Asian Share Market, Asian Stock Market

Account Period Settlement:
The settlement process where the buy and sale transactions done for a particular period (week or fortnight) are aggregated and only the net obligations are settled after the period is over. Indian securities market had weekly account period settlement before rolling settlement.

Allotment:
A letter sent to the successful application about allotment of shares/debentures against his application.
American Depository Receipts (ADRs):
A certificate issued in the United States in lieu of foreign security. ADRs are traded in US markets for all intents and purposes.

American option:
A put or call option that cane be exercised any time before the expiration date.

Asset Management Company:
The company that handles day to day management and operations of a Mutual Fund.

Arbitrage
The process of benefiting out of price differential in the same scrip between two markets or because of price difference in the scrip in the underlying market and futures or derivative markets.
Arbitration:
Settlement of claims differences or disputes between member of a stock exchange and another member and between a member and his clients, sub-brokers, etc., through appointed arbitrators. It is a quasi-judicial process that is faster and an inexpensive way of resolving a dispute. The stock exchange facilitates the process of arbitration between the members and their clients in accordance with the bye-laws of the exchange.

Ask
The price which the seller of the security wants to sell the shares owned by him.

Auction:
An auction is a mechanism utilized by the stock exchange to fulfill its obligation to a counter party member when a member fails to deliver agreed securities or make the payment. Through auction, the stock exchange arranges to buy good securities and deliver them to the buying broker or arranges to realise the cash and pay it to the selling broker.

Basis:
The difference between current price and future price of an underlying security.

Bid and Ask:
Bid is the price of a share a prospective buyer is prepared to pay for particular scrip. Ask is the price at which a share is offered for sale by the seller.

Bid Ask Spread:
Difference between best bid and best ask price available for a particular security in a market.

Bonus Shares:
Shares allotted to the existing shareholders free of cost by capitalizing the free reserves of a company.

Book Closure:
The periodic closure of register of members to determine the entitlement of corporate actions such as bonus, dividend, interests etc.

Brokerage:
Brokerage is the commission charged by a broker for purchase/sale transaction through him. The maximum brokerage chargeable is at present 2.5% of the trade value. The actual brokerage charged however is far less.

Call Option:
An agreement which gives the owner the right but not the obligation to buy a particular security by a specified date at a predetermined price.

Circuit breakers/filters:
It is a mechanism by which stock exchange temporarily suspends the trading in a security when its prices are volatile and tend to breach the price band.

Clearing:
Clearing refers to the process by which all transactions between members are settled through multilateral netting.

Close Out:
The process whereby the exchange settles the obligation due to a broker and his clients in the event of default by the counterparty broker.

Company objection:
An investor sends the certificate along with the transfer deed to the company for transfer. In certain cases the registration is rejected because of signature difference, or if the shares are fake, forged or stolen etc. In such cases the company returns the shares along with a letter which is termed as a company objection.

Contract Note:
The official and legal document issued by a stock broker to his clients evidencing buy/sale of securities at the stated price and time of the day.

Cum-bonus:
The share is described as cum-bonus when a purchaser is entitled to receive the current bonus.

Cum-rights:
The share is described as cum-rights when a purchaser is entitled to receive the current rights.

Stocks Glossary
 

Dabba Trading:
The illegal practice of buy/sale of securities outside the exchange mechanism without any documentary evidence to relate such transactions.

Day order:
A day order, as the name suggests, is an order which is valid for the day on which it is entered. If the order is not matched during the day, at the end of the trading day the order gets cancelled automatically.

Day Trader:
A trader who only takes the position intra-day and does not have any obligation to deliver/receive shares from the exchange. Difference between his sale and purchase is profit or loss for the day.

Dematerialisation:
Dematerialisation is the process by which shares in the physical/paper form are cancelled and credited to the Beneficiary Account (BO) in the form of electronic balance and is maintained on highly secure systems at the depository.

Demutualization:
The process of segregating the ownership, management and trading aspects of a stock exchange to address the issues of conflicts of interest.

European call:
A put or call option that can be exercised only on the day of its expiration and not before that.

Ex-bonus:
The share is described as ex-bonus when a purchaser is not entitled to receive the current bonus, the right to which remains with the seller.

Ex-rights:
The share is described as ex-rights when a purchaser is not entitled to receive the current rights, the right of which remains with the seller.

Face Value:
Par value of shares, which indicates the nominal value of shares. Dividend is based on face value.

Forward trading:
Forward trading refers to trading where contracts traded today are settled at some future date at prices decided today.

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