F.O.B. (Free On Board)
| Indicates that all delivery, inspection and elevation or loading costs involved in putting commodities on board a carrier have been paid.
|
FAB Spread
| Five Against Bond. A futures spread trade involving the buying (selling) of a five-year Treasury bond futures contract and the selling (buying) of a long-term (15-30 year) Treasury bond futures contract.
|
Face Value
| The debt (or loan) amount that appears on the face of the certificate and that the issuer must pay at maturity.
|
Factor
| A decimal between 0 and 1 that represents the amount of mortgages remaining in a pool of mortgage-backed securities.
|
Factor Book
| A tabular presentation that shows relevant information about factors, value of remaining mortgages, and interest rates on mortgage-backed securities.
|
Factor Table
| A table used to compute the outstanding principal on Pass-Throughs — Ginnie Maes, Freddie Macs and Fannie Maes.
|
Fall
| The situation wherein one side of a trade (buyer or seller) does not live up to the contractual obligations of the trade, i.e., failure to deliver money or failure to deliver the securities on settlement date.
|
FAN Spread
| Five Against Note. A futures spread trade involving the buying (selling) of a five-year Treasury note futures contract and the selling (buying) of a ten-year Treasury bond futures contract.
|
Fannie Mae
| Nickname for the Federal National Mortgage Association and the mortgage-backed securities it issues.
|
Farmer Mac
| Nickname for the Federal Agricultural Corporation and the securities it issues.
|
Fast Tape
| Transactions in the pit or ring take place in such volume and with such rapidity that price reporters are behind with price quotations, so insert "FAST" and show a range of prices.
|
Federal Deposit Insurance Corporation (FDIC)
| The regulatory agency responsible for administering bank depository insurance in the US.
|
Federal Farm Credit System
| Established by Congress to provide credit to farms and farm-related enterprises. The FFCS is also an issuer of agency securities.
|
Federal Funds
| Member bank's deposits held by the Federal Reserve; also implies immediately available funds.
|
Federal Funds Rate
| The rate of interest charged for the use of federal funds.
|
Federal Home Loan Bank
| One of twelve federally chartered banks that regulates credit to its member institutions.
|
Federal Housing Administration (FHA)
| A division of HUD; it insures residential mortgage loans and sets construction standards as its principal activities.
|
Federal National Mortgage Association (FNMA)
| A corporation created by Congress to support the secondary mortgage market; it purchases and sells residential mortgages insured by the FHA or guaranteed by the Veterans Administration.
|
Federal Reserve (Fed)
| The Central Bank of the United States.
|
Federal Reserve System
| A quasi-governmental organization of 12 regional banks and a governing board of directors. The Federal Reserve Bank has several discretionary powers over the volume of credit in the United States. The system seeks to actively manage the U.S. economy through utilization of its powers, which are limited to influencing monetary variables.
|
Feed Ratio
| The relationship of the cost of feed, expressed as a ratio to the sale price of animals, such as the corn-hog ratio. These serve as indicators of the profit margin or lack of profit in feeding animals to market weight.
|
Feed Ratios
| The variable relationships of the cost of feeding animals to market weight to sales prices, expressed as ratios, such as the hog/corn ratio. These serve as indicators of the profit return or lack of it in feeding animals to market weight.
|
FHA
| Abbreviation for the Federal Housing Administration. The FHA is also an issuer of agency securities.
|
FHA Experience
| An estimate of the average life of a pool of mortgage-backed securities in relation to experience tables developed by the Federal Housing Administration.
|
FIA
| See Futures Industry Association.
|
Fictitious Trading
| Wash trading, bucketing, cross trading, or other schemes which give the appearance of trading. Actually, no bona fide, competitive trade has occurred.
|
Fiduciary
| A person legally appointed in the P&S department.
|
Fill or Kill (FOK)
| An order that requires execution of the entire quantity immediately. If not, the order is canceled.
|
Final Dividend
| The dividend paid by a company at the end of its financial year, recommended by the directors but authorized by the shareholders at the company’s annual general meeting.
|
Financial Instruments
| As used by the CFTC, this term generally refers to any futures or option contract that is not based on an agricultural commodity or a natural resource. It includes currencies, securities, mortgages, commercial paper, and indices of various kinds.
|
Financing Corporation
| An agency created to assist the S&L industry by retailing securities to the public. Also the nickname for its securities.
|
First Mortgage Bonds
| Bonds that are collateralized by a first lien on tangible assets. In the event of a default, a first mortgage bond holder can demand liquidation of those assets in satisfaction of the debt.
|
First Notice Day
| The first day on which notices of intent to deliver the commodity in fulfillment of a given month's futures contract can be made by the seller to the clearinghouse and by the clearinghouse to a buyer.
|
Fiscal Agent
| The authority who is responsible for issuing new securities of federal agencies.
