Glossary

ACH is now known as ASX Clear Pty Limited.  It is a subsidiary of ASX which clears options and futures traded on ASX.

Margining system used by ASX Clear whereby the probable maximum one-day adverse movement in the value of exchange traded options in a portfolio is calculated.

Australian Real Estate investment Trusts (see REITs)

ASTC is now known as ASX Settlement Pty Limited. It is licensed as a Clearing and Settlement Facility under the Corporations Act.

Total dividend, in cents per share, for the year, adjusted by a dilution factor to take account of issues and reconstructions.

An alternative to cash dividends, allowing shareholders to receive new shares instead of cash.

Funds aiming to deliver returns in both rising and falling markets. Compared to traditional fund managers these funds have greater scope to use derivatives, short positions, and exotic securities.

Person employed by an ASX Market Participant who has been accredited by ASX to advise or make a recommendation to retail clients in relation to exchange traded options and warrants.

Person employed by an ASX Market Participant who has been accredited by ASX to advise or make a recommendation to retail clients in relation to ASX futures.

Where the fund manager has the discretion to select the securities in a fund and looks for opportunities to buy and sell to increase its performance.

Made when certain events occur that may affect the underlying securities. Examples of adjustments include changing the number of shares per contract and/or the exercise price of options in the event of a new issue or a reorganisation of capital by the issuer of the underlying securities.

Australian Financial Services Licence.

Annual meeting of shareholders required by law where directors inform shareholders of company performance and future prospects. Shareholders vote on board elections and significant company issues.

Computerized, rule-based system responsible for executing orders to buy or sell a security.

Capitalisation weighted index of performance of share prices of about 500 of the largest Australian companies. Established by ASX at 500 points in January 1980.

Measure of performance of securities in the All Ordinaries index taking into account dividends as well as share price movement.

Allocation of shares in a company by the directors, following an application or offer to take up the shares. Decisions as to the persons to whom shares are allotted, and the number allotted to each, are at the discretion of the directors, subject to compliance with the Corporations Law. If an issue of shares is over- subscribed, i.e. the number of shares applied for exceeds the number available for issue, the excess must be eliminated either by rejecting some applications altogether, or by reducing the number of shares allotted to some or all of the applicants.

Negotiable certificates that represent a non-U.S. company's publicly traded equity or debt. Depositary Receipts are legal, US. Securities that trade freely on a major exchange or in the over the counter (OTC) market in U.S. Dollars, pay dividends or interest in dollars, and settle, clear and transfer according to standard U.S. practices.

The Depositary Receipt evidences the home market security which trades in a foreign country and it is custodised with a local bank, called the custodian.

Type of option or warrant contract which allows the holder to exercise at any time up to and including the expiry date. Most equity options listed on ASX are American Style. See European Exercise, European Style.

Aggregate market value.

Financial report or statement issued by a publicly listed company to its shareholders. Contains a statement of financial performance, a statement of financial position, a statement of cash flow, as well as notice of the Annual General Meeting (AGM) and business resolutions to be discussed.

Also known as dividend yield, it represents the dividend return from an investment. Calculated by dividing the dividend per share by the share price, converted to a percentage.

Yield = (Dividend per share / Last market price) x 100.

Return or profit, expressed on an annual basis that the writer of the option contract receives for buying the shares and writing that particular contract. See buy and write.

Series of identical fixed payments to be made for a specified number of years.

Financial Product approved under Section 8 of the ASX Settlement Operating Rules.

Simultaneous buying and selling of the same or equivalent securities in different but related markets. Purpose is usually to profit from price discrepancies.

Formerly, the rules adopted by a company when it formed that governed the company's internal affairs and other matters affecting the shareholders and the company. These matters are now dealt with in the company constitution.

Date upon which the relevant information is recorded.

If you hold in the money deliverable warrants but do not exercise them before or at expiry you may be entitled to a cash payment, often called an 'Assessed Value Payment' (or AVP).

Proportion of total capital invested in the different asset classes.

Net assets of a company (in $) / number of issued shares.

For example: XYZ Ltd with $100,000 net assets and 10,000 shares issued has an Asset Backing of $10.00 per share.

Probable future economic benefits obtained or controlled by an entity as a result of past transactions or events affecting the entity.

Random allocation by ASX Clear to a writer of an exchange traded option exercise obligation. This is carried out by ASX Clear.

One company may be associated with another company if certain types of arrangements exist between the two bodies. Companies may also be considered to be associated when one company has an equity interest in the other.

ASX is a multi-asset class, vertically integrated exchange group that functions as a market operator, clearing house and payments system facilitator. It oversees compliance with its operating rules, promotes standards of corporate governance among Australia’s listed companies and helps educate retail investors.

A subsidiary of ASX which clears options and futures traded on ASX.

Unique code used to identify listed companies.

Wholly owned subsidiary of the Australian Securities Exchange Limited that executes and settles sales and purchases of participating international securities on behalf of the broker.

ASX Settlement Pty Limited is licensed as a Clearing and Settlement Facility under the Corporations Act.

Option or warrant with an exercise price equal to the current market price of the underlying asset.

Amount of share capital which a company is permitted to issue. Also called nominal capital. See issued capital, uncalled capital, and paid-up capital.

Exercise by ASX Clear of an in the money option at expiry. Requires the client account to be pre-set to automatic exercise by the client's broker.

Typical trading activity for a day. Calculated by the annual volume divided by the total number of working days in that year.

