Borrowed funds used to trade financial instruments. Traders deposit a percentage (initial margin), and brokers lend the rest.
Risk: Amplifies both gains and losses. Margin calls may occur if equity drops.
A brokerage account that allows traders to borrow money or securities to increase trade size.
Requires: Margin agreement, ongoing maintenance margin.
A broker's demand for additional funds or securities when the account value falls below the maintenance margin.
Consequence: If unmet, the broker can liquidate positions to cover losses.
Broad term covering insider trading, manipulation, and spreading false information to distort market prices.
Heavily regulated under EU’s Market Abuse Regulation (MAR) and U.S. SEC laws.
The total market value of a company's outstanding shares.
Formula: Market Cap = Share Price × Number of Shares
Types:
Quote and trade-related information associated with equities, fixed income, options, futures, currency and other asset types. You subscribe to market data in Client Portal. As a service to our clients, we provide real-time streaming market data for free or at the price we are charged by an exchange.
A situation where market prices deviate significantly from fundamentals due to panic, speculation, or manipulation.
The idea that market prices fully reflect all available information.
Forms:
Occurs when trading is spread across multiple venues (exchanges, dark pools), making it harder to access all available liquidity at once.
A condition in which markets operate transparently and fairly, maintaining investor confidence.
Key principles: No manipulation, fair access, transparent pricing.
A firm or individual that quotes both buy and sell prices and stands ready to execute trades.
Role: Provides liquidity and stabilizes markets.
Example: Citadel Securities, Virtu Financial.
Market manipulation occurs when participants deliberately attempt to distort prices for strategic reasons, such as influencing public perception or outcomes tied to the prediction market. Though manipulation can temporarily affect prices, well-designed markets with high liquidity typically resist long-term manipulation due to opposing trades from informed participants.
An entity responsible for managing and maintaining the infrastructure of a trading venue (e.g. Euronext, Deutsche Börse).
An order to buy or sell a security immediately at the best available price.
Fast execution, less control over price.
Market price generally refers to the last reported sale price of a security and is often used interchangeably with "market value".
The risk of losses due to overall market movements (interest rates, economic downturns, geopolitical events). Cannot be diversified away.
The date on which the principal amount of a bond, note or other debt instrument is typically repaid to the investor along with the final interest payment.
U.S. Micro-Caps generally have a market capitalization of less than $250 million or $300 million. They can be quoted on the OTC Bulletin Board (OTCBB) and the OTC Markets Group (e.g., OTCQX, OTCQB & Pink) or on public exchanges. IBKR defines U.S. Micro-Cap as shares (1) traded over the counter or (2) that are listed on Nasdaq and NYSE American that have a market capitalization of between $50 million to $300 million and are trading at or below $5. To avoid situations where minor, short-term fluctuations in a stock price cause repeated reclassification, any stock classified as U.S. Microcap will remain in that classification until both its market capitalization and share price exceed $300 million and $5, respectively, for a 30 consecutive calendar day period.
Multi-leg strategies involve two or more options, such as:
A European regulatory term for a trading venue operated by an investment firm or market operator that brings together third-party buyers and sellers of financial instruments.
Examples: Turquoise (LSE), Chi-X Europe.
Key Features:
A professionally managed investment fund that pools money from many investors to buy securities like stocks and bonds.
Key Point: Investors own shares of the fund, not the underlying securities.