer prices for employees with families and blue collar workers.

Rating

An opinion awarded by a specialized independent agency, expressed by an alphanumeric code, which indicates the creditworthiness of a debtor or a particular issue of securities. The Rating is emitted as a result of a detailed analysis of the financial situation of the company being assessed and the overall context in which it operates. Ratings are subject to periodic review.

Rating Agency

Independent company specializing in the assessment of the creditworthiness of an issuer or a title. Standard & Poor's, Moody's and Fitch are the major rating agencies (also called "the three sisters").

Raw Materials

Raw materials are goods or commodities such as metals, minerals, agriculture and livestock and other physical assets which investors can trade through the use of derivatives.

Real Financial assets

Examples of real financial assets are real estate, agricultural land and consumer durables.

Redemption Price

Amount paid to the holder of a financial asset at maturity.

Relative Value Certificate

Belonging to the category of Capital Protected Certificates, Relative Value Certificates allow investors to gamble on the rise in the ratio or the difference between an asset and a Long or Short asset offering in any case the total or partial capital protection.

Repurchase or Repo Agreements

The Repurchase agreement, or Repo as it is also known, is a short-term investment made through the purchase of Bonds in cash that are resold at Maturity at a fixed price.

Return

The Return on investment is the change in total percentage of the value of a financial instrument at a given time frame.

Rho

The Greek letter Rho, is the indicator measuring the change in the premium of a Warrant at the varying of the interest rate offered by the money market.

Right of Withdrawal

The right of withdrawal is the ability for a contracting party to dissolve a contract unilaterally, consequently voiding all the obligations deriving from it, without the consent of the other party and without facing penalties. To be valid the unilateral termination of the contract must be communicated in writing to the other party within the time allowed by law or as established in the contract through a special clause for the exercise of the right of withdrawal.

Risk of Insolvency

The Risk of Insolvency is the risk associated with the possibility that the borrower will default on its obligations to pay interest and principal repayment.

S&P500

US stock index that measures the performance of the top 500 stocks by market capitalization listed on NYSE and Nasdaq.

Sale Price

The sale price is the basis for the calculating gains and losses of a derivative contract.

Saving Shares

A type of share which has no voting rights but has a right to a higher dividend than other types of Shares (the statutes may provide a minimum level of dividend for this category of Shares).

SEC

An acronym of the Securities Exchange Commission. The SEC is the Audit Commission of the US financial markets. It is the equivalent of Italy's Consob.

Secondary Market

The secondary market is where financial instruments which are already in circulation on the market are traded.

Securities Market

The term securities market is defined as the segment of the financial market on which securities are traded and activities relating to securities conducted, i.e. financial products that by their very nature are intended for circulation.

Securitization

The Securitization is a transaction whereby a bank sells a portion of its loans to an outside company, called Special purpose vehicle or SPV. In this way, the SPV provides liquidity to the bank which then recovers it by issuing bonds guaranteed by the loans.

Securitized Derivative

A securitized derivative is a negotiable instrument incorporating Derivative contracts. Unlike contracts, securitized derivatives are securities not contracts. They can only be issued by a financial intermediary or even by companies or entities with specific capital or supervision requirements and by States and international organizations. In Italy securitized derivatives are divided into two categories: Covered Warrants and Certificates. They are traded on the Italian Stock Exchange, Sedex.

SeDeX

An acronym of Securities Derivative Exchange. The SeDeX is the market managed by Borsa Italiana on which Covered Warrants and Certificates are traded. The SeDeX consists of four segments: a) Plain Vanilla Covered Warrant; b) Structured Covered Warrants; c) Leverage Certificates; d) Investment Certificates.

Share Capital

The share capital is made up from the total of all payments or transfers from shareholders at the time of the formation of a company. The share capital is divided into shares that are awarded to members in proportion to the amount paid in. The share capital may be increased or decreased only by an extraordinary meeting of members.

