A - Z Trading Terms

# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

An international standard code used to identify bank accounts from around the world. IBAN (International Bank Account Number) numbers contain a two-character country code followed by two digits followed by an account number.

An order in which you submit the order (generally a large volume order) while publicly disclosing only a portion of the submitted order at a time. An Iceberg/Reserve order is an order whose Display Size is set to the desired visible portion of the order.

When someone with insider information shares it improperly, giving others an unfair advantage in the market.

A non-binding statement from a potential buyer or seller indicating a willingness to trade a specific security at a certain price. Common in IPOs and block trades.
Note: IOIs help gauge market demand before formal orders are placed.

When an investor places a trade through a broker or financial advisor, rather than executing it directly.

A benefit (like commissions or fees) given to financial advisors or intermediaries to promote certain products. Heavily regulated in the EU to avoid bias.

Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is a crucial factor to consider in investing, as it affects the real return on investments. For instance, if an investment yields a 5% return but inflation is 3%, the real return is only 2%. To hedge against inflation, investors often turn to assets like stocks, real estate, or commodities, which historically outpace inflation.

The minimum amount of capital that a trader must deposit to open a leveraged position. Set by brokers and regulated by law.
Example: To open a $100,000 position with 10:1 leverage, a trader must provide $10,000 in initial margin.

An event where the company issues securities for the first time.

The first time a company offers its shares to the public via a stock exchange.
Purpose: To raise capital, increase visibility, and provide liquidity for early investors.

Material, non-public information that could influence a company’s stock price.
Example: Knowing about a pending merger or earnings surprise before it's announced.

The illegal act of trading based on material, non-public information.
Example: A company executive sells stock knowing the company is about to report a loss.

The illegal act of trading based on inside information.
Legal vs. Illegal: Legal insider trading occurs when corporate insiders buy/sell shares and report it to regulators. Illegal insider trading involves acting on confidential info without disclosure.

A broker who facilitates trades between major financial institutions (like banks), especially in fixed income and derivatives markets.
Role: Maintains anonymity, improves liquidity.

The risk that the price of a bond will fall when interest rates rise.

A derivative contract in which two parties exchange interest payments - one fixed, one floating - based on a notional principal.
Used for: Hedging interest rate risk.

A person or firm that facilitates a transaction between two other parties.
In trading: Often refers to brokers, dealers, or market makers.

A prohibited practice where a broker unnecessarily adds a third party to a transaction to earn extra commission.

A financial institution that assists companies in raising capital, underwriting securities, and managing mergers and acquisitions.
Examples: Goldman Sachs, JPMorgan, Morgan Stanley.

A bond with a relatively low risk of default, rated BBB- (S&P) or Baa3 (Moody’s) or higher.

Activities regulated under financial law such as portfolio management, trade execution, underwriting, and advisory services.

Brokers or financial institutions that distribute IPO shares to investors on behalf of the IPO manager.

A financial firm responsible for managing the issuance of shares during an IPO. Works closely with the issuer to coordinate pricing, timing, and marketing.

The International Securities Identification Number, or ISIN, is a unique 12 character alpha-numeric international code which identifies a specific security (e.g., stock, bond, warrant). While the ISIN is intended to identify the security for the purposes of trading, clearance and settlement, it does not designate the particular exchange which a security trades and, in fact, a like security trading on multiple exchanges and denominated in different currencies will have the same ISIN on each. The ISIN consists of three parts; a two letter country code, a nine character National Security Identifying Number (NSIN) and a single check digit. Take for instance Apple, Inc. (trading symbol AAPL) which has the following ISIN: US0378331005. The first two characters (US) represent the country in which this issuer is domiciled. The next nine (037833100) represent the NSIN which, as this is a US issuer, is a CUSIP. The final character (5) is the check digit used for error detection.

The original price of a bond at the time of sale.