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Definition of Euroclear

Euroclear Image 1

Euroclear

One of two principal clearing systems in the Eurobond market. It began operations in 1968, is
located in Brussels, and is managed by Morgan Guaranty Bank.



Related Terms:

ABM (automated banking machine)

A Bank machine, sometimes referred to as an automated teller machine (ATM).


Adjusted Cash Flow Provided by Continuing Operations

Cash flow provided by operating
activities adjusted to provide a more recurring, sustainable measure. Adjustments to reported cash
provided by operating activities are made to remove such nonrecurring cash items as: the operating
compOnent of discontinued operations, income taxes on items classified as investing or financing activities, income tax benefits from nonqualified employee stock options, the cash effects of purchases and sales of trading securities for nonfinancial firms, capitalized expenditures, and other nonrecurring cash inflows and outflows.


Agency bank

A form of organization commonly used by foreign Banks to enter the U.S. market. An agency
Bank cannot accept deposits or extend loans in its own name; it acts as agent for the parent Bank.


All or none

Requirement that nOne of an order be executed unless all of it can be executed at the specified price.


All-or-none underwriting

An arrangement whereby a security issue is canceled if the underwriter is unable
to re-sell the entire issue.



At-the-money

An option is at-the-mOney if the strike price of the option is equal to the market price of the
underlying security. For example, if xyz stock is trading at 54, then the xyz 54 option is at-the-mOney.


Auction markets

markets in which the prevailing price is determined through the free interaction of
prospective buyers and sellers, as on the floor of the stock exchange.


Euroclear Image 1

Automated Clearing House (ACH)

A collection of 32 regional electronic interBank networks used to
process transactions electronically with a guaranteed One-day Bank collection float.


Automated Clearing House (ACH)

A Banking clearinghouse that processes direct
deposit transfers.


BAN (Bank anticipation notes)

Notes issued by states and municipalities to obtain interim financing for
projects that will eventually be funded long term through the sale of a bond issue.


Bank

MOney in a Bank cheque account, the difference between receipts and payments.


Bank collection float

The time that elapses between when a check is deposited into a Bank account and when the funds are available to the depositor, during which period the Bank is collecting payment from the payer's Bank.


Bank discount basis

A convention used for quoting bids and offers for treasury bills in terms of annualized
yield , based on a 360-day year.


Bank draft

A draft addressed to a Bank.


bank draft

A guaranteed form of payment which is issued in amounts over $5,000.


Bank for International Settlements (BIS)

An international Bank headquartered in Basel, Switzerland, which
serves as a forum for mOnetary cooperation among several European central Banks, the Bank of Japan, and the
U.S. Federal Reserve System. Founded in 1930 to handle the German payment of World War I reparations, it
now monitors and collects data on international Banking activity and promulgates rules concerning
international Bank regulation.


Euroclear Image 2

Bank line

Line of credit granted by a Bank to a customer.


Bank overdraft

MOney owed to the Bank in a cheque account where payments exceed receipts.



Bank reconciliation

The process of taking the balances from the Bank statement and the general ledger and making adjustments so that they agree.


Bank reconciliation

A comparison between the cash position recorded on a company’s
books and the position noted on the records of its Bank, usually resulting in some
changes to the book balance to account for transactions that are recorded on the
Bank’s records but not the company’s.


Bank wire

A computer message system linking major Banks. It is used not for effecting payments, but as a
mechanism to advise the receiving Bank of some action that has occurred, e.g. the payment by a customer of
funds into that Bank's account.


Banker's acceptance

A short-term credit investment created by a non-financial firm and guaranteed by a
Bank as to payment. Acceptances are traded at discounts from face value in the secondary market. These
instruments have been a popular investment for mOney market funds. They are commonly used in
international transactions.


Bankers Acceptances

A bill of exchange, or draft, drawn by the borrower for payment on a specified date, and accepted by a chartered Bank. Upon acceptance, the bill becomes, in effect, a postdated certified cheque.


Bankruptcy

State of being unable to pay debts. Thus, the ownership of the firm's assets is transferred from
the stockholders to the bondholders.


bankruptcy

The reorganization or liquidation of a firm that cannot pay its debts.


Bankruptcy cost view

The argument that expected indirect and direct Bankruptcy costs offset the other
benefits from leverage so that the optimal amount of leverage is less than 100% debt finaning.


Bankruptcy risk

The risk that a firm will be unable to meet its debt obligations. Also referred to as default or insolvency risk.


Bankruptcy view

The argument that expected Bankruptcy costs preclude firms from being financed entirely
with debt.



