Brief dictionary of terms and definitions
AMERICAN DEPOSITORY SESSION (ADR) – A special negotiable certificate issued by a US depositary bank that certifies the ownership of a certain number of shares issued in a foreign country and quoted on the US stock exchange. The American Depository Receipt is a receipt certifying the ownership of the shares of a foreign resident company acquired in the process of their placement in the United States.
Assets (ASSETS) – Material resources, cash and securities of the company. The company’s reputation also applies to assets. Accounts receivable (debt obligations of outside organizations) of the company are also part of its assets.
SHARE – A security that indicates the contribution of a certain share in the capital of the joint-stock company. The action assigns to its owner the following rights: to participate in the management of the joint-stock company, to receive part of the dividends, to the share of the property when the joint-stock company is liquidated.
JOINT STOCK COMPANY (JSC) – A company whose authorized capital is divided into a certain number of shares; the shareholders of the joint-stock company (shareholders) are not liable for its obligations, but bear the risk of losses related to the company’s activities within the package of shares owned by them.
SHARE ANALYSIS – The process of collecting and processing information to determine the value of one ordinary share. The analysis of shares is conditionally divided into fundamental and technical.
Underwriter – Investment banker is an intermediary between the issuer and investors when issuing shares of the company. In fact, the underwriter purchases securities from the issuer and resells them to investors.
ARBITRATION – Simultaneous (with a small time gap) purchase and sale of one financial instrument (or several similar instruments) on different trading floors in order to obtain “instantaneous” profit from the price difference with minimal risk. For example, an investor can conduct arbitrage transactions on the difference in quotes for the same issuer between the MICEX and RTS exchanges – this is an inter-stock arbitration.
ATTESTED SPECIALISTS – One of the mandatory conditions for carrying out the activities of NetTrader.ru is the availability in its staff of the required number of qualified professionals with sufficient experience in the financial market. Employees pass specialized certification examinations in the FSFM of Russia and receive certificates.
BARREL – The unit of capacity and volume in the system of British measures in the United States and Great Britain. In international business practice, it is most common as a measure of the volume of oil. The American oil barrel is 158.988 dm3.
NON-CODE SECURITIES – The form of equity securities, in which the owner is established on the basis of an entry in the system of keeping the register of securities owners or, in the case of the deposit of securities, on the basis of a record on the depo account.
EXCHANGE – Organizationally designed and regularly functioning market. Securities are traded by the stock exchange; goods by standards and samples – commodity exchange. The main Russian stock exchange is the Moscow Interbank Currency Exchange (MICEX). The second most important trading platform in Russia is the Russian Trading System (RTS) – it mainly deals with large blocks of shares, as well as with shares of mid-cap companies that are not traded on the MICEX.
EXCHANGE DEAL – A stock exchange transaction registered with an exchange made during the exchange session by its participants in accordance with the rules of exchange trade.
EXCHANGE TRADES – A set of actions of participants of exchange trade (buyers and sellers), aimed at making exchange transactions.
BROKER – A professional participant in the stock market engaged in brokerage, an official intermediary between the buyer and the seller when performing transactions with financial instruments. The broker carries out transactions on his own behalf, but at the expense and on behalf of the client.
BROKERAGE ACTIVITY – Commitment of civil law transactions with securities as an agent or commission agent acting on the basis of an agreement of commission or commission, as well as a power of attorney to perform such transactions in the absence of instructions to the powers of an attorney or commission agent in the contract.
Market participants buying securities in the expectation of an increase in their value.
GDP (GROSS DOMESTIC PRODUCT) – The real market value of goods and services produced in a country for a certain period of time (usually a year), including income received by foreign companies and non-resident citizens. In this case, as a rule, income of citizens-residents and firms working abroad is not taken into account.
EXTRAORDINARY MARKET – The market where an over-the-counter turnover of an exchange commodity occurs and where the formation of the purchase-sale price of property occurs outside the exchange.
VOLATILITY – Fluctuations in the rate (price) of a certain financial instrument (shares, bonds) for the selected period of time. The higher the volatility, the more the share prices change over a period of time.
