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Trade date

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Definition of Trade date

Trade Date Image 1

Trade date

In an interest rate swap, the date that the counterparties commit to the swap. Also, the date on
which a trade occurs. trades generally settle (are paid for) 1-5 business days after a trade date. With stocks,
settlement is generally 3 business days after the trade.



Related Terms:

48-hour rule

The requirement that all pool information, as specified under the PSA Uniform Practices, in a
TBA transaction be communicated by the seller to the buyer before 3 p.m. EST on the business day 48-hours
prior to the agreed upon trade date.


Forward contract

A cash market transaction in which delivery of the commodity is deferred until after the
contract has been made. It is not standardized and is not traded on organized exchanges. Although the
delivery is made in the future, the price is determined at the initial trade date.


Forward delivery

A transaction in which the settlement will occur on a specified date in the future at a price
agreed upon on the trade date.


Forward trade

A transaction in which the settlement will occur on a specified date in the future at a price
agreed upon the trade date.


Announcement date

date on which particular news concerning a given company is announced to the public.
Used in event studies, which researchers use to evaluate the economic impact of events of interest.



Balance of Merchandise Trade

The difference between exports and imports of goods.


Balance of trade

Net flow of goods (exports minus imports) between countries.


Trade Date Image 2

Balance of Trade

See balance of merchandise trade.


Basket trades

Related: Program 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.


Call date

A date before maturity, specified at issuance, when the issuer of a bond may retire part of the bond
for a specified call price.


Consolidated Omnibus Budget Reconciliation Act (COBRA)

A federal Act
containing the requirements for offering insurance to departed employees.


Counter trade

The exchange of goods for other goods rather than for cash; barter.


Coupon dates

The dates when the coupons are paid. Typically a bond pays
coupons annually or semi-annually.


Date of payment

date dividend checks are mailed.


Date of record

date on which holders of record in a firm's stock ledger are designated as the recipients of
either dividends or stock rights.


Trade Date Image 3

Dates convention

Treating cash flows as being received on exact dates - date 0, date 1, and so forth - as
opposed to the end-of-year convention.


Declaration date

The date on which a firm's directors meet and announce the date and amount of the next
dividend.



Declaration date

The date on which the board of directors has declared a dividend.


Effective date

In an interest rate swap, the date the swap begins accruing interest.


Ex-dividend date

The first day of trading when the seller, rather than the buyer, of a stock will be entitled to
the most recently announced dividend payment. This date set by the NYSE (and generally followed on other
US exchanges) is currently two business days before the record date. A stock that has gone ex-dividend is
marked with an x in newspaper listings on that date.


ex-dividend date

date that determines whether a stockholder is entitled to a dividend payment; anyone holding stock before this date is entitled to a dividend.


Ex-rights date

The date on which a share of common stock begins trading ex-rights.


Expiration date

The last day (in the case of American-style) or the only day (in the case of European-style)
on which an option may be exercised. For stock options, this date is the Saturday immediately following the
3rd Friday of the expiration month; however, brokerage firms may set an earlier deadline for notification of
an option holder's intention to exercise. If Friday is a holiday, the last trading day will be the preceding
Thursday.


Extension date

The day on which the first option either expires or is extended.


Fixed-dates

In the Euromarket the standard periods for which Euros are traded (1 month out to a year out) are
referred to as the fixed dates.


Flat trades

1) A bond in default trades flat; that is, the price quoted covers both principal and unpaid,
accrued interest.
2) Any security that trades without accrued interest or at a price that includes accrued
interest is said to trade flat.


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".



Free Trade

The absence of any government restrictions, such as tariffs or quotas, on imports or exports.


Holder-of-record date

The date on which holders of record in a firm's stock ledger are designated as the
recipients of either dividends or stock rights. Also called date of record.


Information-motivated trades

trades in which an investor believes he or she possesses pertinent
information not currently reflected in the stock's price.


Informationless trades

trades that are the result of either a reallocation of wealth or an implementation of an
investment strategy that only utilizes existing information.


Invoice date

Usually the date when goods are shipped. Payment dates are set relative to the invoice date.


Issue date

The date a security is first offered for sale. That date usually
determines when interest payments, known as coupons, are made.


Issue Date

date on which a policy is approved.


Maturity date

The date when the issuer returns the final face value of a bond
to the buyer.


Maturity Date

date on which a debt is due for payment.


North American Free Trade Agreement (NAFTA)

an agreement among Canada, Mexico, and the United States establishing the North American Free trade Zone, with a resulting reduction in trade barriers


Notification date

The day the option is either exercised or expires.


Payment date

The date on which each shareholder of record will be sent a check for the declared dividend.


Payment date

The date established for the payment of a declared dividend.


Policy Date

date on which the insurance company assumes responsibilities for the obligations outlined in a policy.


Posttrade benchmarks

Prices after the decision to trade.


Pre-trade benchmarks

Prices occurring before or at the decision to trade.


