Cable
Dealers' slang for the UK sterling/US dollar exchange rate.
Call
An option that gives the buyer the right to long a position in the underlying contract at a specific price; the call writer (seller) may be assigned a short position in the underlying contract if the buyer exercises his call.
Call Rate
The overnight interest rate.
Capital Risk
The risk arising from a bank having to pay to the counter party with out knowing whether the other party will or is able to meet its side of the bargain. see Herstatt.
Carry
The interest cost of financing securities or other financial instruments held.
Cash Delivery
Same day settlement.
Cash Market
The market for the purchase and sale of physical currencies.
Cash
Normally refers to an exchange transaction contracted for settlement on the day the deal is struck. This term is mainly used in the North American markets and those countries which rely for foreign exchange services on these markets because of time zone preference i.e. Latin America. In Europe and Asia, cash transactions are often referred to as value same day deals.
Cash and Carry
The buying of an asset today and selling a future contract on the asset. A reverse cash and carry is possible by selling an asset and buying a future.
Cash Settlement
A procedure for settling futures contract where the cash difference between the future and the market price is paid instead of physical delivery.
Central Bank
A nations main regulatory bank. Traditionally, its primary responsibility is development and implementation of monetary policy.
Central Rate
Exchange rates against the ECU adopted for each currency within the EMS.Currencies have limited movement from the central rate according to the relevant band.
Chartist
An individual who studies graphs and charts of historic data to find trends and predict trend reversals which include the observance of certain patterns and characteristics of the charts to derive resistance levels, head and shoulders patterns, and double bottom or double top patterns which are thought to indicate trend reversals.
Clean Float
An exchange rate that is not materially effected by official intervention.
Closed Position
A transaction which leaves the trade with a zero net commitment to the market with respect to a particular currency.
Commission
The fee that a broker may charge clients for dealing on their behalf.
Confirmation
A memorandum to the other party describing all the relevant details of the transaction.
Contract
An agreement to buy or sell a specified amount of a particular currency or option for a specified month in the future (See Futures contract).
Conversion Account
A general ledger account representing the uncovered position in a particular currency. Such accounts are referred to as Position Accounts.
Conversion
The process by which an asset or liability denominated in one currency is exchanged for an asset or liability denominated in another currency.
Conversion Arbitrage
A transaction where the asset is purchased and buys a put option and sells a call option on the asset purchased, each option having the same exercise price and expiry.
Convertible Currency
Currency which can be exchanged for other currencies or gold without authorization from the central bank.
Copey
Slang for the Danish krone.
Correspondent Bank
The foreign banks representative who regularly performs services for a bank which has no branch in the relevant centre, e.g. to facilitate the transfer of funds. In the US this often occurs domestically due to inter state banking restrictions.
Counterparties
The parties on either side of a transaction.
Countervalue
Where a person buys a currency against the dollar it is the dollar value of the transaction.
Country Risk
The risk attached to a borrower by virtue of its location in a particular country. This involves examination of economic, political and geographical factors. Various organizations generate country risk tables.
Cover
(1) To take out a forward foreign exchange contract. (2) To close out a short position by buying currency or securities which have been sold.
Covered Arbitrage
Arbitrage between financial instruments denominated in different currencies, using forward cover to eliminate exchange risk.
Covered Margin
The interest rate margin between two instruments denominated in different currencies after taking account of the cost of forward cover.
Crawling Peg
A method of exchange rate adjustment; the rate is fixed/ pegged, but adjusted at certain intervals in line with certain economic or market indicators.
Credit Risk
Risk of loss that may arise on outstanding contracts should a counter party default on its obligations.
Cross Deal
A foreign exchange deal entered into involving two currencies, neither of which is the base currency.
Cross Rate
Exchange rate that does not involve the US dollar.
Currency Clause
A clause in an export contract in which the sum payable is denominated in the buyer's currency; but the amount payable will vary with the exchange rate for the buyer's currency against the seller's currency.
Current Account
The net balance of a country's international payment arising from exports and imports together with unilateral transfers such as aid and migrant remittances. It excludes capital flows. |