SECOND ECHELON – Shares of Russian companies that have limited liquidity and low daily trading volumes. In the “second tier” stocks, the difference between the purchase and sale price is between 2.5 and 15%, but they may be of interest, for example, for strategic investors and private equity funds.
“BLUE FISHES” – Ordinary shares of the most famous and large companies of the country, which have proved themselves to be high business figures in the past, actively circulating on the open market. As a rule, the “blue chips” of the Russian stock market include shares of the following companies: Sberbank of Russia, Gazprom, LUKOIL, Rostelecom, Tatneft, Surgutneftegaz, Transneft, AvtoVAZ, Norilsk Nickel, Ural-Svyazinform, Mosenergo.
STATE DEBT – The aggregate debt of the state on its own credit operations, whether through direct lending or by placing bonded loans.
GOVERNMENT SECURITIES – Securities issued on behalf of the Russian Federation. These include debt securities traded on both the domestic and the external stock market.
DEPOSITORY – Professional market participant, performing depository activities. The depositary makes storage and accounting of securities, as well as registers the transfer of ownership of securities.
DEPONENT – A person who uses the services of a depository to store securities and (or) record the rights to securities.
DIVIDENDS – Part of the profit of the joint-stock company, subject to distribution among shareholders. It is announced by the company’s manager and approved by the shareholders’ meeting.
Dealer – Professional participant of the stock market, engaged in dealer activities. A dealer can only be a legal entity that is a commercial organization. Deals are carried out by the dealer on his own behalf and at his own expense.
DEALER ACTIVITY – Transactions in the purchase and sale of securities on their behalf and at their own expense by publicly announcing the purchase and (or) sale prices of certain securities with the obligation to purchase and (or) sell these securities at prices announced by the person who carries out such activities .
DISCOUNT – The difference, for example, between the price of a security issue and its actual market value, or between cash and futures exchange rates, or the difference between the offering and redemption price.
DCC – Depository Clearing Company – Settlement Depository of Exchanges (RTS).
TRUST MANAGEMENT – Management of the property (shares, funds) of the company’s clients in the interests of these clients. Transfer of property in trust does not entail the transfer of ownership of it to the trustee.
YEAR INCOME – The ratio of the profit attributable to one ordinary share to its market value.
Yield of the share depends on:
• the rate of growth in the share price
• the amount of dividends paid
• the amount of taxes from the profit
• the inflation rate and the growth of bank interest
EUROBONDS – One of the types of securities is debt (bonds) issued by a borrower (country, company or bank) to obtain a long-term loan on the European stock market, nominated in one of the national currencies of Europe or in euros.
DEBTOR’S DEBT – The amount of debts owed to the enterprise from counterparties.
DEBT CREDITOR – Cash funds temporarily borrowed by the enterprise and subject to return to creditors.
INVESTMENT PORTFOLIO – A collection of securities of different types, different validity periods and different liquidity, managed as a whole. In fact, an investment portfolio is a strategic investment plan for an investor whose goal is to generate profits and protect money from inflation.
INVESTOR – A person acquiring investment property (shares, bonds). The investor places money, for example, in securities for a certain period in order to make a profit. Such an activity is called investment.
DOW JONES INDUSTRIAL INDEX – Average rate of shares of the group of the largest US companies. The index is published by Dow Jones & Company and is the arithmetic average of the daily quotes at the close of the exchange. There are Dow Jones indices for shares in communal, industrial and transport companies.
INTERNET TRADING Transactions with securities through the Internet.
INFLATION – depreciation of the monetary unit and price growth due to excess money supply in the country in the absence of an adequate increase in marketable output.
CLEARING – The system of offsetting mutual claims and obligations of participants of exchange trade on exchange transactions
CLEARING CENTER – A clearing organization that performs mutual settlements for transactions made by clearing participants through a trade organizer licensed by the FSFM.