An entity becomes aware of information if a director or executive officer (in the case of a trust, a director or executive officer of the responsible entity or management company) has, or ought reasonably to have, come into possession of the information in the course of the performance of their duties as a director or executive officer of that entity.

Where futures market prices are progressively lower in the future delivery months than in the nearest delivery month. For instance, if the wool quotation for March is 480�/kg and that for July is 450�/kg then the backwardation for five months against March is 30�/kg.  (Backwardation is the opposite of Contango).

Defined level that causes some event to occur in relation to a warrant. The disclosure document will provide details.

One per cent of one per cent (0.01%).

Risk that movements in the price of a futures contract do not correlate exactly with movements in the price of the underlying financial instrument or commodity.

When prices are falling and further falls are expected.

View that prices will fall.

Yardstick that a fund manager compares the performance of their fund to, such as the All Ordinaries Index which may be used as a benchmark for Australian shares.

Measure of how changes in a share price correlate to overall movements in the share market as a whole.

Price at which someone is prepared to buy shares (opposite to offer).

Off-market trading mechanism enabling market users to arrange and transact orders of significant size in specified contracts.

Larger companies with a long history of profitability and stability.

Elected body or persons formed to control the planning and implementation of corporate objectives.

A tradeable debt security, usually issued by a government or semi-government body to raise money. Holders of the bond have lent money for which they receive a fixed rate of interest over a set period of time. The bond is repaid with interest on the predetermined maturity date. Bonds can be traded on the sharemarket.

An extra dividend in addition to the normal dividend. See bonus share/bonus issue.

Usually a plan whereby shareholders may elect to receive all or a portion of the dividend in shares instead of cash.

Additional shares issued by the company to existing shareholders for free, usually in a pre-determined ratio to the number of shares already held.

Date at which a company's share register is closed off to identify the shareholders and to calculate any entitlement to new issues and dividends.

Interest and other costs incurred by an entity in connection with the borrowing of funds.

Sharp decline or a sharp rise in price, usually after a sustained period of little or no movement.

Trader or trading company given responsibility for the acceptance and/or execution of an order.

Fee paid to a stockbroking firm for buying or selling of shares.

When prices generally are rising and further rises are expected.

View that prices will rise.

Also known as the economic cycle. The rise and fall of the economy, from a peak, or boom, to a trough and back to a peak.

Monday to Friday inclusive, except New Year's Day, Good Friday, Easter Monday, Christmas Day, Boxing Day, and any other day that ASX declares is not a business day.

The ASX Market Rules govern the operations and behaviour of Market Participants of ASX and Affiliates.

The Market Rules also set out the requirements to become a Market Participant (commonly referred to as 'stockbroking organisations').

The Rules also set out the requirements to become a Participating Organisation (commonly referred to as 'stockbroking organisations') and an Affiliate.

The ASX Settlement Operating Rules govern the operation of CHESS, the electronic transfer and settlement system, and the CHESS subregister.

Strategy requiring the simultaneous purchase of underlying securities and the writing of call options over those securities representing the same number of those securities.

Offsetting purchase to "cover" or liquidate a short sale.

To buy at the beginning of a trading session at a price within the opening price range.

No Liability (N.L.) and sometimes Limited Liability (Ltd.) companies have shares that are not fully paid. A call may be made for the payment of part, or all, of this outstanding capital. Holders of shares in N.L. companies may choose not to pay the call and forfeit their shares, hence the name No Liability. Holders of shares in Limited Liability companies cannot forfeit the shares and are legally obliged to pay a call. See contributing share.

Option / warrant contract which gives the holder the right, but not the obligation, to buy the underlying asset at the exercise price at or before a fixed expiry date.

Defined level which limits the upside potential of an investment product.

Difference between the proceeds from the sale of a security and the initial cost of the investment. If the proceeds exceed the cost this is said to be a capital gain.

Tax on the profit from the sale of capital assets such as shares or property.

Increase in the value of an asset such as an investment in shares.

When the proceeds from the sale of a security are less than the cost of the investment.

Warrants where the issuer promises that the investor gets back at least a certain value set out by the issuer.

Currency, coins, cheques, and balances in bank accounts - a current asset.

Actual physical asset underlying a futures contract. Sometimes called "spot commodity".

Derivatives position, such as a written option contract, where the option writer meets their margin obligations with cash.

Strategy where investors apply with their shares to receive a similar amount of instalment warrants plus a cash payment.

New issue of shares for cash made to existing shareholders in proportion (e.g. 1 new share for every 2 shares held) to their existing shareholding for the purpose of raising additional capital for the company. It is usually issued at a discount to the market price.

The market for securities and physical commodities. Often referred to as the underlying market.

Price in the market place for actual cash or spot commodities to be delivered via customary market channels.

A warrant for which settlement obligations are met by payment of cash from issuer to holder, rather than the purchase or sale of an underlying asset.

Where settlement is completed by a cash payment rather than sale of an underlying asset.

A CHESS Depository Interest (CDI) is a financial product quoted on the Australian Securities Exchange which confers a beneficial interest in the foreign financial product to which it relates.  CDIs are a type of depository receipt.  There are two types of CDIs, CHESS Units of Foreign Securities (CUFS); and Depository Interests (DIs).

That part of an Issuer's register for a class of its securities that is administered by the Issuer and records legal title to securities through a paper certificate in that class. Note: The register may be of shares, options or other securities.

See Technical Analysis.

ASX's Clearing House Electronic Sub-Register System which is ASX's settlement system and central register for electronic transfer of share ownership and associated cash payments.

