Glossary
Absolute Return
Absolute return is the return that an asset achieves over a given period and does not compare it to any other measure or benchmark.
Absolute Return Fund
This is a fund aiming to deliver returns in both rising and falling markets, usually with flexibility to use derivatives, short positions, and other securities.
Account Number
The number that a bank or other financial institution gives to a particular account. This number plus the BSB identifies that account.
Account-based pension
Previously known as allocated pensions, these are pensions purchased with superannuation money on retirement.
Accounting Conservatism
Accounting conservatism is a principle that requires company accounts to be prepared with caution such that probable losses are recorded as soon as they are known and gains only recorded when they are fully realised.
Accounting Cycle
The accounting cycle is a process of identifying and recording the accounting events of a company beginning with when a transaction occurs and ending with its inclusion in the financial statements.
Accounting Equation
The accounting equation shows on a company's balance that a company's total assets are equal to the sum of the company's liabilities and shareholders' equity.
Accredited derivatives adviser
A person employed by an ASX Market Participant who has been accredited to advise or make a recommendation to retail clients in relation to exchange traded options and warrants.
Accredited futures adviser
A person employed by an ASX Market Participant who has been accredited to advise or make a recommendation to retail clients in relation to ASX futures.
Accretion
Accretion is the gradual growth of assets and earnings due to business expansion, a company's internal growth, or a merger or acquisition.
accrual revenue
ATO term - Accrual revenue is based on the 'economic transaction method'. It reflects the tax liabilities for the period in which an economic activity actually occurred. This approach facilitates comparison with economic events in the same period.
Accumulation index
An index that measures the movement of both the price and the returns of an index, for example, the movement in a share price and the dividends paid. An accumulation index assumes all returns are reinvested and compounded.
Accumulation Phase
Accumulation phase refers to the period in a person's life in which they are saving for retirement. It is followed by the distribution phase when they are retired and spending the money.
Acid-Test Ratio
The acid-test, or quick ratio, compares a company's short-term assets to its short-term liabilities to see if a company has enough cash to pay its immediate liabilities, such as short-term debt.
Acquisition
An acquisition occurs when one company purchases most or all of another company's shares to gain control of that company.
Acquisition Premium
An acquisition premium is the difference between the estimated real value of a company and the actual price paid to acquire it.
Active investment management
An investment management approach where a fund manager buys and sells investments regularly in an effort to outperform a specific market index.
Activist Investor
An activist investor is an individual who buys a stake in a public company in order to influence how the company is run, such as by obtaining seats on its board of directors.
Administrative financial platform
An online platform used to buy and sell units in managed funds and where you can view a summary of your investments and consolidated information for tax reporting.
AFS Licence
An Australian financial services (AFS) licence given by ASIC which allows people or companies to legally carry on a financial services business, including selling, advising or dealing in financial products.
After-tax super contribution
Money deposited into a super fund after you have paid any tax on it.
Age Pension
A regular, fortnightly payment from the government when you reach pension age.
Aggregated transfer from individual
ATO term - When an individual has a credit - and they are not entitled to receive the super money directly - it is sent from the individual's account to their super fund account.
Aggregated transfer to provider
ATO term - Occurs after aggregation when a client's credits are transferred to a funds or an individual or trustee.
aggregated turnover
ATO term - Another definition of group income is anchored in Division 328 of the Income Tax Assessment Act 1997 (ITAA 1997), which describes small business entities. It differs from the 'total business income' definition. It is generally the annual turnover of the business plus the annual turnover of any business connected to or affiliated with it.
Aggregation
ATO term - At periodic intervals all of a fund's individual member's credits are sent to the super fund along with payment details of each member. This payment to the fund is called an aggregation.
Aggregation to individual
ATO term - When an individual has a credit - and they are entitled to receive the super money directly - it is sent to the individual and not to their super fund account.
AGM
The annual general meeting of shareholders required by law where directors inform shareholders of company performance and future prospects. Shareholders vote on board elections and significant company issues.
Agreed value
Car insurance policies are based on either 'agreed' or 'market' value. An agreed value policy has a set dollar value for your vehicle.
Agribusiness scheme
An investment in livestock, farming, horticultural or forestry projects, usually through a managed investments scheme.
Algorithmic trading
A computerised, rule-based method of executing orders to buy or sell a security.
All Ordinaries Accumulation Index
This is an index measuring the performance of securities in the All Ordinaries index taking into account income as well as share price movement. It assumes dividends are reinvested.
All Ordinaries Index (All Ords)
This is a capitalisation weighted index of the performance of the share prices of the 500 largest Australian companies. It began at 500 points in January 1980.
