S&L
Savings and Loan
S&P
Standard and Poor's Corporation
SABE
Semi-Annual Bond Equivalent
Samaurai Bond
A yen-denominated bond issued in Japan by a foreign issuer.
Saving Certificate
A deposit of a fixed maturity and amount usually earning a higher rate of interest than a savings bond.
Seasoned
Refers to a security which has been outstanding in the secondary market for over 90 days
SEC
Securities and Exchange Commission
Sector
A group of securities with similarities (for example, industry type, coupon rate, maturity date and/or rating).
The four bond sectors of the market, as we view them: Treasuries, Mortgages, Corporates, and International.
Treasuries: All U.S. Treasury Issues. Highest quality (AAA), and liquidity.
Mortgages: Agency and other pass-throughs (FNMA,FHLMC,FHA), plus derivatives (CMO's, PO's. etc.). Mostly AA-AAA, prepayable at any time.
Corporates: All industrial, financial, utility, and other corporate issuers. Terms and quality vary. Generally callable prior to maturity.
International: Includes U.S. issuers in foreign markets (Euro's), foreign issues in U.S. market (Yankees), and foreign issues in foreign markets.
Secular Trend
A long-term movement in the price of a security or of interest rates, either upward or downward, which is not related to seasonal or technical factors.
Securities
Stocks, bonds and notes which give evidence to and assure the fulfillment of an obligation.
Securities Act of 1933
A law designed to ensure that new securities offered to the public are clearly and completely described in the registration statement and prospectus. The SEC does not guarantee that the statements are accurate, but attempts to make certain that all relevant information is fully disclosed
Securities and Exchange Commission (SEC)
An agency created by Congress to provide laws for the protection of investors in security transactions. The SEC administers the Securities Act of 1933, the Securities Exchange Act of 1934, the Trust Indenture Act, the Investment Company Act, the Investment Advisors Act and the Public Utility Holding Company Act.
Securities Depository
A company, usually a domestic bank, whose responsibility includes the custody of securities, administration of fungible securities and the settlement of securities transactions including payment.
Sell Off
A sudden sharp decline in prices accompanied by increased volume of trading and a general rise in interest rates.
Senior Securities
The class of securities that occupies the highest priority in a claim for principal, interest or dividends.
Serial Bond
An issue that is segmented into a series of maturities which matures in relatively small amounts at stated periodic intervals.
Servicing
The policing and record-keeping functions performed by mortgage lenders. The servicer of a loan sends payments notices, keeps track of the principal balance, ensures that property taxes and mortgage insurance are paid, remits payments to mortgage investors, etc. For these considerations, the servicer is paid a servicing fee.
Servicing Fee
The fee paid to the servicer of a mortgage loan. It is usually a fixed percentage of the outstanding principal balance of the loan, and is taken from the interest portion of the payment.
Settlement
Cash Settlement: Same day settlement
Corporate Settlement: Settlement five market days after the trade date (term used it the U.S. Market).
Delivery Versus Payment Basis: Under this settlement rule, the delivery of and payment for bonds are simultaneous.
Domestic Settlement: Settlement according to the accepted market convention.
Euroclear Settlement: Settlement is seven calendar days after the trade day. As of June 1995, settlement will be three market days after the trade day.
Free Payment Basis: The delivery of a bond and the payment for it are not necessarily simultaneous.
International Settlement: The settlement of securities is affected through an international clearing agency such as Euroclear or Cedel. International settlement usually assumes no local or generally recognized holidays
Regular Way Settlement: In the United States, settlement is on the next market day after the trade date.
Skip-Day Settlement: Settlement on the day after the next market trade day.
Settlement Date
The date on which the final consummation of a securities transaction takes place and payment is made.
SF
1. Sinking Fund
2. Single Family
Share/Par
Refers to par value in the case bonds, and number of shares in the case of stocks.
Shopping
Making an effort to obtain a better bid or offering from someone else after having received a firm bid or offering from a dealer.
Short
To become an ower; to have sold without ownership in anticipation of subsequently purchasing at a lower price.
Short Covering
The action taken by a trader or investor to buy securities previously sold short in order to deliver them and thereby close out a short position.
Short Position
Situation that arises when securities that are not owned are sold.
Short Sale
The practice of selling first and buying later. The seller sells a security not owned on the expectation that the market price will fall and the seller will be able to buy the security at a price lower than that at which it was sold.
Short-Term
A type of obligation with a maturity of less than one year.
Singapore Interbank Offered Rate (SIBOR)
The posted rate at which prime banks offer to make Asian dollar deposits available to other prime banks.
Single-Family (SF)
Refers to mortgages on one-to-four family dwellings.