That part of an Issuer's register for a class of Approved Financial Products that is administered by ASX Settlement and records legal title to Financial Products  through uncertificated holdings in that class. Note: The register may be of shares, options, managed investments or other financial products that are Approved Financial Products under the ASX Settlement Operating Rules.

Securities are in the same class only if the same rights and obligations attach to them. Differences arising from the requirements of the listing rules relating to restricted securities are to be ignored. Example: Partly paid securities are in a different class to fully paid securities. Fully paid securities that rank equally except for the next dividend or distribution are in the same class (but may be traded separately until they merge with the other shares in the class). Fully paid ordinary securities classified as restricted securities are in the same class as fully paid ordinary securities that are not classified as restricted securities.

Option contracts of the same type - either call options or put options - covering the same underlying instrument/underlying security.

Asset of a kind referred to in paragraph (a) of the definition of restricted securities in ASX Listing Rules.

The process of matching, registering and guaranteeing transactions.

Either an accumulation account (a holder record maintained in CHESS by a broker to facilitate settlement of CHESS approved securities with clients who are not participants) or a settlement account (a holder record maintained in CHESS by a participant non-broker to facilitate settlement of CHESS approved securities with other participants).

Either ASX Clear or SFECC depending on the instrument.

Participant of ASX Clear to whom fulfilment of all contracts, registered in their own names, is guaranteed.

Fund that has a fixed number of shares or units on issue.

To liquidate a position by taking an equal and opposite position, e.g. a trader who has bought a futures contract, would close out, or get out of the contract, by taking out a contract to sell.

Trade that liquidates an investor's written position.

Fee that an advisor or a fund manager may receive for the buying or selling of securities.

The office designated by ASX to process company announcements for release to the market.

Complete name of listed company, as reported to the Australian Securities Exchange.

Right to take up certain securities on specified terms within or at a specified time.

Person required to be appointed under the Corporations Law and usually having the responsibility for all the record-keeping within the company.

Written document confirming a transaction between two dealers or a broker and a client which details the costs, type and quantity of shares traded. Also known as a 'Contract note'.

Style of investing by a fund manager that wishes to achieve stable returns over a short to medium horizon.

Situation in which futures market prices are progressively higher in the future delivery months than in the nearest delivery month. For instance, if the wool quotation stands at 450�/kg for March and at 480�/kg for July, then the contango for five months (against March as a basis) is 30�/kg (Contango is the opposite of backwardation).

Month in which delivery or cash settlement is to be made in accordance with a futures, options or warrant contract.

Number used to determine the dollar value of an index future, option, warrant or CFD contract.

Written document confirming a transaction between two dealers or a broker and a client which details the costs, type and quantity of shares traded. Also known as a 'Confirmation'.

The number or quantity of the underlying represented by a futures, options or warrant contract.

Amount of the underlying asset to which the contract refers.

Value or worth of a contract at the time of making that contract.

Shares that have been partly paid for. At a future date the shareholder will be required to pay the balance outstanding, unless the company is a no liability company in which case shares can be forfeited instead.

Person who, in ASX's opinion, has a substantial interest in the equity of the holder of, or a substantial economic interest in, restricted securities and each intermediate entity through which that interest occurs.

Process whereby the price of a derivative contract aligns with the price of the underlying financial instrument or commodity. This usually occurs at maturity.

Number of warrants that must be exercised to require the transfer of the underlying instrument.

Unsecured note or debenture that is classified as an equity security because it is convertible into an equity security.

Loan made to a company at a fixed rate of interest with the right to be either redeemed (i.e. repaid by the company) for cash or converted into ordinary shares at a predetermined date or within a certain period.

Bond or other debt instrument that can be exchanged for shares of the issuer.

Action taken by an entity for the purpose of giving an Entitlement to Holders of a class of the entity's securities. Examples of Corporate Actions include rights issues, bonus issues, dividends or other payments, or offers under a buy- back scheme.

A corporation includes all bodies corporate and certain types of unincorporated bodies, but excludes certain corporate bodies.

A national scheme of legislation dealing with the regulation of companies and the securities and futures industries.

Cost factored into the pricing of derivatives instruments (excluding CFDs). It reflects the cost of holding the underlying over the life of the contract, less the amount that the contract holder would receive in income from the underlying, such as dividends, during this time.

Interest payment paid at regular intervals by the issuer to owners of Interest Rate Securities.

To cancel a short position in an asset by the purchase of an equal quantity of the same asset. Also known as short covering.

Warrant issuer places the underlying securities of a warrant in a trust or other custodial arrangement. See also fully covered warrant.

Where both the buy and sell parties (unrelated entities) are from the same market participant.

Meaning "with". Cum dividend means that shares are being traded with the current dividend attached and thus the buyer rather than the seller receives the dividend declared. Cum-Rights Shares quoted "cum-rights" entitle the buyer to participate in a New Issue of shares then current.

Cum means 'with'. Shares quoted cum dividend entitle the buyer to the current dividend. The price of the shares will usually reflect the amount of the dividend. Similarly, shares 'cum rights' entitle the buyer to participate in the new issue of shares. See ex-dividend.

Dividends on preference shares that accrue as a commitment of the company if they are not paid in any year. Arrears of cumulative preference dividends must be paid before any dividends are paid to ordinary shareholders. Unless specifically stated to be non-cumulative, dividends on all preference shares are deemed to be cumulative.

Give holders exposure to movements in two different currency exchange rates.

Cash or other assets of the entity that would in the ordinary course of operations of the entity be consumed or converted into cash within twelve months after the end of the last financial year of the entity.