Allocated pension
These are pensions purchased with superannuation money on retirement, now known as account-based pensions.
Allotment of shares
An allocation of shares in a company following an application or offer to take up the shares. Decisions as to the persons to whom shares are allotted and the number allotted to each, are at the discretion of the directors.
American Depositary Receipts
Negotiable certificates that represent a non-U.S. company's publicly traded equity or debt. Depositary Receipts are legal, US. Securities that trade freely on a major exchange or in the over the counter (OTC) market in U.S. Dollars, pay dividends or interest in dollars, and settle, clear and transfer according to standard U.S. practices. The Depositary Receipt evidences the home market security which trades in a foreign country and it is custodised with a local bank, called the custodian.
American exercise, American style
The Depositary Receipt evidences the home market security which trades in a foreign country and it is custodised with a local bank, called the custodian.
American exercise, American style
Type of option or warrant contract which allows the holder to exercise at any time up to and including the expiry date. Most equity options listed on ASX are American Style. See European exercise, European style.
AMV
Measures the combined market value of all the outstanding shares of a company. For example, a company with 50 million outstanding stock, currently trading at a share price of $1 will have an Aggregate Market Value of $50 mllion.
Annual percentage rate (APR)
The interest rate charged to a borrower, excluding expenses such as account opening and account keeping fees. The APR is the basic cost of your credit as a percentage of the total loan amount. Even one credit card may have more than one APR - one for purchases, one for cash advances and one that is charged if you make late payments. A rate that includes all fees is known as a comparison rate
Annual report
Financial report or statement issued by a publicly listed company to its shareholders. Contains a statement of financial performance, a statement of financial position, a statement of cash flow, as well as notice of the Annual General Meeting (AGM) and business resolutions to be discussed.
Annual yield
Also known as dividend yield, it represents the dividend return from an investment. Calculated by dividing the dividend per share by the share price, converted to a percentage. Yield = (Dividend per share / Last market price) x 100.
Annualised return
Return or profit, expressed on an annual basis, that the writer of the option contract receives for buying the shares and writing that particular contract. See buy and write.
Annuity
An investment, purchased with a lump sum that guarantees to pay a set income for either an agreed number of years, or for life. Generally, your money is locked away for a fixed period or for life, though some annuities allow early withdrawals or for a 'residual capital value'. There is no capital left at the end of the specified period. The income payments may be indexed each year, often in line with inflation. Some annuities allow for reversionary beneficiaries.
Approved financial product
Financial Product approved under Section 8 of the ASX Settlement Operating Rules.
AQUA market
Market for the trading of products that can be quoted under the AQUA Rules. Products are third-party issued products that give investors exposure to an underlying asset or set of assets, but where the value of the assets is not under the control of the issuer. The value of the product is linked to the performance of the underlying assets rather than the financial performance of the issuer itself.
Arbitrage
Simultaneous buying and selling of the same or equivalent securities in different but related markets. Purpose is usually to profit from price discrepancies.
ARITA
The Australian Restructuring Insolvency & Turnaround Association is an organisation in Australia for insolvency professionals
Articles of association
Formerly, the rules adopted by a company when it formed that governed the company's internal affairs and other matters affecting the shareholders and the company. These matters are now dealt with in the company constitution.
As at date
Date at which the relevant information is recorded.
ASFA Retirement Standard
The Association of Superannuation Funds of Australia's (ASFA) estimate of how much money you'll need in retirement, depending on your lifestyle.
Assessed value payment
If you hold in the money deliverable warrants but do not exercise them before or at expiry you may be entitled to a cash payment, often called an 'Assessed Value Payment' (or AVP).
Asset
Any property owned by a person or company, including tangible and intangible assets
Asset allocation
Proportion of total capital invested in the different asset classes like shares, property, fixed interest or cash..
Asset backing
Net assets of a company (in $) / number of issued shares. For example: XYZ Ltd with $100,000 net assets and 10,000 shares issued has an Asset Backing of $10.00 per share.
Asset manager
A person or company that manages an investment on behalf of others.
Assignment
Random allocation by ASX Clear to a writer of an exchange traded option exercise obligation. This is carried out by ASX Clear.
Associated company
One company may be associated with another company if certain types of arrangements exist between the two bodies. Companies may also be considered to be associated when one company has an equity interest in the other.
ASX (Australian Securities Exchange)
ASX is a multi-asset class, vertically integrated exchange group that functions as a market operator, clearing house and payments system facilitator. It oversees compliance with its operating rules, promotes standards of corporate governance among Australia's listed companies and helps educate retail investors.