Bear market

Any market in which prices are in a declining trend.


bear market

A market in which stock or bond prices are generally
falling.


Bear Market

A prolonged period of falling stock market prices.


Black market

An illegal market.


Brokered market

A market where an intermediary offers search services to buyers and sellers.


Bull market

Any market in which prices are in an upward trend.


bull market

A market in which stock or bond prices are generally rising.


Bull Market

A prolonged period of rising stock market prices.


Bulldog market

The foreign market in the United Kingdom.


Call money rate

Also called the broker loan rate , the interest rate that Banks charge brokers to finance
margin loans to investors. The broker charges the investor the call mOney rate plus a service charge.


Capital market

The market for trading long-term debt instruments (those that mature in more than One year).


Capital market

The market in which investors buy and sell shares of companies, normally associated with a Stock Exchange.


Capital Market

A market that specializes in trading long-term, relatively high risk
securities


Capital Market

The market in which savings are made available to those needing funds to undertake investment projects. A financial market in which longer-term (maturity greater than One year) bonds and stocks are traded.


Capital market efficiency

Reflects the relative amount of wealth wasted in making transactions. An efficient
capital market allows the transfer of assets with little wealth loss. See: efficient market hypothesis.


Capital market imperfections view

The view that issuing debt is generally valuable but that the firm's
optimal choice of capital structure is a dynamic process that involves the other views of capital structure (net
corporate/personal tax, agency cost, Bankruptcy cost, and pecking order), which result from considerations of
asymmetric information, asymmetric taxes, and transaction costs.


Capital market line (CML)

The line defined by every combination of the risk-free asset and the market portfolio.


capital markets

markets for long-term financing.


Cash flow from operations

A firm's net cash inflow resulting directly from its regular operations
(disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing
securities), calculated as the sum of net income plus non-cash expenses that were deducted in calculating net
income.


CASH FLOWS FROM OPERATIONS

A section on the cash-flow Stockholders’ equity statement that shows how much cash came into a company and how much went out during the normal course of business.


Cash markets

Also called spot markets, these are markets that involve the immediate delivery of a security
or instrument.
Related: derivative markets.


Central Bank

A public agency responsible for regulating and controlling an economy's mOnetary and financial institutions. It is the sole mOney-issuing authority.


Clearing House Automated Payments System (CHAPS)

A computerized clearing system for sterling funds
that began operations in 1984. It includes 14 member Banks, nearly 450 participating Banks, and is One of the
clearing companies within the structure of the Association for Payment clearing Services (APACS).


Clearing house / Clearinghouse

An adjunct to a futures exchange through which transactions executed its floor are settled by a
process of matching purchases and sales. A clearing organization is also charged with the proper conduct of
delivery procedures and the adequate financing of the entire operation.


Clearing House Interbank Payments System (CHIPS)

An international wire transfer system for high-value
payments operated by a group of major Banks.


Clearing member

A member firm of a clearing house. Each clearing member must also be a member of the
exchange. Not all members of the exchange, however, are members of the clearing organization. All trades of
a non-clearing member must be registered with, and eventually settled through, a clearing member.


Commercial Bank

A privately owned, profit-seeking firm that accepts deposits and makes loans.


Common market

An agreement between two or more countries that permits the free movement of capital
and labor as well as goods and services.


Common stock market

The market for trading equities, not including preferred stock.


Complete capital market

A market in which there is a distinct marketable security for each and every
possible outcome.


Component

Raw materials or subassemblies used to make either finished goods
or higher levels of subassembly.


concentration banking

System whereby customers make payments to a regional collection center which transfers funds to
a principal Bank.


Consortium banks

A merchant Banking subsidiary set up by several Banks that may or may not be of the
same nationality. Consortium Banks are common in the Euromarket and are active in loan syndication.


Convertible eurobond

A Eurobond that can be converted into another asset, often through exercise of
attached warrants.


Corner A Market

To purchase enough of the available supply of a commodity or stock in order to
manipulate its price.


Dealer market

A market where traders specializing in particular commodities buy and sell assets for their
own accounts.


Debt market

The market for trading debt instruments.


Derivative markets

markets for derivative instruments.


Direct search market

Buyers and sellers seek each other directly and transact directly.


Discontinued Operations

Net income and the gain or loss on disposal of a business segment whose assets and operations are clearly distinguishable from the other assets and operations of an entity.


DLOM (discount for lack of marketability)

an amount or percentage deducted from an equity interest to reflect lack of marketability.