CONTROL PACKAGE OF SHARES – The minimum share of shares that enables their owners to exercise actual control over the activities of the joint-stock company, block the adoption of undesirable decisions. Theoretically, a controlling interest is at least half of all voting shares. With a broad distribution of shares among investors, a controlling stake is 20%.
QUOTE – The numerical value of the price, rate, interest rate for a particular financial instrument, declared by the seller or buyer.
RATE OF THE ACTION – The price at which the share is sold on the market. The share price of a particular company is directly dependent on the dividend received on them or on the prospects for obtaining it.
LIQUIDITY OF SECURITIES – The speed with which securities are sold on the market at real market prices. If the security is liquid, then it makes it possible to sell it quickly without a significant fluctuation in the market price.
LISTING – A standardized list of exchange commodities (securities) traded on the exchange.
BEARERS – Market participants who sell securities in the expectation of a drop in their value.
MICEX – Moscow Interbank Currency Exchange – the leading exchange of Russia for trading in securities (shares, bonds) and currency.
NDC – National Depository Center Settlement Depository of Exchanges (MICEX).
NON-DISPERSED SHARES – Shares not included in the exchange list.
BOND – an issue security that fixes the right of its holder to receive from the issuer bonds at the announced date of its nominal value and fixed in it a percentage of this value or other property equivalent. The bond may provide for other proprietary rights of its holder, if it does not contradict the legislation of the Russian Federation.
GENERAL ACCESSIBLE INFORMATION IN THE SECURITIES MARKET – Information that does not require privileges for access to it or is subject to disclosure in accordance with federal law.
ORDINARY SHARE – A share in which dividends are paid out of the part of the profit remaining after payment of interest to holders of preferred shares. Holders of ordinary shares have the right to vote at the general meeting of shareholders. Dividends on ordinary shares are not guaranteed.
Providing companies with their employees with the right to purchase shares at a predetermined fixed price.
2. Conditions that are included in exchange transactions for a period by which one of the parties is given the right to choose between certain mutually exclusive terms of the transaction or changes in its initial conditions.
LIABILITIES – All material claims to the company: accounts payable, dividends declared for payment, salaries, tax arrears, various kinds of obligations and bank loans.
INITIAL PUBLIC EMISSION – The first public offering of shares of the company. Typically, securities offered at the initial public issue are shares of young companies that raise equity. Investors buying such shares should be prepared to take a big risk for the opportunity to get a big profit.
FIRST ECHELON (“BLUE FISHES”) – These are shares of companies with capitalization and revenues of more than $ 2.5 billion. The difference between buying and selling quotes is less than 2.5%. Companies, whose shares are “blue chips”, publish reports on international standards, have independent directors in the management and open relationships with investors.
PRIVATIZATION OF THE CORPORATE PERSONALITY – Property that is in state or municipal ownership can be transferred by its owner to the ownership of citizens and legal entities in the manner prescribed by the laws on privatization of state and municipal property.
PRIVILEGED SHARE – A share that does not give a vote, unless otherwise provided by the charter of the joint-stock company. Dividends on preference shares are paid after payments on bonds and before payments on ordinary shares. Usually, on a preferred stock, the owner is guaranteed a fixed amount of dividend (as a percentage of the nominal value of the share).
ORDERS – All the main types of orders (orders) executed by the company are similar to the basic types of orders that are applied in Western markets.
The main types of common orders on exchanges, where orders are executed electronically:
stop order – this order is executed by the market, when the transactions are held at the price at which the order was issued. For this order, entry and exit to the market can be made. The outputs are usually called “stop-loss” – this is a stop-loss order, and “take-profit” is a stop-order that fixes profits.
market order – means an order to buy or sell on the market, that is, at any price that is at the moment. The advantages of this order are manifested in highly liquid markets, where it is executed almost instantly, differing little from transactions in the previous moment. Use such an order when the speed of the order is more important than the price at which it will pass. Usually on the phone this sounds like an indication: “Buy (sell) the market.”
Limit order (limit order) – indicate the price at which you are willing to make a deal. In the case of a purchase, this is the maximum price at which you are ready to buy, and it should be below the market price. In the case of a sale, this is the minimum price at which you are willing to sell, and it should be higher than the current market price.
