SEC (U.S.)
Securities and Exchange
Commission (SEC) The US Government agency that regulates securities trading. It
has civil enforcement powers only and must seek criminal prosecution through
the US Justice Department.
SIPC (Pronounced ‘Si-Pick’) (U.S.)
Acronym for the Securities
Investor Protection Corporation, a corporation created by Congress (although
not a government agency) which will provide funds to protect investors cash and
stocks left with brokers who are covered by SIPC should the brokerage firm
fail. There are, however, definite limits to the amounts SIPC will provide and
to the circumstances under which such payments will be made.
Safe Harbor (U.S.)
Another way of fighting off an
unfriendly takeover by a company. Here, the company that is the object of the
takeover goes out and buys a radio station, airline, or similar business, under
the assumption that ownership of a subsidiary in such a heavily regulated
industry will make acquisition of the company less attractive.
Samurai Bonds
Foreign bonds offered in the
Japanese Bond Market.
Saturday Night Special (U.S.)
A surprise tender offer with a
7-10 day expiration period. So called because the strategy often involves
announcing it over the weekend, thus denying the rival management time to
respond.
Sauda Book
Members and authorized assistants
are given a book called “Sauda Book” to record transactions of sales and
purchases.
Scorched Earth Policy (U.S.)
Extreme defence tactics by a
defending company taking on heavy debt or selling off the key assets to save
itself, to ward off a takeover.
Screen based trading
Form of trading that uses modern
telecommunication and computer technology to combine information transmission
with trading in financial markets.
Sector fund
A
fund that invests primarily in securities of companies engaged in a specific
investment segment. Sector funds entail more risk, but may offer greater
potential returns than funds that diversify their portfolios.
Secondary Market
The market for previously issued
securities or financial instruments.
Securities Lending Scheme
A scheme formed in 1997 for
lending of securities through an approved intermediary to a borrower under an
agreement for a specified period with the condition that the borrower will
return equivalent securities of the same type or class at the end of the
specified period along with the corporate benefits accruing on the securities
borrowed.
Securitization
The process of homogenizing and packaging financial
instruments into a new fungible one. Acquisition, classification,
collateralization, composition, pooling and distribution are functions within
this process.
SEDAR
An electronic filing system (the System for Electronic
Document Analysis Retrieval) in Canada that enables companies to file
prospectuses and continuous disclosure documents.
Self clearing member
A member of a clearing corporation or clearing house of the
derivatives exchange or derivatives segment of a stock exchange who may clear
and settle transactions on its own account or on account of its clients only
and shall not clear or settle transactions in securities for any other trading
members.
Selling Short
A manner in which an investor sells securities he does not
posses in the hope of buying them back later at a lower price.
Sensitive Index
A share price index based on 30 active scrips developed by
the Bombay Stock Exchange with 197879 as the base year.
Settlement Date
The date specified for delivery of securities between
securities firms.
Settlement Period
For administrative convenience, a Stock Exchange divides
the year into a number of settlement periods so as to enable members to settle
their trades. All transactions executed during the settlement period are
settled at the end of the settlement period.
Settlement risk (principal risk)
The risk that the seller of a security or funds delivers
its obligation but does not receive payment or that the buyer of a security or
funds makes payment but does not receive delivery. In this event, the full
principal value of the securities or funds transferred is at risk.
Share transfer agent
Any person, who on behalf of any body corporate maintains
the record of holders of securities issued by such body corporate and deals
with all matters connected with the transfer and redemption of its securities. It
can also be a department or division (by whatever name called) of a body
corporate performing the above activities if, at any time the total number of
the holders of securities issued exceed one lakh.
Shark Repellent (U.S.)
Special provisions in a company’s
charter or bylaws designed to deter bidders.
Shelf Registration (U.S.)
Here a company wishing to sell
new stocks or bonds to the public can file a single plan with the Securities
and Exchange Commission, outlining its intentions to sell such securities over
the next two years. Once the plan – called a registration statement – has been
filed and is sitting on the shelf at the SEC, the company may then sell all or
part of the securities, without any further procedures, at any time it feels
market conditions are right.
Short Covering
Buying of stocks by a seller to
complete his previous commitments.
Short position
In futures, the short has sold
the commodity or security for future delivery; in options, the short has sold
the call or the put and is obligated to take a futures position if he or she is
assigned for exercise.
Short squeeze
A situation in which a lack of
supply and an excess demand for a traded stock forces the price upward. If a
stock price starts to rise rapidly, the trend may continue to escalate because
the short sellers will likely want out. For example, say a stock rises 15% in
one day, those with short positions may be forced to liquidate and cover their
position by purchasing the stock. If enough short sellers buy back the stock,
the price is pushed even higher.
Single stock derivatives
A single transaction equivalent
to the simultaneous sale of a put and purchase of a call for a given stock.
Single stock futures essentially allow investors to sell a stock short without
waiting for a downtick as would otherwise be required.
Sleeping Beauty (U.S.)
A desirable company, often with
considerable cash on its balance sheet, that is vulnerable to a takeover
attempt by another company.
Small firm effect
The tendency of small firms (in
terms of total market capitalization) to outperform the stock market (consisting
of both large and small firms).
Special Delivery
Delivery and payment beyond
fourteen days’ limit subject to the exact date being specified at the time of
contract and authorised by the Stock Exchange.
Specified Shares
A group of equity shares in which carry forward of
transactions from one settlement period to the next is permitted.