Domestic market

Part of a nation's internal market representing the mechanisms for issuing and trading
securities of entities domiciled within that nation. Compare external market and foreign market.


Dow Jones industrial average

This is the best known U.S.index of stocks. It contains 30 stocks that trade on
the New York Stock Exchange. The Dow, as it is called, is a barometer of how shares of the largest
U.S.companies are performing. There are thousands of investment indexes around the world for stocks,
bonds, currencies and commodities.


Dow Jones Industrial Average

Index of the investment performance of a portfolio of 30 “blue-chip” stocks.


economic components model

Abrams’ model for calculating DLOM based on the interaction of discounts from four economic compOnents.
This model consists of four compOnents: the measure of the economic impact of the delay-to-sale, monopsony power to buyers, and incremental transactions costs to both buyers and sellers.


Efficient capital market

A market in which new information is very quickly reflected accurately in share
prices.


efficient capital markets

Financial markets in which security prices rapidly reflect all relevant information about asset values.


Efficient Market Hypothesis

In general the hypothesis states that all relevant information is fully and
immediately reflected in a security's market price thereby assuming that an investor will obtain an equilibrium
rate of return. In other words, an investor should not expect to earn an abnormal return (above the market
return) through either technical analysis or fundamental analysis. Three forms of efficient market hypothesis
exist: weak form (stock prices reflect all information of past prices), semi-strong form (stock prices reflect all
publicly available information) and strong form (stock prices reflect all relevant information including insider
information).


Efficient Markets Hypothesis

The hypothesis that securities are typically in equilibrium--that they are fairly priced in the sense that the price reflects all publicly available information on the security.


Either-way market

In the interBank Eurodollar deposit market, an either-way market is One in which the bid
and offered rates are identical.


Electronic Federal Tax Payment Systems (EFTPS)

An electronic funds transfer system used by businesses to remit taxes to the government.


Eligible bankers' acceptances

In the BA market, an acceptance may be referred to as eligible because it is
acceptable by the Fed as collateral at the discount window and/or because the accepting Bank can sell it
without incurring a reserve requirement.


Emerging markets

The financial markets of developing economies.


Equilibrium market price of risk

The slope of the capital market line (CML). Since the CML represents the
return offered to compensate for a perceived level of risk, each point on the line is a balanced market
condition, or equilibrium. The slope of the line determines the additional return needed to compensate for a
unit change in risk.


Equity market

Related:Stock market


Eurobank

A Bank that regularly accepts foreign currency denominated deposits and makes foreign currency loans.


Eurobond

A bond that is (1) underwritten by an international syndicate, (2) offered at issuance
simultaneously to investors in a number of countries, and (3) issued outside the jurisdiction of any single
country.


Eurobond

A debt security issued in a market other than the home market of
the company issuing the security


eurobond

Bond that is marketed internationally.


Eurocurrency market

The mOney market for borrowing and lending currencies that are held in the form of
deposits in Banks located outside the countries of the currencies issued as legal tender.


European Monetary System (EMS)

An exchange arrangement formed in 1979 that involves the currencies
of European Union member countries.


Excess return on the market portfolio

The difference between the return on the market portfolio and the
riskless rate.


Export-Import Bank (Ex-Im Bank)

The U.S. federal government agency that extends trade credits to U.S.
companies to facilitate the financing of U.S. exports.


External market

Also referred to as the international market, the offshore market, or, more popularly, the
Euromarket, the mechanism for trading securities that (1) at issuance are offered simultaneously to investors
in a number of countries and (2) are issued outside the jurisdiction of any single country. Related: internal
market


Fair market price

Amount at which an asset would change hands between two parties, both having
knowledge of the relevant facts. Also referred to as market price.


Fair market value

The price that an asset or service will fetch on the open market.


Fair Market Value

The highest price available, expressed in terms of cash, in an open and unrestricted market between informed, prudent parties acting at arm's length and under no compulsion to transact.


Farm Improvement and Marketing Cooperatives Loans Act

See here


Federal Financing Bank

A federal institution that lends to a wide array of federal credit agencies funds it
obtains by borrowing from the U.S. Treasury.


Federal funds market

The market where Banks can borrow or lend reserves, allowing Banks temporarily
short of their required reserves to borrow reserves from Banks that have excess reserves.


Federal Home Loan Banks

The institutions that regulate and lend to savings and loan associations. The
Federal Home Loan Banks play a role analogous to that played by the Federal Reserve Banks vis-à-vis
member commercial Banks.


Federal Open Market Committee (FOMC)

Fed committee that makes decisions about open-market operations.



 

 

 

 

 

 

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