The derivatives contract which matures and becomes deliverable during the present month; also called spot month.

Obligations that are expected or could be required to be discharged on demand or within twelve months. In a company's annual report, this figure shows the amount of debt due to be repaid within twelve months.

A measure of liquidity that shows a company's ability to pay its short-term debts. Current Ratio = (Current assets / Current liabilities) = number of times covered

The official daily quotation for each contract available for each delivery or cash settlement month of Option as determined by the Exchange for the purpose of margining by the Clearing House.

Orders which automatically expire at the close of the day's trading if not filled during the day on which they are received.

Loan to a company at a fixed rate of interest and for a fixed term, usually one to five years. The debenture is secured by a trust deed over an asset, or assets, of a company.

Relationship between funds provided by borrowing and funds provided by shareholders. The debt/equity ratio shows to what extent a company is financed by debt (also called the gearing or leverage ratio).

Debt/Equity ratio = (total debt / shareholder equity) x 100

Process of financing through issuing debentures or bonds; or increasing other liabilities to finance operations. Alternative to equity funding.

As defined in the Listing rules

• an unsecured note, except one convertible to a share or unit
• a debenture, except one convertible to a share or unit
• any security that ASX decides to classify as a debt security
• but not a security ASX decides to classify as an equity security for the purposes of ASX Listing Rules.

Shares quoted "dd" are the result of a reconstruction of the company's share capital where shareholders have surrendered old scrip to the company but the company has yet to issue new scrip. Shareholders who wish to sell must do so on a "dd" basis so buyers know that they cannot yet expect delivery of scrip.

Settlement in which the obligation to settle on a trade date plus three (3) business days (T+3) basis is deferred until the time following the despatch date that ASX fixes.

When a company is removed from the Official List and its shares are no longer quoted.

The actual types or grades of the underlying asset which may be delivered in settlement of a futures contract for which the underlying is a commodity.

Settlement of a warrant by transfer of the underlying asset rather than by payment of cash.

The tender and receipt of the underlying physical asset, or warehouse receipts covering such commodity, in settlement of a futures contract.

Specified month during which actual delivery of the physical asset may be made under the terms of a futures contract.

Securities quoted as "del" are the result of a new issue for which CHESS statements have not yet been issued.

Measure of the sensitivity of an option or warrant price to movement in the price of the underlying asset.

Instrument that derives its value from that of an underlying instrument (such as shares, share price indices, fixed interest securities, commodities, currencies etc). General usage includes futures, exchange-traded options, contracts for difference and warrants. Often involves leverage. Corporations Act characterisation may differ from general usage for example some warrants are not classified as derivatives under the Corporations Act.

Date by which an Issuer must have despatched certificates or entered Financial Products into holders' uncertificated holdings. Generally would result from corporate actions such as dividend reinvestment plans, rights issues, share buy backs, share purchase plans and initial public offerings (IPOs).

Where a Market Participant gives their clients the ability to submit orders to the Participant, which then routes the orders through its internal systems and controls and onto the trading platform.

Persons elected by shareholders who are responsible for the implementation of corporate objectives.

When a derivative is trading at a price less than its fair value. With futures, sometimes used to refer to the price differences between futures of different delivery months, as in the phrase "July at the discount to May", indicating that the price of the July future is lower than that of May.

An investment account for which an authorised adviser makes investment decisions on behalf of the client in accordance with the adviser's authority.

Payment to unit holders of a fund out of the profits of the fund. These are allocated on a per unit basis.

Spreading investments over a variety of investment categories with different performance characteristics, in order to reduce risk.

Portfolio that holds a variety of assets with different performance characteristics.

Distribution by a company to shareholders. Usually expressed as a number of cents per share.  Many ASX listed companies (see listed company) pay dividends twice each year, usually as a smaller 'interim' dividend and a larger 'final' dividend.

Dividend shown as cents per share. For example a figure of 19 represents $0.19 and a figure of 7.5 represents $0.075.

Ratio showing the number of times a company's dividend is covered by its net profit.

Dividend Cover ratio = (net profit / dividend paid)

Tax credits passed on to a shareholder who receives a franked dividend. Imputation credits entitle investors to a rebate for tax already paid by an Australian company.

Dividends on cumulative preference shares that have not been declared each period in accordance with the terms of their issue. See cumulative preference dividends.

See dividend.

Plan which gives holders of securities the opportunity to accept securities in place of dividend, distribution or interest payments (either partly or wholly). Also called a 'Dividend Reinvestment Plan'.

Either interim or final. The last dividend in the company's financial year is classified as final and all others are classified as interim. Some dividends may also be classified as 'special' in accordance with the advice given by the company about the dividend. Ordinarily the term 'special' is used to indicate that the dividend is not one that is paid regularly each year but the term may be used differently by different companies.

Dividend shown as a percentage of the last sale price of securities.

Measures of earnings attributed to each equivalent ordinary share over a twelve month period. Calculated by dividing the company's earnings by the number of shares on issue in accordance with AASB 1027 'Earnings per share'.

Financial Institutions Duty.

Set of global sector and industry definitions. See Standard & Poors.

Number identifying registration on the CHESS Subregister.

Name of the computerised trading system used by ASX to trade equities, options, warrants, interest rate securities and some futures.

Income or profit of an entity. May be expressed as gross or net.

Evidence of securities ownership in the form of a holding statement. All security holdings on ASX are registered electronically.

