Ultimo Continental term for month or year end.
Uncovered Another term for an open position.
Under Reference (Order)
Before finalizing a transaction all the details should be
submitted for approval to the order giver, who has the right
to turn down the proposal.
Under-Valuation An exchange rate is normally considered to be undervalued
when it is below its purchasing power parity.
A colloquial term for reversing a transaction. e.g. a spot
sale by means of a forward purchase or, if done in error, a
Unit of Account A device designed to provide a consistent value with varying
currencies. e.g. ECU and SDR.
Up Tick A transaction executed at a price greater than the previous
(French) Payments are said to be "valeur compensee" when
payment by one party in one centre, and settlement by the
other party in another centre, takes place on the same day.
For exchange contracts, it is the day on which the two
contracting parties exchange the currencies which are being
bought or sold. For complete description see the chapter on
trading. For a spot transaction, it is two business banking
days forward in the country of the bank providing
quotations which determines the spot value date. The only
exception to this general rule is the spot day in the quoting
centre coinciding with a banking holiday in the country(ies)
of the foreign currency(ies). The value date then moves
forward a day. The enquirer is the party who must make
sure that the spot day coincides with the one applied by the
respondent. The forward months maturity must fall on the
corresponding date in the relevant calendar month. If the
one month date falls on a non-banking day in one of the
centers, then the operative date would be the next business
day that is common. The adjustment of the maturity for a
particular month does not affect the other maturities that
will continue to fall on the original corresponding date if
they meet the open day requirement. If the last spot date
falls on the last business day of a month, the forward dates
will match this date by also falling due on the last business
day. Also referred to as maturity date.
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Value Spot Normally settlement for two working days from the date the
contract is entered into.
Value Today Transaction executed for same day settlement; sometimes
also referred to as "cash transaction"
A simple option whose terms and conditions do not include
any provisions other than exercise style, expiry and strike.
To compare with exotic options which have additional
Funds required to be deposited by a client when a price
movement has caused funds to fall below the stipulated
percentage of the value of the contract.
Vega Expresses the price change of an option for a one per cent
change in the implied volatility.
Velocity of Money
The speed with which money circulates, or turnover in the
economy. It is calculated as the annual national income;
average money stock in the period.
Vertical (Bear or Bull)
The sale of an option with a high exercise price and the
purchase (in the case of a bull), or the sale (in the case of a
bear), of an option with a lower exercise price. Both options
will have the same expiration date.
A measure of the amount by which an asset price is
expected to fluctuate over a given period. Normally
measured by the annual standard deviation of daily price
changes (historic). Can be implied from futures pricing,
A local currency account maintained with a bank by another
bank. The term is normally applied to the counterparty's
account from which funds may be paid into or withdrawn as
a result of a transaction.
Wholesale Money Money borrowed in large amounts from banks and
institutions rather than from small investors.
Wholesale Price Index
Measures changes in prices in the manufacturing and
distribution sector of the economy, and tends to lead the
consumer price index by 60 to 90 days. The index is often
quoted separately for food and industrial products.
Working Balance Discretionary element in the monetary reserves of a central
A day on which the banks in a currency's principal financial
center are open for business. For FX transactions, a working
day only occurs if the banks in both currencies' financial
centers are open (all relevant currency centers in the case
of a cross).
A bank made up of members of the IMF whose aim is to
assist in the development of member states by making loans
where private capital is not available.
Writer The seller of a position. Also known as the grantor of the
trade. "Writing a Currency" is to sell it.
Yard Slang for milliard, one thousand million (1 European milliard
= 1 US billion = 1,000 million).
The graph showing changes in yield on instruments
depending on time to maturity. A system originally
developed in the bond markets is now broadly applied to
various financial futures. A positive sloping curve has lower
interest rates at the shorter maturities, and higher at the
longer maturities. A negative sloping curve has higher
interest rates at the shorter maturities.
Certificate issued by the Bank of England to "discount
houses" in lieu of stock certificates to facilitate their
dealing in the short dated gilt edge securities.
Zero Coupon Bond A bond that pays no interest. The bond is initially offered at
a discount to its redemption value.