ASX Clear (Futures) or ASXCLF
The clearing facility and central counterparty (CCP) for futures and options in interest rate, equity, energy and commodity products that are traded on ASX Trade24. ASX Clear (Futures) also offers clearing services for certain OTC (over the counter) and block trading related transactions.
ASX code
Unique code used to identify listed companies.
ASX International Services Pty Ltd
Wholly owned subsidiary of the Australian Securities Exchange Limited that executes and settles sales and purchases of participating international securities on behalf of the broker.
ASX Settlement and Transfer Corporation (ASTC)
ASTC is now known as ASX Settlement Pty Limited. It is licensed as a Clearing and Settlement Facility under the Corporations Act.
ASX Settlement Pty Limited
ASX Settlement Pty Limited is licensed as a Clearing and Settlement Facility under the Corporations Act.
ASX Trade
Screen based trading system used for the trading of cash market equities, exchange traded options, interest rate securities and warrants. ASX Trade is a NASDAQ OMX ultra-low latency trading platform based on NASDAQ OMX's Genium INET system.
ASX Trade24
24 hour trading platform for products including including futures and options contracts listed over Treasury Bonds, bank bills, cash rates, S&P/ASX Equity Indices, energy and commodities as well as ASX Listed CFDs.
ASX200
The ASX200 is a stock market index that measures the performance of 200 largest companies, by market capitalisation, listed on the Australian Securities Exchange.
At-the-money
Option or warrant with an exercise price equal to the current market price of the underlying asset.
ATO-initiated amended entitlement
ATO term - After we make a payment, individual tax return or income details may change - super funds may also send updated details. These events can change how we calculate entitlements and this may result in an increase or reduction in a previous payment calculated.
Australian Bureau of Statistics (ABS)
The statistical agency of the Australian Government. The ABS provide statistical information on a wide range of economic, environmental and social issues. This assists and encourages informed decision-making, research and discussion within governments and the community.
Australian Clearing House (ACH)
ACH is now known as ASX Clear Pty Limited. It is a subsidiary of ASX which clears options and futures traded on ASX.
Australian financial services licence (AFSL)
Australian Financial Services Licence that allows people or companies to legally carry on a financial services business, including selling, advising or dealing in financial products.
Australian Government Bond
Bonds issued by the Commonwealth Government which are direct, unconditional, unsubordinated and irrevocable obligations of the Australian Government.
Australian Government Bonds traded on ASX
The holder of an Australian Government Bond (CGB) traded on ASX has beneficial ownership of an Australian Government Bond in the form of a CHESS Depository Interest (CDI). The holder of an AGB traded on ASX obtains all the economic benefits (including payments) attached to legal ownership of the Australian Government Bond over which the CDI has been issued.
Australian Government guarantee on deposits
Refers to the Financial Claims Scheme (FCS) which provides protection to depositors of up to $250,000 per account-holder per authorised deposit-taking institution (ADI) (bank, building society or credit union) in the event of the ADI failing.
Australian National Accounts
Economic statistics produced by the ABS on income, expenditure and production in the economy.
Australian Prudential Regulation Authority (APRA)
The prudential regulator of the Australian financial services industry. It oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance companies, friendly societies, and most of the superannuation industry. APRA is responsible for ensuring Australia has a stable, effiecient and competitive financial system. It also provides statistics on the Australian financial sector.
Australian Real Estate Investment Trusts (A-REITS)
Australian Real Estate investment Trusts (see REITs)
Australian Securities and Investments Commission (ASIC)
The Australian Federal Government agency that enforces laws relating to companies, securities, financial services and credit, in order to protect consumers, investors and creditors.
Authorised capital
Amount of share capital which a company is permitted to issue. Also called nominal capital. See issued capital, uncalled capital, and paid-up capital.
Authorised deposit-taking institution (ADI)
Corporation authorised under the Banking Act 1959. Includes banks, building societies and credit unions.
Automatic exercise
Exercise by ASX Clear of an in the money option at expiry. Requires the client account to be pre-set to automatic exercise by the client's broker.
Average daily volume
Typical trading activity for a day. Calculated by the annual volume divided by the total number of working days in that year.
avoidance
ATO term - Tax avoidance occurs when taxpayers exploit the tax laws to gain an advantage. Such transactions generally serve no commercial purpose and are entered into merely to obtain a tax benefit that was not intended by parliament. The extent to which tax avoidance is included in the tax gap depends on whether it is contestable.
Aware
An entity becomes aware of information if a director or executive officer (in the case of a trust, a director or executive officer of the responsible entity or management company) has, or ought reasonably to have, come into possession of the information in the course of the performance of their duties as a director or executive officer of that entity.
