Definition of Floor

Floor

Interest-rate option that guarantees that the rate on a floating-rate
loan will not fall below a certain level.
Forward curve
The curve of forward interest rates vs. maturity dates for bonds.

Equity floor

An agreement in which one party agrees to pay the other at specific time periods if a specific
stock market benchmark is less than a predetermined level.

Floor broker

A member who is paid a fee for executing orders for clearing members or their customers. A
floor broker executing customer orders must be licensed by the CFTC.

Floor planning

Arrangement used to finance inventory. A finance company buys the inventory, which is then
held in trust by the user.

Floor trader

A member who generally trades only for his own account, for an account controlled by him or
who has such a trade made for him. Also referred to as a "local".

Interest rate floor

An interest rate agreement in which payments are made when the reference rate falls
below the strike rate.

Floor stocks

Low-cost, high-usage inventory items stored near the shop floor,
which the production staff can use at will without a requisition and which are
expensed at the time of receipt, rather than being accounted for through a formal
inventory database.

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.

Broker

An individual who is paid a commission for executing customer orders. Either a floor broker who
executes orders on the floor of the exchange, or an upstairs broker who handles retail customers and their
orders.

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.

Commission broker

A broker on the floor of an exchange acts as agent for a particular brokerage house and
who buys and sells stocks for the brokerage house on a commission basis.

Equity collar

The simultaneous purchase of an equity floor and sale of an equity cap.

Pit

A specific area of the trading floor that is designed for the trading of commodities, individual futures, or
option contracts.
Pit committee
A committee of the exchange that determines the daily settlement price of futures contracts.

Post

Particular place on the floor of an exchange where transactions in stocks listed on the exchange occur.

Rings

Trading arenas located on the floor of an exchange in which traders execute orders. Sometimes called a pit.

Trading posts

The posts on the floor of a stock exchange where the specialists stand and securities are traded.

Step cost

A cost that does not change steadily, but rather at discrete points. For example,
a facility cost will remain steady until additional floor space is constructed, at
which point the cost will increase to a new and higher level.

Bogey

The level of earnings in an incentive compensation or bonus plan below which no incentive
compensation or bonus is earned. Also termed a floor.

Accumulation bin

A location in which components destined for the shop floor are
accumulated before delivery.

Departmental stocks

The informal and frequently unauthorized retention of excess inventory on the shop floor, which is used as buffer safety stock.

Kit

A group of components needed to assemble a finished product that has been
clustered together for delivery to the shop floor.

Outbound stock point

A designated inventory location on the shop floor between
operations where inventory is stockpiled until needed by the next operation.

Picking list

A document listing items to be removed from stock, either for delivery to the shop floor for production purposes or for delivery to a customer.

Point-of-use delivery

A delivery of stock to a location in or near the shop floor
adjacent to its area of use.

Point-of-use storage

The storage of stock in a location in or near the shop floor
adjacent to its area of use.

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