Share Index

A share index is defined as the summary of the value of a basket of shares it represents. The movements of the index can be considered a good indication of the changes, over a period of time, in valuation of the securities included in the portfolio. There are several methods for calculating the indices, each dependent on the weighting given to the shares which make up the basket.

Shareholder

The holder of one or more shares (see Shares) in a company.

Shares

Title document showing the minimum stake of a shareholder in the share capital of a company that entitles the holder or the Shareholder, to receive a part of the profits eventually distributed by the company and which can confer the right to vote at the shareholders meetings. There are different types of shareholdings depending on the company incorporation and these can be: ordinary, preference or savings.

Short

When a financial instrument is sold a short position (or short) is open.

Short selling

Short selling is the sale of a financial instrument that is not owned by the seller but which will be purchased later. It is an operation that is performed when the investor expects the price of a financial instrument to fall.

SMI

The SMI index comprises the 30 stocks with the highest capitalization listed on the Swiss stock market.

Sovereign Bonds

Sovereign Bonds are bonds issued by institutions and international entities. Among the major issuers Sovereign Bonds are the World Bank, the International Monetary Fund and the European Investment Bank. Typically the evaluation assigned by the Rating Agencies to these bonds is particularly high ("AA" or "AAA").

Specialist

Part of the category of Liquidity Provider, the Specialist is a broker that ensure the liquidity of the financial instruments issued.

Spread

Represents the difference between two prices of the same title, or between two interest rates.

STAR

Acronym of 'Segmento Titoli con Alti Requisiti' ( Securities with High Requirements). The STAR is the segment of the MTA dedicated to medium capitalization companies that comply with specific requirements in terms of corporate disclosure and corporate governance.

Step Up/Step Down

Step Up / Step Down Fixed-rate bonds are bonds where the coupon is variable over time but established at the time of issue: rising in the first case (Step Up) and falling (Step Down) in the second.

Stock Exchange

The Stock Exchange is a regulated market where financial instruments are listed and traded. In Italy the Stock Exchange has been managed by the Italian Stock Exchange since 1998.

Stock Exchange Calendar

Calendar developed by the Italian Stock Exchange that lists the days it is open and closed to trading; the Afterhours market closures, public holidays, ex-dividend dates and all the key Futures dates.

Stock Index Futures

The stock index futures is a derivative contract that obligates the holder to buy or sell a stock index at a specified price, at a given deadline.

Stock Split

The Stock Split is the process by which the Nominal Value of a Share is reduced. The share capital remains unchanged, growing as a result of the number shares in circulation. The procedure is the reverse for Equity Grouping.

Stock Rights Option

The rights option is the option given to the Shareholder or the holder of a Convertible Bond to subscribe new shares in the event of extraordinary or new issue of shares, having priority over other subscribers. The number of titles that can be subscribed by holders of stock rights options is calculated using a conversion ratio. In the event that the holder is not willing to underwrite new securities, the holder can sell the rights on the market.

Stop Loss

A trading order carried out on the condition that the market price of a particular financial instrument reaches a certain threshold. In the Turbo and Short Certificates it is the level of the Underlying that if reached causes it to expire prematurely.

Strike Price

In an option, the strike price is the price at which the person exercising an option to buy (in case of Call) or sell (in that of the Put) the underlying asset.

Structured Bonds

In the case of Structured bonds, Coupons are dependent on the trends of one or more of the underlying assets (shares, indices, funds, Commodities, etc.). Through the use of structured bonds investors aim to attain a higher return than that of traditional bonds benefiting from capital protection at maturity.

Supranational Bonds

Supranational Bonds are the bonds issued by international institutions and entities. Among the major Supranational Bond issuers are the World Bank, the International Monetary Fund and the European Investment Bank. Typically the evaluation assigned by the Rating Agencies to these bonds is particularly high ("AA" or "AAA").

Target Price

The target price is the price a financial asset will achieve, according to analysts.

Technical Analysis

Analysis of the evolution of the value of a financial instrument or a market through the study of historic prices and volumes, through the use of graphs with the aim of predicting the future development of the price and is used as a support when making trading decisions.