GAS DISCREASE – Occurs when the closing price of the previous day is higher than the opening price of the current day or vice versa. Usually the presence of a significant gap is a signal of the reverse movement of market prices due to the fact that there is either an excessive supply or excessive demand. Based on the practice of trading, the gap formed in the stock quotes at the opening of trading, should be closed sooner or later.
CURRENCY CHAMBER (EXCHANGE SETTLEMENT CHAMBER) – A branch of the exchange, a simple partnership or a legal entity performing transaction registration, clearing, securing payments under its results, settlement functions for futures transactions in the interests of all participants of the exchange trade.
REINVESTIZATION – Funds received in the form of income from investments and again directed to invest in the same facilities.
RTS – The Russian Trading System is one of the leading Russian stock and futures exchanges.
MARKET PRICE OF THE ACTION – The last price at which shares were sold. Depends on: the value of the profit of the joint-stock company received for the year, the amount of dividends payable on the stock, stock speculation, supply and demand in the stock market, profitability, liquidity and riskiness of the share, the financial position of the joint-stock company, business activity in the industry and in the country, e.
SPECULATION – Trading in securities for profit on the difference in their rates between the price of buying and selling.
INSURANCE PROTECTION – All NetTrader.ru customer funds are protected by the policy of comprehensive property insurance of Ingosstrakh OJSIC from the risks associated with the trading in securities online.
URGENT INSTRUMENT – Common name for futures, forward and option contracts for derivative securities.
TRADING SYSTEM NETTRADER.RU – The trading system created by company NetTrader.ru. The program has a simple and intuitive web-interface, and when you use it you do not need to install additional programs for making transactions on the exchange.
TRADE SYSTEM QUIK – Multifunctional information and trading platform, created by the company “SMVB-IT”. QUIK is one of the leaders among the systems of Internet trading in Russia. We offer our customers an installation version of the program. This means that transactions can be made only on the computer on which QUIK is installed.
TICKER – A stock symbol, an abbreviation used to refer to the shares of a particular company.
TREND – This is the average trend of raising or lowering the value of securities. In the event of an increase in value, an upward (“bullish”) trend is observed, and in the event of a decline, a downward (“bearish”) trend is observed.
SUPPORT LEVEL – Means that at a certain price, buyers feel that these securities deserve more attention, demand increases and the price ceases to fall below a certain price level. That is, at this level, the price is supported by buyers.
RESISTANCE LEVEL- This is the point of prevalence of sellers, when the supply begins to exceed demand and the price after reaching a certain price level ceases to increase.
PARTICIPANTS OF EXCHANGE TRADES – Accredited members of the exchange (section of the exchange) and their clients.
FORWARD TRANSACTION – A contract with a real delivery, when the two parties agreed on the exchange of assets that must be delivered by the seller to the buyer on a certain date in the future.
FORWARD MARKET – Currency or commodity market, where contracts are concluded on the terms of supply of currency or goods in the future.
FUTURE CONTRACT – Exchange contract for the purchase or sale of goods (financial asset) with delivery for a future date. The futures contract provides for a strictly defined quantity of goods of the established type with the minimum permissible deviations, supplied under certain terms for payment of invoices or transportation costs.
SIGNALS SYSTEM WITH MUTI TIME FRAME DASHBOARD
HEDGING – Insurance against the risk of price changes by taking the opposite position in the parallel market. Hedging allows you to hedge against possible losses at the time of liquidation of a futures deal, and also reduces the risks of the parties: losses from changes in commodity prices are compensated by the gain in futures.
SECURITIES – A document certifying, in compliance with the established form and mandatory requisites, property rights, the exercise or transfer of which is possible only upon presentation.
EMISSION – Legally established sequence of the issuer’s actions to issue equity securities for further placement among potential investors with a view to financing investment costs.
ISSUER – An organization that has issued securities to finance its operations and development. An issuer is a legal entity that carries on its behalf obligations to the owners of securities to exercise the rights secured by these securities.