Face Value	The value of a bond, note, mortgage or other security that appears the face of the issue, unless the value is otherwise specified by the issuing company. Face value is ordinarily the amount the issuing company promises to pay at maturity. Face value is also referred to as Par Value or Nominal Value.
Factfind	The questionnaire created by most financial advisers and sellers of insurance products or packaged products to find out the details about a prospective client. Information from it provides the basis for structuring suitable advice.
Factoring	A process whereby one company takes over the responsibility of debt collection from another.
Failed Trade	Any securities transaction that does not settle on contractual settlement date because one of the settlement parties does not meet the settlement conditions. A failed trade may have negative consequences for the party at fault, including buy-ins, sell-outs and penalties. See Buying-in and Selling-out.
Fair Value	A mathematically calculated value for an option or future that accommodates a trader’s parameters for interest rates, dividends etc. Different tax regimes or interest rate environments may give rise to different fair values for different investors in the same instrument.
False Market	See Misleading Statement.
Family Income Benefit (FIB)	Term assurance which pays money to the life assured’s dependants for a set period, rather than paying a lump sum.
FAS	Free Alongside. Used in the freight market. The price includes delivery alongside the vessel in a specified port, but the freight and insurance cost are for the buyer’s account.
Fast Market	If markets are hectic and turbulent so that prices are rapidly changing, prices quoted on electronic trading systems may not be up to date.
Federal Reserve System	The central banking system of the USA. It comprises a number of regional supervised by the Federal Reserve Board banks which regulates banking activities.
Feeder Fund	A relevant pension scheme dedicated to a single regulated collective investment scheme or to a single eligible investment trust.
Federal Reserve Book Entry System	CSD for US government securities.
Fed Repo	Repo trade between the US Federal Reserve and US Treasury primary dealers in order to supply liquidity to the market.
Fiduciary	An individual, corporation or association holding assets for another party, often with the legal authority and duty to make decisions regarding financial matters on behalf of the other party.
Figure	When the last two digits in a foreign exchange price are zero.
Fill or Kill order	Type of order input into SETS or the options market. It is either completed in full against displayed orders or rejected in full.
FIMBRA	Former SRO responsible for regulating members which comprise mainly Independent Financial Advisers (IFAs). See also PersonalInvestment Authority.
Final Dividend	The dividend paid by a company as the final payment for a particular financial year.
Financial Gearing	Measured either by Gearing Ratio or by Interest Cover. See Gearing.
Final Remuneration	The maximum earnings that can be used for the purpose of calculating maximum approvable pension benefits. It may include the value ofbenefits-in-kind as well as salary.
Final Salary Scheme	Pension scheme where the benefit is based on the member’s pensionable earnings for a period ending at or before normal retirement date or leaving service.
Final Settlement	The completion of a transaction when the delivery of all components of a trade is performed.
Financial Futures/Options Contracts	Financial futures is a term used to describe futures contracts based on financial instruments like currencies, debt instruments and financial indices. An agreement to buy or sell a fixed quantity of a specifiedinterest rate or currency product for delivery at a fixed date in the future at a fixed price.
Financial Instruments	See Instrument.
Financial Measurement	The calculation of a sterling or dollar figure that represents the amount of risk exposure.
Financial Ombudsman Service	Facility established to hear complaints by customers and make awards where appropriate. Can award a maximum of £100,000.
Financial Promotion	Generic name given to all types of promotion of financial activities. Includes advertising through any medium and conversations with prospective customers.
Financial Reporting Council	Provides the strategic direction behind the development of Accounting Standards in the UK. It owns two subsidiary companies, the Accounting Standards Board and the Financial Reporting Review Panel, which issue and enforce Accounting Standards in the UK.
Financial Reporting Review Panel	A subsidiary of the Financial Reporting Council, it ensures that companies in the UK follow Accounting Standards. See also Accounting Standards Board and Financial Reporting Council.
Financial Reporting Standard	See Accounting Standards.
