Legal Articles

RISKADJUSTED CAPITAL

The calibration of a firms financial andor operating risk and its economic capital to determine its ability to withstand unexpected losses. Refer to regulator capital and risk adjusted return on capital.

Comments are closed

SAFE HARBOR RULE

A securities eschange rule governing the repurchase of treasury stock providing protection from liability when the firm acts in good faith in how and when the purchase is made and how much stock is purchased at a given price.

Comments are closed

SECONDARY RESERVES

Very liquid funds in excess of those required to be held as an emergency buffer.

Comments are closed

SELLINGAWAY

When brokers sell products from another firm illegaly. The client will not have any recourse against the originating company.

Comments are closed

SHIBOSAI

A foreign company using the yen to make a transaction in Japan. Refer to daimyo, geisha, samurai, and shogun.

Comments are closed

SIGHT DRAFT

A bill that must be paid to the hold when presented.

Comments are closed

SOFT MARKET

When excess risk capacity lowers premiums. This causes an expansion of business due to a more affordable premium rate. The extra capital is used to cover the new risk. Refer to hard market.

Comments are closed

SPOT MARKET

The value of an asset at the present time in the market. AKA cash market. Refer to forward market.

Comments are closed

STAMP DUTY

An extra charge placed on certain legal documents by purchasing a stamp to be placed on said document.

Comments are closed

STOP LIMIT ORDER

The buying or selling of securities once it reaches the stop level as opposed to the traditional stop order when securities are bought or sold at the market price.

Comments are closed

STRUCTURAL MODEL

A model that exhibits the boundary level that would cause a default considering the value of a companies assets liabilities and capital. Refer to intensity model.

Comments are closed

SUPERVISORY BOARD

When an internal committee nominates a board to decide how a management board behaves. It is the first part of the dual board system.

Comments are closed

SYNTHETIC LENDING FACILITY

A forward agreement to buy undrawn loans or credit agreements. The investor gets a commitment fee. AKA synthetic credit facility.

Comments are closed

TARGETED AMORTIZATION CLASS (TAC) BOND

A mortgage tranche with low risk repayment and price. This is accomplished by using a companion bond. Refer to sequential pay bond.

Comments are closed

TERMINAL EXPECTED RISK EXPOSURE

Expected exposure of a derivative based on an underlying market reference. Refer to average expected, average worstcase, and terminal worstcase exposures.

Comments are closed

TIME DECAY

Daily change effecting the time value of a premium.

Comments are closed

TOXIC WASTE

A financial move that is considered very risky. It is hard to sell to investors.

Comments are closed

TREASURY STOCK

Stock that is repurchased by a company to prevent it from becoming outstanding. This is done through a contra account. The company will not be charges with repurchase manipulation. AKA reacquired stock.

Comments are closed

TWOTIER BID

When a take over happens because stockholders are offered a great price for a first cut off date. The remaining holders get a less attractive deal. Refer to anyandall bid and fair price provision.

Comments are closed

UNDERWRITING RISK

The risk incurred if securities dont sell. Any shortfall must be covered by the underwriter. Or the risk that loss will be greater than insurance can cover.

Comments are closed