Definition of Drop lock

Drop lock

An arrangement whereby the interest rate on a floating rate note or preferred stock becomes fixed
if it falls to a specified level.

Block house

Brokerage firms that help to find potential buyers or sellers of large block trades.

Block trade

A large trading order, defined on the New York Stock Exchange as an order that consists of
10,000 shares of a given stock or a total market value of $200,000 or more.

Block voting

A group of shareholders banding together to vote their shares in a single block.

Blocked currency

A currency that is not freely convertible to other currencies due to exchange controls.

Drop, the

With the dollar roll transaction the difference between the sale price of a mortgage-backed passthrough,
and its re-purchase price on a future date at a predetermined price.

Lockbox

A collection and processing service provided to firms by banks, which collect payments from a
dedicated postal box that the firm directs its customers to send payment to. The banks make several
collections per day, process the payments immediately, and deposit the funds into the firm's bank account.

Locked market

A market is locked if the bid = ask price. This can occur, for example, if the market is
brokered and brokerage is paid by one side only, the initiator of the transaction.

Lock-out

With PAC bond CMO classes, the period before the PAC sinking fund becomes effective. With
multifamily loans, the period of time during which prepayment is prohibited.

Lock-up CDs

CDs that are issued with the tacit understanding that the buyer will not trade the certificate.
Quite often, the issuing bank will insist that the certificate be safekept by it to ensure that the understanding is
honored by the buyer.

Rate lock

An agreement between the mortgage banker and the loan applicant guaranteeing a specified interest
rate for a designated period, usually 60 days.

lock-box system

System whereby customers send payments to a post office box and a local bank collects and processes checks.

Time Clock

A device used to stamp an employee’s incoming or outgoing time
on either a paper document or an electronic record.

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