Glossary

This glossary is available to download as a PDF

1. A
2. B
3. C
4. D
5. E
6. F
7. G
8. H
9. I
10. J
11. K
12. L
13. M
14. N
15. O
16. P
17. Q
18. R
19. S
20. T
21. U
22. V
23. W
24. X
25. Y
26. Z

C

Call Option

An option that gives the holder (buyer), the right but not the obligation to buy the underlying instrument at a pre-agreed rate (strike rate) on or before a specific future date.

Capitalisation Issue

An issue where funds from a company's reserves are converted into shares and offered free of charge to the company's shareholders.

CaR

Capital at Risk.

Cash Settlement

Where a product is settled at expiry, based on the differential between the fixed/guaranteed price and the underlying instrument.

C.C.P.

Central Counterparty set up by the Stock Exchange, to remove credit risk when buying/selling shares.

C.D.

Certificate of Deposit: A tradable deposit issued by banks and building societies.

C.F.D.

(oil) Contract for Difference. A derivative product used to manage the price risk between 'dated Brent' and the first front month.

C.L.S.

Continuous Linked Settlement: a new way to settle FX and Currency trades through CLS Bank and minimize Herstatt risk.

C.M.O.

Collateralised Mortgage Obligation: a debt security based on a pool of mortgages.

Compound Option

An option on an option. The holder (buyer) has an option to purchase another option on a pre-set date at a pre-agreed premium.