Tel Quel Price

A stock is listed as a Tel Quel when its value takes into account both the capital value (Clean Price) and is associated rights (accrued interest in the case of the bonds or dividends in the case of shares).

Theta

Theta is a measure of the rate of decline in the value of an option due to the passage of time. Theta is also referred to as 'Time decay' on the value of an option. If everything is held constant, then the option will lose value as time moves closer to the maturity of the option.

Total Market Capitalization

Cumulative capitalization of stocks listed on a market.

Total Return

Total Return is defined as the performance of one or more investments including the capital appreciation as well as income from reinvestment

Trading Book

A prospectus detailing individual orders and quotes relating to each contract with an indication of their respective quantities. One side of the book shows the proposed purchases and the proposed sales being shown on the other side.

Trading Code

The Trading Code is the code that identifies the issuer and the financial instrument on the market.

Trigger Price

A trigger price is the price level that refers to an occurrence or absence of a certain condition and which has as a consequence the occurrence of an event (an example of an "event" could be early expiry or the payment of a coupon).

Trend

The trend designates the general direction of a market movement.

Twin Win Certificate

Twin Win Certificates are financial instruments belonging to the category of Conditional Capital Protection Certificates that allow for investors to benefit from upward and downward trends in an Underlying financial asset if it does not reach a ore-determined price level, also called a Barrier level, set at the time of issue.

Underlying

The Underlying asset is the activity such as a share, stock index currency, commodity or any other real( e.g. raw materials) or financial asset( an exchange rate or interest rate) upon which the value and price of the Certificate is dependent.

Underlying Currency

It is the currency in which the value of the Underlying is expressed. For Quanto type Certificates the currency of denomination of the Underlying is always the domestic currency.

Underlying Financial Assets

The real or financial asset on which the price of another financial instrument is derived.

Underlying – Long

In Alpha Relative Value type Certificates, the long underlying assets are those from which the highest returns can be expected.

Underlying – Short

In the Alpha Relative Value type Certificates, the short underlying assets are those from which low returns or even negative performances can be expected.

Upside Participation

The coefficient of upside Participation is the percentage value that indicates the level of participation, in the Underlying performance redeemed at maturity, to the investor who holds the financial instrument that offers such a payoff.

Value Date

The day in which funds must be made available for a financial transaction or trade.

Variable Interest Rate

The rate of interest is variable when it changes based on the performance of a benchmark (e.g. Euribor or Libor).

Variable Rate Bonds

Variable interest rate bonds are debt securities in which the return to the investor is represented by periodic coupons calculated at a rate of interest which may change during the life of the loan. The interest rate may be: predetermined or indexed to a benchmark to which a spread is usually added.

Vega

Vega, in options, is usually used to calculate an option's sensitivity to changes in the volatility of the underlying asset. Specifically, for a buyer of the options, Vega is always positive, while a seller of options will always find Vega to be negative.

Volatility

Volatility is a measure of the variability or uncertainty of the returns or the price of a financial asset. It expresses the level of investment risk.

Volume

Volume refers to the number of contracts traded during a specified time period on a financial instrument. The size is an indicator of liquidity of a particular financial instrument (high volumes are synonymous with high liquidity of the financial instrument).

Warrant

A Warrant is a financial instrument that gives its holder the right to buy (a Call Warrant) or sell (a Put Warrant) an Underlying asset at or by a certain date at a fixed price. If the right is exercisable within a given period of time it is known as an American-style Warrant; if the right can be exercised at a specific date it is known as a European –style Warrant.

Yield to Maturity

Yield to Maturity is abbreviated as YTM and represents the yield obtainable in maintaining the financial instrument portfolio purchased until it expires or matures. In Italian it is also called Rendimento a Scadenza.

Zero Coupon Bonds

Zero Coupon Bonds are debt securities that do not pay coupons. The return to the investor is the difference between the redemption value at maturity and the amount paid for the subscription of the bond.

Text modified: 09.04.2015