Financial Resources (FR)	The elements which must be maintained by firms at all times. It comprises own funds subject to two adjustments.
Financial Resources Requirement (FRR)	The amount of financial resources that a firm must maintain at all times. Comprises a primary requirement and a secondary requirement.
Financial Risk	The quantifiable likelihood of loss or less-than-expected returns.
Financial Services Act 1986 (FSA 86 or FSA 1986)	This act provided the framework for regulation of the financial services industry in the UK and a regime for the protection of investors. It has been superseded by the Financial Services and Markets Act 2000 .
Financial Services Authority (FSA)	The agency created by the Financial Services and Markets Act 2000 to be the sole financial regulator in the UK.
Financial Services and Markets Act (FSMA 2000)	The legislation that created the unified regulatory role of the Financial Services Authority and replaced various pieces of law. Became effective at midnight on 30 November 2001.
Financial Services and Markets Tribunal	Body which hears appeals from authorised persons or approved persons who have been disciplined. It is run by the Lord Chancellor's department and is independent of the FSA.
Financial Services Compensation Scheme	Scheme designed to provide an element of protection in the event of default by an investment business. The maximum claim depends on the nature of the business.
Financial Statements	Document which shows the financial situation of a company. Comprises a balance sheet, profit and loss account, cash flow statement, related notes and other statements required by regulation.
Financial Year	The UK government’s official financial year runs from 1 April to 31 March and is denoted by the year in which it starts. Thus the financial year 2001 starts on 1 April 2001 and ends on 31 March 2002.
Firm Price	A guaranteed price.
First Order	A general sensitivity measure of how much the value instrument or portfolio is affected by (ie, is sensitive to) changes in a risk factor.
First Notice Day	The first day that the holders of short positions can give notification to the exchange/clearing house that they wish to effect delivery.
Fiscal Agent	A commercial bank appointed by the borrower to undertake certain duties related to the new issue, such as assisting the payment of interest and principal, redeeming bonds or coupons, handling taxes, replacement of lost or damaged securities, destruction of coupons and bonds once payments have been made.
Fiscal Policy	Form of economic policy implemented by governments in attempt to influence levels of economic activity. Concentrates on levels of taxation, government borrowing and spending.
Fiscal Year	The relevant period for assessing total income and capital gains for liability to tax. Runs from 6 April in one year to 5 April in the following year.
Fit and Proper	Under FSMA 2000 everyone conducting investment business must be a ‘fit and proper person’. The Act does not define the term, a function which is left FSA.
Fitch IBCA	A credit rating agency.
Five Year Summary	Summary of the last five years results of a listed company. The Stock Exchange requires this to be prepared by the company and included in its annual report.
Fixed Assets	The assets of a company acquired for long-term use within the company, for example, buildings, plant and equipment.
Fixed Charge	Mortgage on a specific asset, usually land and buildings. See Mortgage.
Fixed-Coupon Repo	Collateral returned must have the same coupon as that originally transferred.
Fixed Deposit	A non-negotiable deposit for a specific term.
Fixed Exchange Rate	System whereby the rate of a country’s currency is established at a particular level in relation to other currencies and is not allowed to move from that level, except within very small margins.
Fixed Income	Interest on a security which is calculated as a constant specified percentage of the principal amount and paid at the end of specified interest periods, usually annually or semi-annually, until maturity.
Fixed Interest Securities	Also known as bonds. Securities which carry rights to a fixed rate of interest and eventual repayment of the capital sum.
Fixed Leg	In a coupon swap, the flow of a fixed rate interest payment from one party to the other.
Fixed Price Offer	A method of implementing an Offer for Subscription or Sale. A company issuing shares will invite applications for shares at a predetermined price under a fixed price offer. The advantage is that it eliminates uncertainty as to the price that will be set for the issue. The disadvantage is that it can be difficult to identify an appropriate price at which to sell the issue. See also Tender Offer and Bookbuilding.
