Zero Coupon Bond

A bond that pays no interest. The bond is initially offered at a discount to its redemption value.

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World Bank

A bank made up of members of the IMF whose aim is to assist in the development of member states by making loans where private capital is not available.

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Working Day

A day on which the banks in a currency's principal financial centre are open for business. For FX transactions, a working day only occurs if the bank in both (all relevant currency centers in the case of a cross are open) currencies is working.

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Working Balance

Discretionary element in the monetary reserves of a central bank.

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Wholesale Price Index

It measures changes in prices in the manufacturing and distribution sector of the economy and tends to lead the consumer price index by 60 to 90 days. The index is often quoted separately for food and industrial products.

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Vertical (Bear or Bull) Spread

The sale of an option with a high exercise price and the purchase (in the case of a bull) or the sale (in the case of a bear) of an option with a lower exercise price. Both options will have the same expiration date.

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Vega

Expresses the price change of an option for a one per cent change in the implied volatility.

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Variation Margin

Profits or losses on open positions in futures and options contracts which are paid or collected daily.

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Vanilla

A simple option whose terms and conditions do not include any provisions other than exercise style, expiry and strike. To compare with exotic options which have additional terms.

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Value Today

Transaction executed for same day settlement; sometimes also referred to as "cash transaction"

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Value Spot

Normally settlement for two working days from today. See Value Date.

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Value Date

For exchange contracts it is the day on which the two contracting parties exchange the currencies which are being bought or sold. For complete description see the chapter on trading. For a spot transaction it is two business banking days forward in the country of the bank providing quotations which determine the spot value date. The only exception to this general rule is the spot day in the quoting centre coinciding with a banking holiday in the country(ies) of the foreign currency(ies). The value date then moves forward a day. The enquirer is the party who must make sure that his spot day coincides with the one applied by the respondent. The forward months maturity must fall on the corresponding date in the relevant calendar month. If the one month date falls on a non-banking day in one of the centers then the operative date would be the next business day that is common. The adjustment of the maturity for a particular month does not effect the other maturities that will continue to fall on the original corresponding date if they meet the open day requirement. If the last spot date falls on the last business day of a month, the forward dates will match this date by also falling due on the last business day. Also referred to as Maturity Date.

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Valeur Compensee

Payments are said to be " valeur compensee" when payment by one party in one centre and settlement by the other party in another centre takes place on the same day..

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Unit of Account

A device designed to provide a consistent value with varying currencies. e.g. ECU and SDR.

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Undo

A colloquial term for reversing a transaction. e.g. a spot sale by means of a forward purchase or if done in error, a spot purchase.

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Under-Valuation

An exchange rate is normally considered to be undervalued when it is below its purchasing power parity.

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Under Reference (Order)

Before finalizing a transaction all the details should be submitted for approval to the order giver, who has the right to turn down the proposal.

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Uncovered

Another term for an open position.

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Ultimo

Continental term for month or year end.

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Two-Way Quotation

When a dealer quotes both buying and selling rates for foreign exchange transactions.

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Turnover

The total money value of currency contracts traded is calculated by multiplying size by the number of contracts traded.

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Troc, Troquer

French FX term for swap.

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Treasury Stock

Previously issued stock that has been repurchased by, or donated to, or otherwise are acquired by the issuing firm. Treasury stocks pay no dividends and have no voting privileges.

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Treasury Notes

Government obligations with maturities more than one year but less than ten years.

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Treasury Bonds

Government obligations with maturities of ten years or more.

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Treasury Bills

Short-term obligations of a Government issued for periods of one year or less. Treasury bills do not carry a rate of interest and are issued at a discount on the par value. Treasury bills are repaid at par on the due date. In the UK they are normally for 91 days, and are offered at weekly tenders. In the US they are auctioned.

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Translation Loss/Profit

The calculation of loss or profit resulting from the valuation of foreign assets and liabilities for balance sheet purposes, when consolidating into the base currency.

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Transaction

The buying or selling of securities resulting from the execution of an order.

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Transaction Date

The date on which a trade occurs.

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Trade Ticket

See Deal Ticket.

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Tradeable Amount

Smallest transaction size acceptable.

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Trade Deficit/Surplus

The difference between the value of imports and exports. Often only reported in visible trade terms.

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Trade Date

The date on which a trade occurs.

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Trade Balance

The Trade Balance is a measure of the difference between imports and exports of tangible good and services. The level of the trade balance and changes in exports and imports are widely followed by foreign exchange markets.

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Tomorrow Next (Tom Next)

Simultaneous buying of a currency for delivery the following day and selling for the spot day or vice versa.

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Today/Tomorrow

Simultaneous buying of a currency for delivery the following day and selling for the spot day, or vice versa. Also referred to as overnight.

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Time Value

That part of an option premium which reflects the length of time remaining in the option prior to expiration. The longer the time remaining until expiration, the higher the time value.

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Ticket

See Deal Slip

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Tick

A minimum change in price, up or down.

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Thin Market

A market in which trading volume is low and in which consequently bid and ask quotes are wide and the liquidity of the instrument traded is low.

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Theta

A measure of the sensitivity of the price of an option to a change in its time to expiry.

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Terme

French for period.

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Tender

(1) A formal offer to supply or purchase goods or services.
(2) In the UK the term for the weekly Treasury Bill issue.

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Technical Correction

An adjustment to price not based on market sentiment but technical factors such as volume and charting.

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Tau

Expresses the price change of an option for a percentage change in the implied volatility.

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