|
Fiscal Year
| The twelve-month period during which a business maintains its financial records. Since this cycle does not have to coincide with the calendar year, it is known as the fiscal year.
|
Fix, Fixing
| See Gold Fixing.
|
Fixed Annuity
| Insurance company guarantees dollar amount of payments to the annuitant for the period covered under the contract.
|
Fixed Exchange Rate
| An official exchange rate set by monetary authorities for one or more currencies. In practice, even fixed exchange rates fluctuate between definite upper and lower bands, leading to intervention.
|
Fixed Income Security
| A security whose nominal (or current dollar) yield is fixed or determined with certainty at the time of purchase.
|
Fixed Interest
| This type of transaction pays an agreed interest rate that remains constant for the term of the deal. Fixed interests are many times found in bonds, as well as, a fixed rate mortgage.
|
Flat (or Square)
| To be neither long nor short is the same as to be flat or square. One would have a flat book if he has no positions or if all the positions cancel each other out.
|
Floating Rate Interest
| As opposed to a fixed rate, the interest rate on this type of deal will fluctuate with market rates or benchmark rates. One example of a floating rate interest is a standard mortgage.
|
Floor Broker
| Any person who, in any pit, ring, post or other place provided by a contract market for the meeting of persons similarly engaged, executes for another person any orders for the purchase or sale of any commodity for future delivery.
|
Floor Trader
| Members of an exchange who are personally present, on the trading floors of exchanges, to make trades for themselves. Also referred to as Locals.
|
Flotation
| The occasion on which a company’s shares are offered on the market for the first time.
|
Flower Bond
| A specially identified series of Treasury bonds accepted at full par in payment of estate taxes.
|
Flower Bonds
| Specific government bonds that are eligible to be used as payment at par value for federal estate taxes.
|
FOK
| See Fill Or Kill.
|
Force Majeure
| A clause in a supply contract which permits either party not to fulfill the contractual commitments due to events beyond their control. These events may range from strikes to export delays in producing countries.
|
Forced Liquidation
| The situation in which a customer's account is liquidated (open positions are offset) by the brokerage firm holding the account, usually after notification that the account is undercapitalized (margin calls).
|
Foreign Exchange (or Forex or FX)
| The simultaneous buying of one currency and selling of another in an over-the-counter market. Most major FX is quoted against the US Dollar.
|
Foreign Exchange Risk
| See Currency Risk
|
Forward
| A deal that will commence at an agreed date in the future. Forward trades in FX are usually expressed as a margin above (premium) or below (discount) the spot rate. To obtain the actual forward FX price, one adds the margin to the spot rate. The rate will reflect what the FX rate has to be at the forward date so that if funds were re-exchanged at that rate there would be no profit or loss (i.e. a neutral trade). The rate is calculated from the relevant deposit rates in the 2 underlying currencies and the spot FX rate. Unlike in the futures market, forward trading can be customized according to the needs of the two parties and involves more flexibility. Also, there is no centralized exchange.
|
Forward Contract
| A cash market transaction in which two parties agree to the purchase and sale of a commodity at some future time under such conditions as the two agree. In contrast to Futures Contracts, the terms of forward contracts are not standardized; a forward contract is not transferable and usually can be canceled only with the consent of the other party, which often must be obtained for consideration and under penalty; and forward contracts are not traded in federally designated contract markets. Essentially, forward contract refers to any cash market purchase or sale agreement for which delivery is not made "on the spot."
|
Forward Contracting
| A cash transaction common in many industries, including commodity merchandising, in which a commercial buyer and seller agree upon delivery of a specified quality and quantity of goods at a specified future date. A price may be agreed upon in advance, or there may be agreement that the price will be determined at the time of delivery.
|
Forward Market
| Refers to informal (non-exchange) trading of commodities to be delivered at a future date. Contracts for forward delivery are "personalized" (i.e., delivery time and amount are as determined between seller and customer).
|
Forward Months
| Futures contracts, currently trading, calling for later or distant delivery. See Deferred Futures.
|
Forward Points
| The pips added to or subtracted from the current exchange rate to calculate a forward price.
|
Forward Purchase or Sale
| A purchase or sale between commercial parties of an actual commodity for deferred delivery.
|
Forward Rate Agreements (FRA`s)
| FRA`s are transactions that allow one to borrow/lend at a stated interest rate over a specific time period in the future.
|
Forwardation
| See Contango.
|
Fourth Market
| Trading directly between institutional investors on a system named Instinet.
|
Freddie Mac
| Nickname for the Federal Home Mortgage Association and the mortgage-backed securities it issues.
|
Free Crowd System
| A system of trading, common to most U.S. commodity exchanges, where all floor members may bid and offer simultaneously either for their own accounts or for the accounts of customers, and transactions may take place simultaneously at different places in the trading ring. Also see Board Broker System and Specialist System.