For the purposes of ASX Listing Rules, a scheme for the issue or acquisition of equity securities in the entity to be held by, or for the benefit of, participating employees or non-executive directors of the entity or a related entity.

Fee set by the fund manager for buying units in a managed investment expressed as a percentage of the amount invested. The fee is deducted from the amount invested by the fund manager.

Often used as a synonym for shares. Represents part-ownership of a company, as distinct from debt securities such as bonds and debentures.

Capital raised by a company by issuing shares. An alternative to debt funding.

For the purposes of ASX Listing Rules:

1. shares in a body corporate or an unincorporated body other than redeemable preference shares which are Loan Securities in accordance with paragraph; (c)of the definition of Loan Securities

2. prescribed interests except those referred to in paragraph (d) of the definition of Loan Securities

3. renounceable and non-renounceable rights to subscribe for Securities other than Loan Securities

4. options over unissued Securities other than Loan Securities

5. convertible notes

6. any Securities which are determined by the Exchange to be Equity Securities, but does not include option contracts or Securities determined to be Loan Securities by the Exchange.

Warrants for which the underlying asset is a security (for example, shares in companies).

Depositing an instrument of title to securities with a third party custodian in order to prevent the holder from transferring those securities during a period agreed.

Where the holder of an option or warrant can exercise their right to buy or to sell only on the expiry date.

Where the seller retains the bonus shares being issued. The ex bonus date occurs seven business days prior to and including the Record Date.

The share price may fall on the ex bonus date to reflect the dilution effect as the company's assets are spread over a greater number of shares on issue.

Date on which shares change from being quoted "cum" to "ex". It is usually the fourth business day prior to the record date.

Shares which when sold entitle the seller to retain the current dividend. Shares are usually quoted ex-dividend four business days before company's book close.

Four business days before the company's Record Date. To be entitled to a dividend a shareholder must have purchased shares before the ex dividend date.

Securities entitling the seller to retain the right to participate in a New Issue then current.

The exchange of a physical holding in the underlying to a futures or CFD position or the exchange of a futures or CFD position for a physical holding in the underlying.  EFPs are not always transacted at market and therefore do not have to be traded within the current market bid and offer. They are omitted from the calculation of first, high, low and last prices.

ETFs that invest in and track the performance of an commodity such as silver or gold rather than an equity index and which allows for applications and redemptions in the primary market on a daily basis either in -specie or in cash.

Investment fund designed to track the performance of an asset such as a share price index and which allows for applications and redemptions in the primary market on a daily basis either in -specie or in cash.

Option contracts where counterparties are novated with ASX Clear interposed between taker and writer and which are bought and sold on the options market operated by ASX.

Notification by the buyer (taker) of an option or warrant of their decision to buy or sell the underlying asset or in the case of cash settled contracts to receive a cash payment.

Price at which the taker (buyer) of an option or warrant may buy/sell the underlying asset. Also known as the strike price.

Fee set by a fund manager for selling units in a managed investment expressed as a percentage of the amount invested. The fee is deducted from the amount invested by the fund manager.

More complex instruments which may involve one or a number of unusual features.

Date on which all unexercised options, warrants in a particular series or futures in a particular expiry month expire.

Amount at which securities or debt instruments are issued.

Current value of the underlying shares or index, plus an amount referred to as the 'cost of carry'. An estimate of the price an option should sell at in an efficient market.

Financial Institutions Duty.

Fund available in limited circumstances for clients who have suffered a loss because of a defalcation or fraudulent misuse of money or other property by the broker. Funds are not available to compensate for trading losses.

Usually the second payment amount outstanding for an Instalment, which must be paid to take delivery of the underlying asset. May also be referred to as the exercise price.

Initial payment (capital plus interest and fees) to purchase the shares via an Instalment Warrant.

Security for which the return when held to maturity is fixed. Fixed interest securities normally receive periodic interest payments and repayment of principal at maturity.

Initial raising of capital by public subscription to an offering of securities.

Contract to exchange a particular good or financial instrument at a set price on a future date.

Dividend paid by a company out of profits on which the company has already paid tax. The investor is entitled to an imputation credit, or reduction in the amount of income tax that must be paid, up to the amount of tax already paid by the company.

Tax rate at which the dividend is franked.

Warrant series for which the warrant issuer has placed the underlying shares in a trust or cover arrangement.

Individual or organisation in charge of investing funds on behalf of a financial institution.

Method of analysis using ratios and percentages calculated from financial data of a company to assess the company's quantitative and qualitative aspects.

An agreement to buy or sell an asset or cash equivalent at a date in the future at a price agreed today. The contracts are traded on a futures market. The contract is then novated with a clearing house interposed between buyer and seller.

See leverage.

Debt security issued by the government.

Goods and Services Tax.

Transaction which partly or totally offsets the risk of a current holding.

See Absolute Return Funds.

Annualised standard deviation of daily changes in the price of the asset underlying a futures, options or warrant contract.

Facility that prevents securities from being deducted from, or entered into, a holding pursuant to a Transfer or Conversion.

Instalments containing a high gearing level (usually between 70% to 110%).

Preference share which is a type of interest rate security.

Exchange Traded Fund (ETF) that can either be based on an index or be actively managed.

Tax credits passed on to a shareholder who receives a franked dividend.

A measure of a change in value for a group of assets.

Where a trader tries to profit from pricing discrepancies, between an index based derivative a related index product or the shares comprising the index.

Futures contract which has as its underlying asset an index, typically a share price index.

European call option over a share price index with a 1 point strike price.

Options over a share price index. Index options are European style and cash settled on exercise.

