The stock exchange Key Vocabulary

Account ― The principal division of The Stock Exchange calendar. Normally an Account runs for two weeks (10 working days) and each Account is identified by both a letter and a figure (for example, 5E) ACCOUNT DAY: The Day on which all bargains done during a particular Account are settled — normally the second Monday following the end of the Account.

After-Hours Dealings ― Dealings done after the OFFICIAL CLOSE (3.30 p.m.) which count as the first deals done for the following business day. Also known as EARLY BARGAINS.

Arbitrage ― Buying securities in one country and selling them in another with the object of making a profit.

Associate Member ― A Member of The Stock Exchange in his own right but not a Partner or Director of the MEMBER FIRM with which he is Associated.

Authorised Clerk ― An employee of a MEMBER FIRM, not himself a Member of The Stock Exchange, but empowered to deal on the Firm's behalf. UNAUTHORISED CLERK: see BLUE BUTTON.

Bargain ― Any Stock Exchange transaction. No “special price” is implied.

Bear ― One who has sold a security in the hope of buying it back at a lower price, BEAR MARKET: One in which Bears would prosper, that is, a falling Market.

Bearer Stocks/Shares ― Securities for which no register of ownership is kept by the company concerned.

Beneficial Owner ― The ultimate owner of a security, regardless of the name in which it is legally registered.

Bid ― (1) To indicate how much you are prepared to pay for shares.

(2) An approach made by one company wishing to purchase the entire share capital of another company.

Bourse ― the French word for a stock market, used to refer to a stock market anywhere outside Britain & North America.

Bull ― One who has bought a security in the hope of selling it at a higher price. BULL MARKET: One in which bulls would prosper, that is, a rising Market.

Closing price ― The price at 3.30 p.m.

Compensation Fund ― A fund maintained by The Stock Exchange to recompense investors should a Member Firm fail to meet its obligations, and be HAMMERED.

Consideration ― The money value of a Stock Exchange transaction (for example, the number of shares multiplied by the price per share) before adding commission, stamp duty, V.A.T. etc.

Council of The Stock Exchange ― The Governing Body of The Stock Exchange. It has 46 Members, elected by the Members of The Stock Exchange, plus five Lay Members and the Government Broker, who is an ex-officio Member, but has no vote. All actions of The Stock Exchange are taken in the name of the Council.

Discount Houses ― Specialist financial institutions, operating in the Money Market.

Dividend ― Payment from a company's profits to its shareholders.

Equity ― The risk-sharing part of a company's capital. The term EQUITIES is often used instead of ORDINARY SHARES

Gilts or Gilt-Edged ― Securities whose interest and capital are guaranteed by the U.K. Government. IRISH GILTS: Those whose interest and capital are guaranteed by the Government of the Republic of Ireland. LONG GILTS or LONGS: Those without a redemption date within 15 years. MEDIUM GILTS, or MEDIUMS: Those with a redemption date between 5 and 15 years ahead. SHORT GILTS, or SHORTS: Those with a redemption date within 5 years.

Issuing House ― An organisation which arranges the details of an issue of stock or shares, and the necessary compliance with Stock Exchange regulations in connection with its listing.

Jobber ― A Stock Exchange Member whose Firm acts as a dealer in securities.

Listed Company ― A company whose shares are listed on The Stock Exchange. Sometimes also called a QUOTED COMPANY

Member Firm ― A Firm of Stockbrokers or Stockjobber, whose partners or directors are all Individual Members of The Stock Exchange.

Middle Price ― The price half-way between the two prices shown in The Stock Exchange Daily Official List under “Quotations”, or the average of both buying and selling prices offered by a Jobber. The prices found in newspapers are normally their estimate of the Middle Price.

Nominee Name ― Name in which a security is registered that does not indicate who the BENEFICIAL OWNER is.

Official Close ― See AFTER-HOURS DEALINGS. Official List: The Stock Exchange Daily Official List is the list of official prices published each day by The Stock Exchange.

Opening Price ― The price at 9.30 a.m.

Portfolio― The list of securities owned by a person or financial institution.

Premium ― If the market price of a new security is higher than the issue price, the difference is the PREMIUM. If it is lower, the difference is the DISCOUNT.

Price/Earnings Ratio ― The current share price divided by the last published earnings, (expressed as pence per share).

Prospectus ― Document giving details of a company required to support a new issue, and which must be lodged with the Registrar of Companies before any shares can be offered for sale.

Quotations ― The double price given in the OFFICIAL LIST, indicates the range of buying and selling prices.

Securities ― General name for Stocks and Shares of all types. In common usage, STOCKS are FIXED INTEREST securities and SHARES are the rest, though strictly speaking, the distinction is that Stocks аre denominated in money terms. For example, I.C.I. does not have any ordinary shares at all: its EQUITY CAPITAL is in fact divided into units of ordinary stock, transferable in multiples of £1, but the difference between this and ordinary shares of £1 each is academic. STOCK (in the singular) is often used in the same way as SCRIP to describe the actual paper changing hands.

Share index / stock index ― an official list of the average price of shares in a group of companies on a particular stock market.

Main Indices

FTSE (Footsie) (London) ― the Financial Times Stock Exchange index.

“the Dow” (New York) ― the Dow Jones Industrial Average. Especially long-established “old economy” companies.

NASDAQ (New York) ― Especially hi-tech “new economy” companies.

CAC40 Paris ― a share index of shares in 40 leading companies on the Paris stock market.

DAX (Frankfurt) ― a share index of shares in 30 leading companies on the Frankfurt Stock Exchange.

Hang Seng (Hong Kong) ― an index of the shares of Hong Kong’s 100 largest companies.

Nikkei (Tokyo) ― the main share index of shares in companies on the Tokyo stock market.

Spread ― The difference between a jobber's buying price and selling price.

Talisman ― The Stock Exchange's computerised settlement system. The letters stand for Transfer Accounting, Lodging for Investors and Stock Management for Jobbers.

Tap Stocks ― Government stocks which the Government Broker will supply at a given price. The price he chooses, set in consultation with the Bank of England, provides a means of influencing interest rates in general.

Traded Options ― Options which can be bought and sold throughout their life, and exercised by the eventual holder at their expiry date.

Transfer ― The form signed by the seller of a security authorising the company to remove his name from the register, and substitute that of the buyer.

Turn ― The difference between a buying and selling price where business done has resulted in a profit. To MAKE A TURN: buy and sell at a profit.

Underwriting ― An arrangement by which a company is guaranteed that an issue of shares will raise a given amount of cash, because the Underwriters, for a small commission, undertake to subscribe for any of the issue not taken up by the public.

Unlisted Security ― One which has not been admitted to the OFFICIAL LIST. Usually, the issuer will be an UNLISTED COMPANY, but not always. It is not uncommon for a company to apply to The Stock Exchange for its ordinary shares to be listed but not its loan stocks, or vice versa.

Warrant ― A special kind of option, given by a company to holders of a particular security, giving them the right to subscribe for future issues, either of the same or some other security.

Yield ― The annual return on your money, based on the current price of the security, on the assumption that the next dividend paid will be the same as the last one.