|
Free Stock
| Loanable securities; that is, securities that can be used for loan or hypothecation. These securities are stock in a margin account that represents the debit balance.
|
Free Supply
| Stocks of a commodity that are available for commercial sale, as distinguished from government-owned or -controlled stocks.
|
Front and Back Office
| The front office usually comprises of the trading room and other main business activities.
|
Frontrunning
| With respect to commodity futures and options, taking a futures or option position based upon non-public information regarding an impending transaction by another person in the same or related future or option.
|
Frozen Account
| An account in which all purchases must be paid for in cash in advance for a period of 90 days because of failure to make timely or proper payment in the past.
|
FT Index
| Refers to the Financial Times Industrial Ordinary Share Index, also known as the "30 Share Index." This started in 1935 at 100, and is based on the prices of 30 leading industrial and commercial shares. They are chosen to be representative of British industry, rather than of the Exchange. Government stocks, banks and insurance companies are not included. The Index is calculated hourly during the day with a "closing index" at 4:30 p.m.
|
FT-SE 100 Share Index
| Popularly known as "Footsie"; an index of 100 leading UK shares listed on the London Stock Exchange providing a minute-by-minute picture of how share prices are moving. It started on January 3, 1984 with the base number of 1,000. Also forms the basis of a contract in the London Traded Options Market (LTOM) and the London International Financial Futures Exchange (LIFFE).
|
FT-SE Eurotrack 200 Index
| Denominated in ECUs, this comprises the stocks of the FT-SE 100 Index plus the constituents of the FT-SE Eurotrack 100 Index. The UK component is weighted to ensure that the 200 Index closely tracks the major benchmark indices. It started on Monday, February 25, 1991 with a base value of 1,000 as at close of business on Friday, October 26, 1990.
|
Full Carrying Charge
| See Carrying Charges.
|
Full Carrying Charge, Full Carry
| See Carrying Charges.
|
Full Trading Authorization
| Owner of the account gives power to another person to buy, sell and make withdrawals from the account.
|
Full-Service Broker
| A broker that provides investment research, information and advice, as well as all services in connection with the purchase and sale of futures and options contracts. Full Service Brokers usually charge commission rates that are higher than discount broker's rates without discounts.
|
Fully Disclosed
| All customer accounts of the Introducing Broker are introduced to another Broker/Dealer who clears the customers’ trades. This second broker is called a Clearing Broker. The names and addresses of the customer accounts are "fully disclosed" to the Clearing Broker whose name is also disclosed to the customers on the statements and confirmations. The Clearing Broker does all the bookkeeping involved in settling the trades and keeping the customer accounts in proper form.
|
Fully Disclosed Account
| An account carried by the Futures Commission Merchant in the name of the individual customer. Opposite of an Omnibus Account.
|
Fully Paid
| Applied to new issues, when the total amount payable in relation to the new shares has been paid to the company.
|
Fund Exchange
| Ability to shift a mutual fund investment from one fund to another sponsored by the same mutual fund family.
|
Fund Family
| An investment management company that offers several types of mutual funds.
|
Fundamental Analysis
| An approach to market behavior that stresses the study of underlying factors of supply and demand in the commodity, in the belief that such analysis will enable one to profit from being able to anticipate price trends. Contrasted with Charting.
|
Fungibility
| The characteristic of interchangeability. Futures contracts for the same commodity and delivery month are fungible due to their standardized specifications for quality, quantity, delivery date and delivery locations.
|
Futures
| A way of trading financial instruments, currencies or commodities for a specific price on a specific date in the future. Unlike options, futures give the obligation (not the option) to buy or sell instruments at a later date. They can be used to both protect and to speculate against the future value of the underlying product.
|
Futures Commission Merchant (FCM)
| Individuals, associations, partnerships, corporations and trusts that solicit or accept orders for the purchase or sale of any commodity for future delivery on or subject to the rules of any contract market and that accept payment from or extend credit to those whose orders are accepted.
|
Futures Contract
| An agreement to later sell or buy a commodity of a standardized amount and standardized minimum quality grade, during a specific month, under terms and conditions established by the federally designated contract market upon which trading is conducted, at a price established in the trading pit.
|
Futures Industry Association (FIA)
| A membership organization for futures commission merchants (FCMs) which, among other activities, offers education courses on the futures markets, disburses information and lobbies on behalf of its members.
|
Futures Price
| (1) Commonly held to mean the price of a commodity for future delivery that is traded on a futures exchange. (2) The price of any futures contract.
|
Futures-equivalent
| A term frequently used with reference to speculative position limits for options on futures contracts. The futures-equivalent of an option position is the number of options multiplied by the previous day's risk factor or delta for the option series. For example, 10 deep out-of-money options with a risk factor of 0.20 would be considered 2 futures-equivalent contracts. The delta or risk factor used for this purpose is the same as that used in delta-based margining and risk analysis systems.
|