Sinking Fund
Money, either cash or an acceptable substitute, regularly set aside by a company out of its earnings at stated intervals to redeem all or part of its long-term debt as specified in the indenture. The creation of a sinking fund provides for an orderly amortization of a debt over the life of an issue. A Cash Sinking fund can be satisfied by cash or bonds purchased in the open market or called at the sinking fund call price. A Property Additions Sinking Fund is generally satisfied by pledging a stated portion of the value of unmortgaged property.
Spot Price
The price of a security or commodity in the cash market. Used in reference to the futures markets for securities or commodities which underlay various futures contracts.
Spread
The yield or price differential between two different securities.
Underwriting spread; the difference between the price to the public and the issuer.
The difference between the bid and the asked price or yield in the quotation of a security.
Simultaneous purchase and sale of different but related futures contracts, one-to-one or in a ratio; a hedge if the cause of widening or narrowing in the price difference between futures contracts is the same as the cause of gains or losses in an intended cash market transaction.
Standard Deviation
Statistical measure of the degree to which an individual value in a probability distribution tends to vary from the mean of the distribution. In portfolio theory, the past performance of securities is used to determine the range of possible future performances and a probability is attached to each performance. The standard deviation of performance can then be calculated for each security and for the portfolio as a whole. The greater the degree of dispersion, the greater the risk.
State Work Flow
High level diagram showing the states, beginning to end, following each process in work flow; I.e. Trade Flow and Account Flow.
Stock
A certificate of ownership. A contract between the issuing corporation and the owner which gives the latter an interest in the management of the corporation the right to participate in its profits.
Stop
To agree to trade a specific block of securities at a certain price or better. The agreed trade will be executed in any event.
In a Treasury auction, the last competitive bid which is accepted on the high yield side.
Stop Limit Order
An order to buy or sell when a given price is reached or passed, but at that price or better. A stop limited order to buy always specifies a price above the present market price; when the market price reaches the stop limit price, the stop limit order to sell specifies a price below the present market price.
Stop Order
An order to buy or sell when a given price is reached or passed. A stop order to buy always specifies a price above the present market price. A stop order to sell always specifies a price below the present market price. When the stop price is reached or passed, the stop order becomes a market order.
Stop Price
The lowest price the issuer accepts in an auction for a new issue.
Straddle
An option position that is a combination of a put and a call on the same security the same strike prices for the same expiration date.
A futures position that is any combination of both long and short contracts of the same security for different delivery months.
Straight Bond
A bond with unquestioned right to repayment of principal at a specified future date, unquestioned right to fixed interest payments on stated dates and no right to any additional interest, principal or conversion privilege
Street
The New York Financial Community in the Wall Street area, or the broker/dealer community in general.
Street Name
Registration of securities in the name of a broker bank or other third party instead of the owner. Facilitates transfer of record ownership and the clearance and settlement of securities transactions.
Street Practice
Any procedure generally agreed upon and in use by the financial community.
Specifically, the collection of conventions in general use by the financial community regarding calculations of yields or prices.
Strike Price
The price at which an option may be exercised for the underlying security
STRIP
(Separate trading of Registered Interest and Principal of Securities) Process by which a bond is separated into its corpus and coupons which are then sold separately as zero coupon securities.
SUB
1. Subsidiary
2. Subject
3. Subordinated
Sub Process
A type of activity assigned within Process Charter to link an activity in one process flow to a start box in a separate file, creating a parent/child relationship.
Subject
Refers to a quote or indication of price that is not firm and cannot be relied upon as the basis for a transaction.
In new issue terminology, a term indicating to would-be buyers that all securities have been circled. However, depending on subsequent availability, the order may be filled
Subordinated
Refers to a promise to pay or a security with a promise to pay which cannot legally be fulfilled until payments on certain other obligations have been made and any other conditions (defined in the indenture) have been met. These other obligations are said to be senior to the subordinated obligation.
Surplus
The amount by which revenues exceed expenditures.
Swap
The sale of one security for the purchase of another. Bond swaps fall into three basic categories, although a given swap may have aspects of two or more of these:
Substitution Swaps: swaps done in order to improve upon one or more characteristics of the original bonds. Swaps done for yield pickup, quality improvement or change in call protection are in this category.
Intermarket Spread Swaps: swaps done in anticipation of a (favorable) change in the price or yield spread between the two issues from two different sectors of the market.
Rate Anticipation Swaps: swaps done in anticipation of a (favorable) change in the overall level of interest rates. Rate anticipation swaps generally consist of lengthening maturity and/or lowering coupon when bullish and shortening maturity and/or increasing coupon when bearish.
Syndicate
A limited partnership agreement among underwriters.
A group of investment bankers who underwrite and distribute as agreed a new issue of securities or a large block of an outstanding issue
Syndicate is Terminated
Means that all the underwriters have been freed from all price and trading restrictions imposed during syndication and that the security is trading or is expected to trade at or over its initial offering price.
Syndicate Restrictions
The contractual obligations placed on the underwriting group relating to distribution, price limitations and market transactions