Warrants over a share price index. Index warrants are European style and cash settled on exercise.

Managed investment that invests in infrastructure assets, such as transport, telecommunications, materials handling and utilities.

Minimum deposit determined by the Clearing House on all futures contracts and exchange traded options and exchange traded CFDs. This margin must be paid by the Clearing Participant to the Clearing House. The client must pay the Clearing Participant.

Warrants give holders the right to buy the underlying shares or instrument by payment of several instalments (usually two) during the life of the warrant. The Final payment is usually between 40% and 60% of the price of the underlying instrument at the time of issue. Instalment warrants are often covered warrants with the underlying asset being held in trust / custody for the benefit of the holder. A common feature of instalment warrants is that the holder is entitled to any dividends or distributions and possibly franking credits paid by the underlying asset during the life of the warrant. An interest component is usually part of the payments due.

Ratio showing the number of times interest payments are covered by earnings before interest and tax (EBIT). The higher the interest cover, the greater the company's ability to meet interest payments.

Interest Cover = Earnings Before Interest and Tax (EBIT) / Net Interest Payments = number of times covered.

Security that pays a fixed or floating rate of return. The issuer usually promises to pay a specified rate of interest per annum over the life of the security and to repay the principal at maturity.

When a dividend is paid more than once a year, dividends other than the final one are called interim dividends. Typically, dividends are paid twice a year, one interim and one final dividend.

Call (put) option or warrant with an exercise price below (above) the current market price of the underlying asset.

Difference between the current market price of the underlying asset and the exercise price of the option or warrant, but not less than zero. For warrants, the conversion ratio needs to be taken into account.

Asset acquired for the purpose of producing income and/or capital gains for its owner.

Value of securities allotted in a company to its shareholders and debt holders.

Shares of a company that have been allotted to shareholders.

Register of shares managed by the listed entity itself for the registration of shares in their company alone.

European style options with a strike price of 1 cent, in the case of stock LEPOs, or 1 point, in the case of index LEPOs.

Fee paid to the manager of an investment fund. The MER is normally expressed as an annual percentage or "basis point" charge (where one basis point equals one hundredth of a percent) on the funds net asset value.

The extent to which an investor or business is using borrowed money.

Listed Investment Companies.

Price limit for an order, e.g. a bid of $3.00 means that the buyer is not willing to pay more than $3.00 for the security.

Instruction to a broker to buy or sell a security at a specified price or better.

Company whose members have liability limited by shares or guarantee. In the case of the former, liability is limited to the amounts unpaid on the shares, in the case of the latter by the amount undertaken to be contributed in the event of a winding up of the company.

Assets that can be bought or sold easily and with little impact on price.

Where buying and selling can be accomplished with ease and with little impact on price because of sufficient volume on offer.

Measure of the ability to buy or sell assets easily and with little impact on price.

Company which has agreed to abide by ASX Listing Rules so that its securities can be bought and sold on ASX.

Rules governing the procedures and behaviour of all entities listed on ASX.

Trader who has bought or who holds a position that will benefit from rising prices.

Unit of trading equivalent to one futures contract.

Professionally managed portfolio of assets.

Process whereby cash options or futures contracts still open at expiry are closed out by mandatory cash settlement.

Amount calculated by the clearing house as necessary to cover the risk of financial loss on options contracts, futures contract and CFDs.

Communication to a client asking to cover an adverse price movement on a futures, options or CFD position.

Probable maximum one day move in the underlying asset as calculated by the clearing house. Expressed as a percentage, and used in the calculation of margins for options and futures.

Total number of shares on issue multiplied by their market price. This can be applied to work out the market value of one company or of the value of all companies listed on the exchange.

Order to a broker to buy or sell at the current market price at the time the order is given.

Organisations that meet ASX's requirements are recognised as Market Participants. Includes Trading Participants and Clearing Participants.

Prevailing price of shares traded on ASX. May be the last price at which the shares traded, or the most recent price offered or bid for the shares.

Risk of a general decline in the market.

When the term of a contract or agreement finishes. May involve cash or physical settlement.

Part of a company's constitution, the formal document subscribed by those wishing to form a company and giving details of the company, e.g. its name, objects and particulars of capital.

When two or more companies combine either by takeover or creation of a new entity.

A charge over property given by the owner (borrower/mortgagor) to a lender (mortgagee) to secure repayment of a loan or to ensure satisfaction of a debt.

American term to describe a managed investment.

Book value of a company's assets divided by the number of shares on issue.

The NGF is a compensation fund available to meet certain types of claims arising from dealings with Participants of ASX and, in limited circumstances, Participants of ASX Clear.

Total assets minus intangible assets such as goodwill.

Offer document explaining the features of a financial product, including the risks, benefits and such other information that might reasonably be expected to have material effect on an investment decision.

The number of times the price covers the earnings per security over a twelve month period. Investors commonly use this ratio to measure the attractiveness of particular shares and to compare shares in one company with those in another.

P/E ratio = Price per Share
                Earnings per share

Difference between the open derivatives contracts held long and the open derivatives contracts held short in any one contract by an individual or group.

When recently issued shares do not rank equally with existing shares in terms of dividends.

Mining company not entitled to calls on the unpaid issue price of shares. Such companies are denoted N.L.

Rights offer that may only be taken up or forfeited, and cannot be traded on the market.

Process undertaken by the clearing house whereby it substitutes itself between the buyer and the seller of a trade, acting as the ‘middleman’ to guarantee the obligations of each party.