Program trades

Also called basket trades, orders requiring the execution of trades in a large number of
different stocks at as near the same time as possible. Related: block trade


Projected maturity date

With CMOs, final payment at the end of the estimated cash flow window.


Publicly traded assets

Assets that can be traded in a public market, such as the stock market.


Record date

1) date by which a shareholder must officially own shares in order to be entitled to a dividend.
For example, a firm might declare a dividend on Nov 1, payable Dec 1 to holders of record Nov 15. Once a
trade is executed an investor becomes the "owner of record" on settlement, which currently takes 5 business
days for securities, and one business day for mutual funds. Stocks trade ex-dividend the fourth day before the
record date, since the seller will still be the owner of record and is thus entitled to the dividend.
2) The date that determines who is entitled to payment of principal and interest due to be paid on a security. The record
date for most MBSs is the last day of the month, however the last day on which they may be presented for the
transfer is the last business day of the month. The record date for CMOs and asset-backed securities vary with each issue.


Record date

The date used to decide which shareholders will receive the dividend. The owners of the shares at the end of this day are entitled to the dividend.


Registered trader

A member of the exchange who executes frequent trades for his or her own account.


Reversing trade

Entering the opposite side of a currently held futures position to close out the position.


Settlement date

The date on which payment is made to settle a trade. For stocks traded on US exchanges,
settlement is currently 3 business days after the trade. For mutual funds, settlement usually occurs in the
U.S.the day following the trade. In some regional markets, foreign shares may require months to settle.


Settlement date

The date when money first changes hands; i.e., when a buyer
actually pays for a security. It need not coincide with the issue date.


Spot trade

The purchase and sale of a foreign currency, commodity, or other item for immediate delivery.


Terms of trade

The weighted average of a nation's export prices relative to its import prices.


Terms of Trade

The quantity of imports that can be obtained for a unit of exports, measured by the ratio of an export price index to an import price index.


Thinly traded

Infrequently traded.


Trade

A verbal (or electronic) transaction involving one party buying a security from another party. Once a
trade is consummated, it is considered "done" or final. Settlement occurs 1-5 business days later.


Trade acceptance

Written demand that has been accepted by an industrial company to pay a given sum at a future date.
Related: banker's acceptance.


Trade credit

Credit granted by a firm to another firm for the purchase of goods or services.


Trade debt

Accounts payable.


Trade Deficit

Deficit on the balance of merchandise trade.


Trade draft

A draft addressed to a commercial enterprise. See:draft.


Trade house

A firm which deals in actual commodities.


Trade Loading

A term used for channel stuffing in the domestic tobacco industry.


trade-off theory

Debt levels are chosen to balance interest tax shields against the costs of financial distress.


Trade on top of

trade at a narrow or no spread in basis points relative to some other bond yield, usually
Treasury bonds.


Traders

Persons who take positions in securities and their derivatives with the objective of making profits.
traders can make markets by trading the flow. When they do that, their objective is to earn the bid/ask spread.
traders can also be of the sort who take proprietary positions whereby they seek to profit from the directional
movement of prices or spread positions.


Uptick trade

Related:Tick-test rules


Valuation Date

date on which valuation occurs.


Value date

In the market for Eurodollar deposits and foreign exchange, value date refers to the delivery date
of funds traded. Normally it is on spot transactions two days after a transaction is agreed upon and the future
date in the case of a forward foreign exchange trade.


World Trade Organization (WTO)

the arbiter of global trade that was created in 1995 under the General Agreement on Tariffs and trade; each signatory country has one
vote in trade disputes


American-style option

An option contract that can be exercised at any time between the date of purchase and
the expiration date. Most exchange-traded options are American style.


Confirmation

he written statement that follows any "trade" in the securities markets. Confirmation is issued
immediately after a trade is executed. It spells out settlement date, terms, commission, etc.


Fail

A trade is said to fail if on settlement date either the seller fails to deliver securities in proper form or the
buyer fails to deliver funds in proper form.


Open interest

The total number of derivative contracts traded that not yet been liquidated either by an
offsetting derivative transaction or by delivery. Related: liquidation


Series

Options: All option contracts of the same class that also have the same unit of trade, expiration date,
and exercise price. Stocks: shares which have common characteristics, such as rights to ownership and voting,
dividends, par value, etc. In the case of many foreign shares, one series may be owned only by citizens of the
country in which the stock is registered.


Warrant

A security entitling the holder to buy a proportionate amount of stock at some specified future date
at a specified price, usually one higher than current market. This "warrant" is then traded as a security, the
price of which reflects the value of the underlying stock. Warrants are issued by corporations and often used
as a "sweetener" bundled with another class of security to enhance the marketability of the latter. Warrants are
like call options, but with much longer time spans -- sometimes years. In addition, warrants are offered by
corporations whereas exchange traded call options are not issued by firms.



 

 

 

 

 

 

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