Spin off
When a company decides that a subsidiary needs to stand on
its own, it might do a spin-off, distributing shares of the new entity to
existing shareholders, or selling the new business to its managers or even its
employees.
Split
Sub-division of a share of large denomination into shares
of smaller denominations. Also means subdivision of holdings.
Spoofing
Placing a limit order at a better price than the current
market price for purchase or sale of thinly traded scrips and then endeavouring
to cancel the initial limit order in order to induce buy or sell.
Spot Delivery Contract
A contract which provides for
(a)
actual delivery of securities and the payment of a
price therefore either on the same day as the date of the contract or on the
next day, the actual period taken for the despatch of the securities or the
remittance of money therefore through the post being excluded from the
computation of the period aforesaid if the parties to the contract do not
reside in the same town or locality;
(b)
transfer of the securities by the depository from the
account of a beneficial owner to the account of another beneficial owner when
such securities are dealt with by a depository.
Stag
i.
An applicant, for a new issue of shares, who hopes to
sell the shares on allotment at a profit once trading commences in the
secondary market.
ii.
A speculator who buys and sells stocks rapidly for fast
profits.
Stagflation
The combination of sluggish economic growth, high
unemployment and high inflation.
Stagnation
Period of low volume and inactive trading on the securities
market.
Staggered Board (U.S.)
A board of directors in which only a certain number of the
directors say, a third, are elected each year. This is considered one effective
method through which a company might protect itself against an unwelcome
takeover attempt. With a staggered board, an outside group could only obtain
control of a minority of the board of directors in any given year, since
holdover directors elected in earlier years would continue to serve.
Stakeholder
Any individual or group who has an interest in a firm; in
addition to shareholders and bondholders, includes labor, consumers, suppliers,
the local community and so on.
Stamp Duty
The ad valorem duty payable by
buyer for transfer of shares in his name. Also payable on contracts issued by a
stock-broker.
Standard Price
The standard price of a security
is generally worked out as a weighted average price of all recorded
transactions for that security adjusted to the nearest rupee.
Stock dividend
A dividend paid to stockholders
in shares of stock of the issuing corporation, issued to stockholders or record
out of the unissued stock of the corporation, involving no payment of cash, and
used to reflect positive interest in the security.
Stock Index Future
A futures contract whose price
varies in line with the movements of a stock market index.
Stock lending
The lending of a security by the
registered owner, to an authorized third party, for a fixed or open period of
time, for an agreed consideration secured by collateral. The demand to borrow
securities comes mainly from market makers to cover short positions or take
arbitrage opportunities.
Stop Loss Order (or) Stop Order
An order to sell a security when
it declines to a specified price.
Stock exchange
Any body of individuals, whether
incorporated or not, constituted for the purpose of assisting, regulating or
controlling the business of buying, selling or dealing in securities.
Stock option
The right to purchase shares of
common stock in accordance with an agreement, upon payment of a specified
amount; a compensation scheme under which executives are granted options to
purchase common stock over an extended option period at a stated price.
Stock splits
A distribution of company’s own capital stock to existing
stockholders with the purpose of reducing the market price of the stock, which
would hopefully increase the demand for the shares.
Straddle
A combination strategy in which the same position is taken
in the same number of puts as calls.
Straight through processing (STP)
The processing of a trade, whose
data is compliant with internal and external requirements, through systems from
post-execution through settlement without manual intervention.Simply put it
means seamless integration of trades from initiation to settlement without
manual intervention.
Strike Price
The price, in contracts for put
options and call options, at which the option can be exercised. Sometimes
called the exercise price or basis price.
Subaccount
Sub-account includes foreign
corporates or foreign individuals and those institutions, established or
incorporated outside India and those funds, or portfolios, established outside
India, whether incorporated or not, on whose behalf investments are proposed to
be made in India by a Foreign Institutional Investor.
Sub broker
Any person not being a member of
a stock exchange who acts on behalf of a stock-broker as an agent or otherwise
for assisting the investors in buying, selling or dealing in securities through
such stock-brokers.
Subscribed Capital
The amount of equity and
preference capital subscribed to by the shareholders either fully or partly
paid up with calls in arrears.
Swap
A financial transaction which
exploits arbitrage opportunities between markets and in which two counter
parties agree to exchange streams of payments over time according to a
predetermined rule.
Swap buyback
The sale of an interest rate swap
by one counterparty to the other, effectively ending the swap.
Swap reversal
An Interest rate swap designed to
end counterparty’s role in another Interest rate swap, accomplished by
counterbalancing the original swap in maturity, reference rate, and notional
amount.
Swaption
Options on interest rate swaps.
The buyer of a swaption has the right to enter into an interest rate swap
agreement by some specified date in the future. The swaption agreement will
specify whether the buyer of the swaption will be a fixed-rate receiver or a
fixed-rate payer. The writer of the swaption becomes the counterparty to the
swap if the buyer exercises.
Sweat equity
A sweat equity share is an equity share issued by the
company to employees or directors at a discount or for consideration other than
cash for providing know-how or making available rights in the nature of
intellectual property rights or value additions.
Society for Worldwide Interbank Financial
Telecommunications (SWIFT)
A dedicated computer network to
support funds Transfers messages internationally between over 900 member banks
world-wide.
Switching
When a trust manager group has a
stable of investments, it sometimes allows investors to switch between them. It
may or may not charge a fee for this right or grant a discount to existing
investors.
Synchronized or Pre-arranged trading
Systemic risk
Risk that affects an entire
financial market or system, and not just specific participants. It is not
possible to avoid systemic risk through diversification.
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