Price at which someone is prepared to sell securities. (opposite of bid).

In relation to a Takeover Bid, the period for which offers under the bid remain open; or in relation to a Scheme, the period from the date an announcement of intention to propose a Scheme is first received by the Exchange until the date on which the Scheme is effected.

Names of securities permitted quotation and so, trading on ASX. Referred to in the Listing Rules as the Official list.

The transfer of shares between parties without going through the market place. Off-market transfers are executed through the use of an "Australian Standard Transfer Form".

Managed investment where there is no restriction on the number of units in the fund that will be issued. ETFs are open ended funds.

Number of contracts outstanding or 'open' in a particular class or series of options or futures.

Price (or price range) recorded during the period when an instrument commences trading.

Contract between two parties giving the taker (buyer) the right, but not the obligation, to buy or sell a pre-existing underlying asset at a particular price on or before a particular date.

The most commonly traded security in Australia. Holders of ordinary shares are part-owners of a company and may receive payments in cash, called dividends, if the company trades profitably. They have no preferential rights as to either dividends out of profits or capital on a winding up.

Trading condition code. See overseas trade.

Combination of two trading condition codes, OS and XT.  One market participant buying / selling outside Australian market hours.

Call (put) option or warrant for which the current market price of the underlying asset is below (above) the exercise price.

Defined in the Listing Rules as the place of an entity's primary listing.

A trade consummated in a foreign country outside of Australian market hours by a resident of that country through an approved exchange during their open hours.

Amount paid by shareholders or recorded as paid on issued shares.

Controlling company or entity.

On an equal footing, or proportionately. A term frequently used with respect to share issues to indicate that the new shares being issued will rank equally in all respects with previously issued shares either immediately or at some specified time in the near future.

Dividend paid to preference shareholders in addition to the normal preference dividends payable.

Share with a claim to profits ahead of ordinary shares. These shares may also have access to any additional dividends to be paid after ordinary shareholders have received theirs.

Shares which have been issued with only part of their value paid, for example shares may be issued with a par value of $1.00, of which only 50 cents has been paid, with a further 50 cents still owing.

Also known as Contributing Shares.

Dividend paid by a company out of profits on which the company has already paid tax. The shareholder is entitled to an imputation credit, or reduction in the amount of income tax that must be paid, up to the amount of tax already paid by the company. The % figure represents the % of tax already paid by the company. Sometimes the percentage franked is also referred to in company announcements as a franked amount or imputed credit.

Underlying market on which the derivative is based. For example, shares, equity indices, interest rate, physical commodities and currencies.

Allotment of shares, debentures, etc. made directly from the company to investors.

Shares that rank before ordinary shares in the event of liquidation.

Amount payable by the taker of the option to the writer of the option on buying the option.

Current market value of an exchange traded option based on the previous days closing market price and represents the current cost of liquidating the position.

Highest and lowest price at which an instrument traded over the course of a day or week.

Investment fund not available to the general public that often makes concentrated investments directly into companies.

Iissue offered to all holders of securities in a class on a pro rata basis.

An unconditional written promise to pay a specified sum of money on demand or at a specified date.

Trusts that enable investors to purchase an interest in a diversified portfolio of real estate assets. Investors in property trusts gain exposure to the value of the real estate the trust owns, and receive rental income through distributions the trust pays to investors.

Written authorisation given by one person to another so that the second person can act in place of the first person, e.g. attending and voting at shareholders' meetings. The person authorised to act is also known as the proxy.

Option / warrant contract giving the holder the right, but not the obligation, to sell the underlying asset at the exercise price.

Securities in a listed entity are quoted on ASX for trading. Defined in the Listing Rules as Official Quotation.

Trustee of the National Guarantee Fund (NGF).

Allocated by an issuer to identify a holder on an issuer sponsored or certificated subregister.

Person appointed either by a court or by an individual under a power contained in a statute, or an instrument, to investigate the affairs of a company which has run into financial difficulties.

Under the ASX Settlement Operating Rules a trustee company within the meaning of State or Territory Trustee Companies legislation or a Public Trustee of a State or Territory.

An alteration to the issued capital of a company. Includes share splits, consolidations, capital reductions (partial repayments) schemes of arrangement and name changes.

The date used in determining who is entitled to a dividend or other entitlement associated with a security. Those on the register on the record date are eligible for the entitlement. To allow for settlement of trades, ex dividend dates and other ex entitlement dates are usually set four business days prior to the record date.

Shares issued on the terms that they may be redeemed by the company at a later date, either by payment out of profits which would otherwise be available for dividends or out of proceeds of a fresh issue of shares.

Paying off or cancelling of a debt.

Trusts providing exposure to the value and rental income from properties owned by the trust.

Company which controls or is controlled by another company via ownership of subsidiaries.

Issue of rights where the offeree can choose to take up the rights offered, let them lapse, or trade them on the market. See also rights issue.

Income received from an asset that a property trust owns which is then distributed to unit holders.

In relation to Rolling Instalments, the Reset Date is the date upon which the Final Payment for the Loan Amount is reset for the next period.

Defined in the Listing Rules as certain types of securities which during the escrow period restrict the holder from disposing of the restricted securities, creating any security interest in them or doing, or omitting to do, any act which would have the effect of transferring effective ownership or control of the restricted securities.

Earnings from investments over a given period - usually expressed as a percentage per year of the amount invested.

Changing the proportion of the total portfolio which each investment represents.

Privilege granted to shareholders to buy new shares in the same company.