Fixed Price Re-offer	A means of issuing eurobonds. The lead manager of the issue distributes the bonds to the management group which then the places bonds with clients. They must not place the bonds at a price below the fixed price agreed in advance until the syndicate is broken. It is broken by the lead manager when most of the issue has been placed at the fixed price. The purpose of the rule is to ensure that when managers bid to participate in the management group, they bid at prices which are realistic. See also Bought Deal.
Fixed-Rate	A borrowing or investment where the interest or coupon paid is fixed throughout the arrangement.
Fixed Rate Borrowing	A fixed rate borrowing establishing the interest rate that will be paid throughout the life of the loan.
Fixed Rate Payer	In a coupon swap, the party that pays the fixed rate.
Fixed Rate Receiver	In a coupon swap, the party that receives the fixed rate.
Fixed Settlement	All trades within a specified period, called a dealing period or account, are settled on one fixed day, a specified number of days after the end of the account. Also called Account Settlement.
Fixing	The calculation of the coupon rate for a FRN covering the next coupon payment period.
Flat Position	In the options and futures markets, a position which has been fully closed out and no liability to make or take delivery exists.
Flat Repo	Repo undertaken with no margin.
Flat Yield	Also known as income yield. Income return on owning a bond. Calculated by dividing the coupon by the market price and multiplying by 100.
Flex (Contract)	A derivatives contract traded on an exchange. The contract specification allows some terms (including maturity, strike price and exercise style) of the contract to be negotiated between buyer and seller, unlike a normal standardised derivative contract, where only the price is negotiated.
Flex Options	Newly introduced contracts which are a cross between OTCs and exchange traded products. The advantage of flex options is that participants can choose various parts of the contract specification such as the expiry date and exercise price.
Flex Repo	The lender of cash can draw down the cash supplied in accordance with a schedule agreed at the inception of the trade.
Flight to Quality	The movement of capital to a safe haven during periods of market turmoil to avoid capital loss.
Floating Charge	Charge over a class of assets, such as the stock in trade of the business.
Floating Exchange Rate	System whereby the rate of a country’s currency against others is determined by market forces without any intervention from the government.
Floating Leg	In a coupon swap, the flow of a floating rate interest payment from one party to the other.
Floating Rate	A borrowing or investment where the interest or coupon paid changes throughout the arrangement in line with some reference rate such as LIBOR.
Floating Rate CD (FRCD)	Certificate of deposit on which the rate of interest is refixed in line with market conditions at regular intervals.
Floating Rate Note (FRN)	Eurobonds with a rate of interest that varies from coupon period to coupon period. The rate is usually established as a margin over LIBOR.
Floating Rate Payer	Same as fixed rate receiver in a coupon swap.
Floating Rate Receiver	Same as fixed rate payer in a coupon swap.
Floor	An option which fixes the minimum interest rate receivable on a deposit/loan for a series of interest payments.
Floor Brokerage	The process of delegating the execution to another counterparty.
Flotation	The process of bringing a company’s shares to the market for the first time.
FOB	Free on Board. Used in the freight market to indicate that the price includes delivery to the port and the loading into a vessel.
FOF	See Futures and Options Fund.
Foreign Bond	Like a Eurobond, it is a debt security issued by non-resident borrowers but is underwritten by a syndicate of banks composed primarily of institutions from one country. It is denominated in that country’s currency and sold principally in that country.
Foreign Exchange (Forex)	A term commonly used to encompass the buying and selling of foreign currencies. ‘Forex’ is used as an abbreviation for foreign exchange.
Foreign Exchange Requirement (FER)	Part of a firm's funding requirement to allow for the possibility of adverse fluctuations in exchange rates which would cause the firm to lose money.
Foreign Income Dividends (FID)	Income paid from overseas earnings on which tax is treated as paid but on which there is no tax credit, therefore no tax may be reclaimed.
Forex	See Foreign Exchange.
Forward	A deal for settlement later than the normal settlement date for that particular commodity or instrument.
Forward Contract	A contract between two counterparties where one person agrees to buy from the other person, who agrees to sell, a certain amount of afinancial instrument or a commodity at a stated price but for delivery at an agreed future date.
