Cable

A term used in the foreign exchange market for the US Dollar/British Pound rate.

Cable Transfer

Telegraphic transfer of funds from one centre to another. Now synonymous with inter bank electronic fund transfer.

Cable Transfer

Telegraphic transfer of funds from one centre to another. Now synonymous with inter bank electronic fund transfer.

Call

An option that gives the holder the right to buy the underlying instrument at a specified price during a fixed period. .

Call Option

A call option confers the right but not the obligation to buy stock, shares or futures at a specified price.

Capital Account

Juxtaposition of the long and short term capital imports and exports of a country.

Carry

The interest cost of financing securities or other financial instruments held.

Carry-Over Charge

A finance charge associated with the storing of commodities (or foreign exchange contracts) from one delivery date to another.

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

CBOE

Chicago Board Options Exchange.

CBOT or CBT

Chicago Board of Trade.

CD

Certificate of Deposit.

Central Bank

A central bank provides financial and banking services for a country's government and commercial banks. It implements the government's monetary policy, as well, by changing interest rates. Reserve Bank of India is the central bank of India which performs the role of maintaining orderly conditions in the forex market by intervention through various instruments like cash reserve ratio, bank rate, open market operations and moralsuation.

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.

Certificate of Deposit (CD)

A negotiable certificate in bearer form issued by a commercial bank as evidence of a deposit with that bank which states the maturity value, maturity rate and interest rate payable.CDs vary in size with maturities ranging from a few weeks to several years. CDs may normally be redeemed before maturity only by sale on the secondary market but may also be redeemed back to issuing bank through payment of a penalty.

CFTC

The Commodity Futures Trading Commission, the US Federal regulatory agency for futures traded on commodity markets, including financial futures.

CHAPS

Clearing House Automated Payment System.

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.

CHIPS

The New York clearing house clearing system. (Clearing House Interbank Payment System). Most Euro transactions are cleared and settled through this system.

CIBOR

Copenhagen Interbank Rate, the rate at which the banks lend the Danish Krone on an unsecured basis. The rate is calculated daily by the Danmarks Nationalbank (the Danish Central Bank), based on rules set out by the Danish Banker's Association.

Closed Position

A transaction which leaves the trade with a zero net commitment to the market with respect to a particular currency.

Closing Purchase Transaction

The purchase of an option identical to one already sold to liquidate a position.

CME

Chicago Mercantile ExchangeCock Dates (see broken dates).

Coincident Indicator

An economic indicator that generally moves in line with the general business cycle such as industrial production.

Comex

Commodity Exchange of New York.

Commission

The fee that a broker may charge clients for dealing on their behalf.

Compound Option

An option on an option, the dates and price of such option being fixed.

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).

Contract Expiration Date

The date on which a currency must be delivered to fulfill the terms of the contract. For options, the last day on which the option holder can exercise his right to buy or sell the underlying instrument or currency.

Contract Month

The month in which a futures contract matures or becomes deliverable if not liquidated or traded out before the date specified.

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.

Cost of Carry

The interest rate parity, where the forward price is determined by the cost of borrowing money in order to hold the position.

Cost of Living Index

Broadly equivalent to Retail Price Index or Consumer price.

Counterparty

The customer or bank with which a foreign exchange deal is executed.

Counterparty Risks

Foreign Currency Inter-bank Exchange (FOREX) instruments are Positions (Buys and/or Sell) between the Client and its Counterparty and, unlike exchange-traded foreign exchange instruments which are, in effect, guaranteed by a clearing organization affiliated with the exchange on which the instruments are traded, are not guaranteed by a clearing organization. Thus, when the Customer purchases an OTC foreign exchange instrument, it relies on the Counterparty from which it has purchased the instrument to fulfill the contract. Failure of a Counterparty to fulfill a Position could result in losses of any prior payment made pursuant to the Positions well as the loss of the expected benefit of the transaction.

Country Risk

Factors that affect currency trading unique to the specific country include political, regulatory, legal and holiday risks.

Coupon

(1) On bearer stocks, the detachable part of the hide behind nominee status. Certificate exchangeable for dividends.
(2) Denotes the rate of interest on a fixed interest security.

Coupon Value

The annual rate of interest of a bond.

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 Interest Rate Arbitrage

An arbitrage approach which consists of borrowing currency A, exchanging it for currency B, investing currency B for the duration of the loan, and, after taking off the forward cover on maturity, showing a profit on the entire set of deals. It is based on the theorem of interest rate parity (one of the key theoretical economic relationship) which says that the return on a hedged foreign investment will just equal the domestic interest rate on investments of identical risk. When the covered interest rate differential between the two money market is zero, there is no arbitrage incentive to move funds from one market to another.

CPI

Consumer Price Index. Monthly measure of the change in the prices of a defined basket of consumer goods including food, clothing, and transport. Countries vary in their approach to rents and mortgages.

CPSS

Committee on Payment and Settlement Systems.

Crawling Peg (Adjustable Peg)

An exchange rate system where a country's exchange rate is "pegged" (i.e. fixed) in relation to another currency. The official rate may be changed from time to time.

Credit Risk

The risk that a debtor will not repay; more specifically the risk that the counterparty does not have the currency promised to be delivered.

Cross Deal

A foreign exchange deal entered into involving two currencies, neither of which is the base currency.

Cross Hedge

A technique using financial futures to hedge different but related cash instruments based on the view that the price movements between the instruments move in concert.

Cross Rate

An exchange rate between two currencies, usually constructed from the individual exchange rates of the two currencies, as most currencies are quoted against the dollar.

Cross-Trade

A cross-trade transaction is a transaction where either the buy broker and the sell broker are the same, or the buy broker and the sell broker belong to the same firm.

Currency

The type of money that a country uses. It can be traded for other currencies on the foreign exchange market, so each currency has a value relative to another.

Currency Basket

Various weightings of other currencies grouped together in relation to a basket currency(e.g. ECU or SDR). Sometimes used by currencies to fix their rate often on a trade weighted basket.

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.

Current Balance

The value of all exports (goods plus services) less all imports of a country over a specific period of time, equal to the sum of trade and invisible balances plus net receipt of interest, profits and dividends from abroad.

Cycle

The set of expiration dates applicable to different classes of option