Chance or probability that an investment will result in a loss to an investor. Can also be referred to as the level of volatility returns attached to a particular investment.

Margin for futures and exchange traded options required to cover the likely one or two day probable worst case movement against the position.

Close out one position and at the same time open another over the same underlying asset with a later expiry date.

Type of instalment, having a longer life (up to 10 years) with a periodic reset date (usually yearly).

On the reset date, the issuer may adjust the exercise price (often called the 'Loan Amount' of the Instalment) with the objective of maintaining a desired gearing level.

Statement sent by the Issuer outlining all investor's transactions in that security.

Investable benchmark for the Australian equity market. The S&P/ASX 200 is comprised of the S&P/ASX 100 plus an additional 100 stocks.

Trading on market after the primary issue.

Enter into a futures contract to sell a specified underlying asset at a future date.

All option contracts of the same class having the same expiry date (see expiry, expiry date, expiration) and the same exercise price.

The day in which cash settlement or delivery resulting from expired futures or options contracts is conducted.

The calendar month in which the last day that the contract can be traded falls.

SFE Clearing Corporation Pty Ltd  provides central counterparty clearing (CCP) and settlement services for all futures and options products which are traded on Sydney Futures Exchange.

Company's issued and paid-up capital.

Also known as a Scrip.

A document with an identifying number that states that the person is a registered holder of a number of securities. Replaced by electronic holding statement in January 1999.

Measure of movement in the price of a nominated group of shares.

Organisation which, on behalf of a company, records changes in share ownership, issues share holding statements and makes adjustments for dividend payments, bonus and rights issues.

Part-ownership in a company.

Trader who has sold or who holds a position that will benefit from falling prices.

Where an investor or fund manager borrows a security and subsequently sells the security with an obligation to purchase back the security and return it at a later date.

Defined in the Listing Rules as a statement of transactions in a security holder's account issued by the entity at the request of the holder.

CHESS Securities lodged as collateral to cover call options written over those specific CHESS securities. For example 1,000 BHP shares lodged to cover one written BHP call option.

Share split or stock split involves the increase of the total number of shares outstanding, accompanied by a proportionate decrease in the price of each share.  The aggregate value of the shares on issue remains the same.

Splitting shares into units of lesser value.

Nearest expiry month to the present.

Security where investors are purchasing both a trust and a related company through one security. This structure binds the investment portfolio together with a related business that may include a funds management company and/or property development company.

Short Term Interest Rate.

Equities or shares. Can also be used to describe inventories held by a business.

A market on which securities are bought and sold.

Predetermined sell (buy) order at a price below (above) the current price intended to minimise losses in event of further falls (rises).

See exercise price.

Initial purchasers of the warrants in the primary issue.

Company controlled by another company. The subsidiary company is an entity in its own right and pays its own tax.

Person/company holding more than 5% of a company's voting rights.

Sydney Computerised Market is an automated dealing system used to trade futures and ASX Listed CFDs.

Multi-legged options order traded at a net price.

Acquisition of a controlling interest in a company through the purchase of shares.

Buyer of an option contract.

Method used to identify investment opportunities through the study of price action. A chart representing past price movements is the principle tool used to identify trends on which analysts can base their future predictions.

As defined in the Listing Rules, it includes terms, conditions, rules, regulations or guidelines formulated to introduce or administer an employee incentive scheme.

Smallest allowed movement in price.

Amount by which an option premium exceeds intrinsic value.

Defined in the Listing Rules as an interruption to trading at the request of an entity that is not a suspension from quotation.

Lays down the rules for a Trust, its investment guidelines and how benefits will accrue to beneficiaries and account holders.

Securities that meet the legal requirements of relating to the use of funds by trustees.

Collective fund which holds a portfolio of securities on behalf of the investors who hold units in the trust.

Total amount of capital that as yet has not been called up on the shares which are currently issued.

Asset that the holder of a derivative has the right to buy or sell, or against which a cash payment is made on exercise of an option or warrant. The underlying instrument may be a security (such as shares in a company), a share price index, a commodity or a currency.

Party that agrees, for a fee, to purchase any unsold shares in an issue of shares.

Unit in a trust.

Unit NAV = fund net asset value/number of units on issue in the fund.

A company that is not listed. Securities issued by unlisted companies generally cannot be traded on ASX.

Loan made to a company for a fixed period of time at a fixed rate of interest. They are issued mainly, but not only, by finance companies for between three months and three years. They offer a higher rate of interest than a debenture of the same maturity, but do not have the same security as a debenture.

Call made by the clearing house for additional funds or eligible security to be lodged to cover an unfavourable movement in the price of futures, options or exchange traded CFDs.

Measure of the amount of fluctuation in price.

Volume weighted average price

Six-letter code used to identify and to trade ASX quoted warrants. The first three letters of the code identify the underlying security. For most equity warrants this is the same as the three-letter ASX code of the underlying company shares. The fourth letter of the code identifies the type of warrant, the fifth letter the warrant issuer, the sixth letter is a sequential code.

All warrants with the same terms of issue and underlying asset and having the same warrant issuer, exercise price, expiry date (see expiry, expiry date, expiration) and settlement procedure. Each warrant series has a separate warrant code.

Financial instruments traded on ASX. Broadly split into products with investment purposes and those for trading purposes; warrants may be issued over securities (such as shares), a basket of securities, a share price index, currencies or commodities.

Consolidation of investments under one administrative umbrella. Investments are wrapped into one single account.

Seller of an option contract.

Trading condition code.  See crossed trade.

Return on an investment expressed as a percentage.