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Special Settlement (securities)
Special settlements in the securities markets exist for OTC trades. It allows a settlement day to be chosen at the time of trading which is outside of the market norms. This is often used to allow financing of short term positions outside of the traders ability. There is no cap on SS periods as these are completely bilateral agreements but market makers and brokers will normally charge or alter the price of the securities for facilitating these sorts of deals. For example: On 1 August an investor believes that the value of the securities will go up in two weeks time on the back of a favourable announcement however the investor has no free funds with which to make an investment. By buying on 1 August for settlement on 14 August (depending on the market and asset but the norm would be 3 August) the investor has locked into the 1st of August price without having to pay for it for two weeks. On the 12th the investor will quite often sell his position, thus, on the 14th his position ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Over-the-counter (finance)
Over-the-counter (OTC) or off-exchange trading or pink sheet trading is done directly between two parties, without the supervision of an exchange. It is contrasted with exchange trading, which occurs via exchanges. A stock exchange has the benefit of facilitating liquidity, providing transparency, and maintaining the current market price. In an OTC trade, the price is not necessarily publicly disclosed. OTC trading, as well as exchange trading, occurs with commodities, financial instruments (including stocks), and derivatives of such products. Products traded on traditional stock exchanges, and other regulated bourse platforms, must be well standardized. This means that exchanged deliverables match a narrow range of quantity, quality, and identity which is defined by the exchange and identical to all transactions of that product. This is necessary for there to be transparency in stock exchange-based equities trading. The OTC market does not have this limitation. Parties may ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Short Term Position
In finance, being short in an asset means investing in such a way that the investor will profit if the market value of the asset falls. This is the opposite of the more common long position, where the investor will profit if the market value of the asset rises. An investor that sells an asset short is, as to that asset, a short seller. There are a number of ways of achieving a short position. The most basic is physical selling short or short-selling, by which the short seller borrows an asset (often a security such as a share of stock or a bond) and sells it. The short seller must later buy the same amount of the asset to return it to the lender. If the market price of the asset has fallen in the meantime, the short seller will have made a profit equal to the difference in price. Conversely, if the price has risen then the short seller will bear a loss. The short seller usually must pay a borrowing fee to borrow the asset (charged at a particular rate over time, similar to ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |