Glossary of terms
Arbitrage
The process where a gap between two market makers’ prices is exploited by buying from one while simultaneously selling to the other to lock in a profit.
Ask Price
The price at which you can buy.
Authority to deal
Allowing someone to spread bet on your behalf. This will require your written notification.
Base Rate
The interest rate at which the Bank of England provides liquidity to the GBP Money Market.
Basis
The difference between the price of a futures contract and the underlying market.
Basis Point
A hundredth of one per cent (0.01 per cent).
Bear / Bear Market
A ‘bear’ is pessimistic about the market and expects it to fall. A 'bear market' is a term used to describe a falling market, or one that is trending lower.
Bet Per
The minimum movement you can bet on. This may differ from the underlying market tick size.
Bid Price
The price at which you can sell.
Blue Chip Stock
Blue Chip companies are large, well established and conservatively managed. The term refers to the highest valued poker chip.
BOBL
Medium term (5 year) German Government Bond.
Bond
A bond is an IOU. You effectively lend money to a company or government in return for a fixed level of income (coupon) and the guaranteed return of your investment at the end of the bond's life (known as 'the maturity date'). In return you receive a certificate that you can sell on in the secondary market.
BUND
Long term (10 year) German Government Bond.
Buy
Trading on our higher (offer) price because you think the market will rise.
Cable
Market nickname for Sterling/US dollar exchange rate.
Cash / Spot
The current level of an underlying market.
Call
A ‘call’ option gives the purchaser the right, but not the obligation, to buy at a pre-arranged fixed price. A 'put' is the opposite of a 'call'.
Capital Gains Tax
A tax on investment profits. Spread betting winnings are free of any UK Capital Gains Tax under current laws.
Contract Note
A document sent out to confirm a trade. Can be e-mailed or sent by post.
Credit account
A Credit account will be available to all clients subject to their financial status and original proof of funds. Approval of a credit account will be at the discretion of MST and will be subject to certain financial conditions (see account opening application).
Credit Allocation
The credit allocation will allow a client to maintain unrealised losses without paying margin. As the markets move up and down positions will acquire unrealised profit or loss, as long as the clients open positions remain within the credit allocation then no funds will be due.
Deposit
Funds that need to be on your account in order to place or hold a bet. It is not the total amount that can be lost on a trade.
Deposit Account
Please see standard account.
Derivatives
Financial contracts, such as futures and options, whose value is derived from an underlying asset, rate or index.
Dividend
A distribution of profits to company shareholders, usually shown in pence per share. Dividends are paid at the company's discretion. They may be distributed as cash, scrip or enhanced scrip.
DJIA
The Dow Jones Industrial Average. The index that tracks the performance of a representative selection of 30 blue-chip US equities.
EDSP
Exchange Delivery Settlement Price. The average traded price over a set period that determines the settlement price for some futures contracts.
Expiry Date
The date on which a contract can no longer be traded.
Exposure
Describes how much of your portfolio is invested in a particular sector.
Fair Value
This is the theoretical price at which a futures contract should trade.
Fill
The execution of an order and the price it is executed at.
Floatation
When a company's shares are offered to investors and quoted on an exchange for the first time.
FSA
The Financial Services Authority. Enforces strict rules on the conduct of spread betting in the UK. Superseded the SFA on the 29 th of April 2000.
FTSE
Financial Times Stock Exchange. These firms are jointly responsible for the compilation and maintenance of the main stock indices reflecting the performance of the UK's top shares.
FTSE 100
The index that highlights the performance of the UK's top 100 companies, as ranked by their market capitalisation. We refer to this as UK100 in our literature.
FTSE ALL SHARE
An index covering about 800 shares representing 98% of UK market value. There are indices for business sub-sectors as well.
FTSE MID 25
The index of the next 250 companies, after the top 100.
FTSE 350
The index of the top 350 companies by market capitalisation. It is a combination of the FTSE 100 and FTSE 250 stocks.
Futures
Entering a contract now to fix a price for the future. At expiry the difference between the contract price and the actual settlement price is usually paid or received.
Gaps Through
The market trades through the level specified in your order, without actually trading at that given level.
Gearing
Gearing is the ratio of a company's borrowing to its assets. A highly geared company is one that has a lot of debt as a proportion of its total assets. Gearing also relates to the Notional Trading Requirement when compared to the total underlying value of a trade. See "Leverage".
Gilts
UK Government Bonds. So called because the certificates were originally gilt edged.
Good For The Day (GFD)
An order, which if not filled, expires at close of business on the day it is received.
Good Till Cancelled (GTC) ....
An order thatwill be carried forward indefinitely until it is either filled or cancelled by you.
Good Till Date
An order, which if not filled, expires at close of business on a date specified by you.
Grey Markets
A term for informal markets that are not actually listed on any exchange, for example IPO’s and political bets.
Hedging
A strategy to reduce the risk of an open position.
Initial Margin Requirement
This is the amount needed on deposit in order to place a trade. Also known as Notional Trading Requirement (NTR).
Interim Dividends
A company's distribution of profits to shareholders halfway through the financial year.
Interim Report
All companies quoted on the London stock exchange must release an interim report after the first 6 months of their financial year. It tends to concentrate on profitability, and may be used to justify an interim dividend.
IPO
Initial Public Offering. The offering of shares making their market debut.
Initial Margin Requirement
This is the amount needed on deposit in order to place a trade. Also known as Notional Trading Requirement (NTR).
Last Day of Dealing
The last Day on which you can open or close a trade in a relevant market.
Leverage
Leverage is the ratio between the initial outlay and the equivalent position in the underlying market. Similar to Gearing.
LIBOR
London Inter Bank Offer Rate. The reference level fixed daily at which London banks will lend money to each other.
Limit Order
An order to sell above or buy below the current price.
Limit Up / Down
The maximum change from the previous closing price permitted by some exchanges.
Liquidity
The volume of business that can be transacted in the market. Highly liquid markets typically have narrow spreads and can accommodate large deal sizes. Illiquid markets have wide spreads, small deal sizes and are often erratic.
Long
Holding an open “buy” trade because you think the market will rise.
Margin
The deposit needed on your account in order to keep your positions open.
Margin Call
A call for additional funds on your account in order to cover your current exposure.
Market Capitalisation
The market value of a company. The total number of shares in issue multiplied by the share price.
Market Maker
Someone who makes a two-way price giving a customer the opportunity to buy or sell.
Market Price
Order Orders can be left on a market basis. This means that if the underlying market triggers your order, you will be filled on our current quote.
NASDAQ
National Association of Securities Dealers Automated Quotation System. A composite index that reflects the performance of high tech stocks in the US
Normal Market Size
The amount that can be traded on a typical market price quote.For shares this is calculated on the previous year's average daily turnover of each individual stock - currently 2.5% of the total volume of shares for each company. Market makers are not obliged to provide a quote for a transaction above normal market size.
National Trading Requirement
This is the amount needed on deposit in order to place a trade. Also known as Initial Margin Requirement (IMR).
Offer Price
The price at which you can buy. Sometimes referred to as the “ask” price.
One Cancels Other (OCO)
Two linked orders where, if one is filled, the other is automatically cancelled.
Open Trade Equity (OTE)
Unrealised profit or loss on an open position.
Options
Financial derivative instrument that gives the contractual right, but not obligation, to buy (a call) or sell (a put) an investment at a specified price within a set period of time.
Orders Aware Margining (OAM)
A calculation that takes into account active stop orders to reduce the overall margin requirement.
'OTE' Inclusion Ratio
The proportion of OTE that can be used to finance current or future trades.
Our Quote
The two-way (bid/offer) price made by MF Global Spreads on which you can trade.
Our Quote Order
A stop, or limit, is usually placed on the basis of our quote. You will be filled if our buy or sell price matches your order.
Penny Shares
Firms with a low market capitalisation. Many stocks on smaller exchanges such as AIM are penny shares.
Premium
The premium is the amount paid for an option.
Put
A 'put' option gives the right, but not the obligation, to sell at a pre-determined fixed price. The opposite of a 'put' is a 'call'.
Rollover
Transferring an expiring trade into a later contract.
S&P 500
'S&P' stands for Standard & Poors (an international credit rating company). It defines the broader US equity market, tracking the performance of the top 500 companies.
SEAQ
Stock Exchange Automated Quotations. The quote driven system for trading UK shares.
Securities
The collective name given to stocks and shares.
Sell
Trading on our lower (bid) price because you think the market will fall.
SETS
Stock Electronic Trading Service. The order driven system used to trade FTSE 100, ex-FTSE 100 and reserve shares.
Shares
Shares represent ownership of part of a company. They are also known as equities.
Short
Holding an open “sell” trade because you think the market will fall.
SOQ
Special Opening Quotation. The settlement price mechanism for some US future contracts.
Spread
The difference between our sell and buy (bid and offer) prices.
Stake
The bet size per unit of movement on our price. In Spread Betting this is NOT the total amount you could lose.
Standard Account
A Standard account will allow clients to only trade with cleared funds in their account. Funds must be held in your account prior to trading. Interest will be paid on unencumbered funds (money not being used as trading margin) on a daily basis and will be credited to your account on a monthly basis. Funds can be remitted by Debit card (Maestro or Delta card) or by bank transfer (TT or BAC's).
Stop Order
Stops are orders to sell below, or buy above, the current price. Stop orders are normally placed to close an existing position and restrict losses in the event of an adverse market movement. They can also be used to initiate a new position if the price breaks through a perceived support/resistance level.
Tick Size
The minimum price movement in each market.
Volatility
Describes the propensity of a market price to change rapidly.
Wavied NTR
The Waived Notional Trading Requirement ("WNTR") will allow clients to open positions without placing funds or maintaining funds on deposit. The client can maintain and keep open all positions until expiry as long as the client remains within the WNTR limit and the credit allocation.