Forward Currency Transaction	The rate of exchange is agreed now but delivery occurs in the future on an agreed date. The difference between the forward rate and the spot rate is the mathematical result of the difference in interest rates of the two countries concerned.
Forward Delivery	Transactions which involve a delivery date in the future.
Forward Exchange Agreement (FXA)	A contract for difference designed to create the same result as a foreign exchange cash forward-forward deal.
Forward ‘Exchange’ Rate	An exchange rate set today, embodied in a forward contract, that will apply to a foreign exchange transaction at some pre-specified point in the future.
Forward Forward	An agreement at a future date, to purchase an instrument which will mature at a period some time in the future.
Forward Market	Dealings that are made for delivery and settlement on a date other than the spot.
Forward Outright	The rate at which a foreign exchange contract is struck today for settlement at a specified future date. A compilation of the Spot exchange rate plus or minus the forward points.
Forward Points	The interest rate differential between two currencies. Quoted as forward foreign exchange points or pips, and added to or taken from the spot exchange rate.
Forward Pricing	System for pricing units in a unit trust, where buyers and sellers trade on the basis of prices to be set at the next price fixing for units, ie. after an instruction from an investor has been received. See Historic Pricing.
Forward Rate Agreement (FRA)	An agreement to pay or receive, on an agreed future date, the difference between a fixed interest rate agreed at the outset and a reference interest rate actually prevailing on a given future date for a given period.
Forwards	These are very similar to futures contracts but they are not normally traded on an exchange. They are not marked to market daily but settled only on the delivery date.
FOTRA	Free of Tax to Residents Abroad. Investors who are neither resident nor ordinarily resident in the UK can register to receive coupon payments on a UK government stock free of withholding tax in the UK.
FRA	See Forward Rate Agreement.
FRABBA	Standard BBA documentation for dealing a FRA.
Franked Income	Dividends from UK companies are paid after the company has paid corporation tax. This income is referred to as ‘franked’.
Free Asset Ratio (FAR)	The surplus assets of a life assurance company over its liabilities in relation to its total assets. The FAR shows the company’s capacity for future growth and to make future bonus payments to with-profitspolicyholders.
Free Delivery/Free Payment	A settlement situation. One side of the trade is delivered in the absence of the other, ie, the free delivery of securities in a bonus issue or the free payment of dividends.
Free Issue	See Bonus Issue.
Free of Payment	The movement of assets for which there is no associated (cash) countervalue. The movement of assets which is not dependent on the simultaneous payment of the cash countervalue.
Free of Tax To Residents Abroad (FOTRA)	See FOTRA.
Free-Standing Additional Voluntary Contributions (FSAVC)	An AVC arrangement which is not directly linked to the employer’s main scheme. See AVCs.
Friendly Societies	Organisations that are set up for the mutual benefit of their members and are non-profit making. Although the term covers building societies, co-operatives and trade unions, some friendly societies are focused on retail financial services and offer 10 year endowment policies. There are tax benefits to the policies but only modest sums can be invested.
Friendly Society Exempt Policy	A savings policy issued by a friendly society where the fund is free of UK tax on investment income and capital gains.
FRN	See Floating Rate Note.
Front End Loading	Some investment products such as life assurance policies and unit trusts have a higher charge in the first year or when units are purchased. This is referred to as front end loading.
Front Office	The term used for the Trading or Dealing room.
Front Running	See Dealing Ahead.
FSA	See Financial Services Authority.
FSA 86 or FSA 1986	See Financial Services Act 1986.
FSA Handbook	FSA’s requirements including rules and principles are all set out in its handbook.
FSMA 2000	See Financial Services and Markets Act .
FTSE 30	See FTSE Ordinary Share Index.
FTSE 100 Index	Weighted arithmetic index of the prices of the UK’s leading 100 shares. It is a real time index calculated by FTSE International.
FTSE All Share Index	The Financial Times Actuaries measure of the leading 850 companies listed on the UK Stock Market.
FTSE Eurotop 100	The index containing the top 100 shares in Europe.
FTSE Indices	Family of UK indices for the London Stock Exchange.
FTSE International	A joint venture between the Financial Times and the London Stock Exchange which produces indices such as the FTSE 100 and the FT-Actuaries All Share Index.
FTSE Mid 250 Index	Index of the prices of the 250 shares below the top 100. Calculated in the same way as the FTSE 100.
FTSE Ordinary Share Index	The index containing the top 30 shares in the UK, also known as the FTSE 30.
Full Listing	See Official Listing.
Full Replication	A method of running an index-tracking fund in which all the shares comprising an index are held in their respective market weightings.
Fully Automated Securities Trading (FAST)	Dealing system in Taiwan.
Fully Diluted Earnings Per Share	A calculation performed by companies to advise shareholders of potential deterioration of earnings per share in the future because of new shares being issued by the company on the exercise of convertible debt warrants or options already in issue. The calculation reworks the earnings per share figure for the current year on the basis that the dilution had already occurred, as if the exercise of the convertibles had already taken place.
Fully Paid Shares	Shares on which no further ‘call’ is due. Once a call has been paid to the company for new shares offered to existing shareholders, they can be traded in the form of allotment letters until definitive certificates become available. Dealing is on a cash settlement basis. See Record Date, Allotment Letter.
Fund	Used to describe a collective investment scheme, into which investors’ monies is pooled and managed as a single entity with a common investment aim.
Fund Managers Association (fma)	The trade association that represents the interests of UK based institutional fund managers. Now merged with AUTIF to form Investment Managers Association (IMA).
Fundamental Accounting Concepts/Principles	The assumptions which companies must follow when preparing their accounts. Fundamental Accounting Principles are Going Concern, Accruals, Consistency, Prudence and No Netting Off. The first four are also known as fundamental accounting concepts.
Fundamental Analysis	Detailed analysis of a company and the industry in which it operates political and external factors to identify whether the shares are over-valued or undervalued.
Fundamental Equilibrium Exchange Rate (FEER)	The exchange rate needed to achieve a sustainable balance in the country’s external current account. See Purchasing Power Parity
Funded Debt	Short-term debt converted into long-term debt.
Funded Pension Scheme	A pension established either as a personal or company scheme to provide pensions in retirement. The company and/or the employee, pay contributions to be invested in the fund during the employee’s working life.
Fund Manager	An organisation that invests money on behalf of someone else.
Fund of Funds	Authorised unit trust which invests in the units of other unit trusts.
Fungible	Able to be co-mingled, identical securities in a bookkeeping system in which no specific securities are assigned by serial number to any one holder’s account. See Non-Fungible.
Fungibility	In addition to its general meeting fungibility is also applied to a futures contract with identical administration in more than one financial centre. Trades in various geographical locations can be off-set (eg, bought on the IPE and sold on SGX-DT). See Fungible.
Fungible Bonds	An interchangeable pool of securities of the same security code from which deliveries are made without reference to any particular identifiable certificate. See Non-Fungible.
FUTOP	Danish Clearing Centre.
Future	A futures contract is a legally binding arrangement by which one party commits to buying a standard quantity and quality of an asset from another party on a specified date in the future, but at a price agreed today. The counterparty is obliged to sell the asset at the agreed price and agreed date. Because the price is agreed at the outset the seller (buyer) is protected from a fall (rise) in the price of the underlying in the intervening time period.
Futures and Options Fund (FOF)	A unit trust scheme dedicated to approved and other derivatives (where most or all the transactions are fully covered by cash, securities or other derivatives), whether with or without transferable securities.
Future Value	The equivalent value at a future date of a set sum of money and stream of cash flows. A deal, traded on a recognised exchange, to buy or sell some financial instrument or commodity for settlement on a future date.
Futures Contract	The risk of adverse movements in exchange rates.
FX Rate Risk	Nine recommendations made in 1989 by the G30 to improve the