Financial Lexicon A compendium of financial definitions, acronyms, and colloquialisms Erik Banks Financial Lexicon A compendium of financial definitions, acronyms, and colloquialisms ERIK BANKS © Erik Banks 2005 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1T 4LP. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The author has asserted his right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2005 by PALGRAVE MACMILLAN Houndmills, Basingstoke, Hampshire RG21 6XS and 175 Fifth Avenue, New York, N.Y.10010 Companies and representatives throughout the world PALGRAVE MACMILLAN is the global academic imprint of the Palgrave Macmillan division of St. Martin’s Press, LLC and of Palgrave Macmillan Ltd. Macmillan® is a registered trademark in the United States, United Kingdom and other countries. Palgrave is a registered trademark in the European Union and other countries. ISBN 1–4039–3609–9 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. A catalogue record for this book is available from the British Library. A catalog record for this book is available from the Library of Congress. 10987654321 14 13 12 11 10 09 08 07 06 05 Printed and bound in Great Britain by Anthony Rowe Ltd, Chippenham and Eastbourne Contents Acknowledgments v The author vi Summary of colloquialisms, foreign terms, and acronyms vii Introduction xv A1 B26 C50 D96 E 120 F 136 G 159 H 170 I 177 J 197 K 199 L 201 M 219 N 236 iii iv CONTENTS O 250 P 260 Q 290 R 292 S 320 T 355 U–V–W 373 X–Y–Z 391 Numeric 396 Selected references 397 Acknowledgments I would like to extend my thanks and appreciation to Andrea Hartill at Palgrave Macmillan for her enthusiasm, support, and guidance on this new project. Thanks are also due to the editing, production, and marketing teams at Palgrave for their work in producing the book. I would also like to acknowledge the contributions of a number of referees from the banking and insurance sectors who were kind enough to review select definitions in this book and provide input on scope and detail. And, as always, my deepest thanks go to Milena. EB Redding, Connecticut 2004 v The author Erik Banks spent 16 years in the financial services industry, holding senior risk management positions at several global financial institutions, includ- ing Partner and Chief Risk Officer of Bermuda reinsurer XL Capital’s derivatives subsidiary, and Managing Director of Corporate Risk Manage- ment at Merrill Lynch, where he spent 13 years managing credit risk, market risk and risk analytics/technology teams in Tokyo, Hong Kong, London and New York. He is the author of 18 books on risk management, emerging markets, governance, derivatives, alternative risk transfer, merchant banking, and electronic finance. vi Summary of colloquialisms, foreign terms, and acronyms COLLOQUIALISMS Accelerator Big uglies Busted convertible Actuals Black knight Buy minus All-in Blank check preferred Buy the book Alligator spread Blowout Cable Alphabet stock Blue chip CAMEL Ankle biter Bogey Carrot equity Asian tail Boiler room Carve-out Aunt Millie Boilerplate Chapter 11 Baby bond Bond crowd Cheap Back door Book-building Check kiting Back door listing Bookrunner Cherry pick Bad bank Bootstrapping Chewable pill Bankmail Bottom fishing Chinese Wall Bear hug Bought deal Churning Bear raid Brady bond Circle Bear spread Breaking syndicate Circuit breaker Bear trap Bricks and mortar City Code Beauty contest Broken date Clawback Bed breakfasting Bubble Clean Belly of the curve Buck Clean price Belly up Bucket shop Clone fund Bellwether Bulge bracket Coat-tailing Benchmark Bull spread Consol Big Board Bunching Contagion vii viii COLLOQUIALISMS Contrarian Flipper Kaffirs Cookie jar accounting Floater Kicker Cooking the books Following the fortunes Killer bees Cooling off period Footsie Kiwi Concert party Freddie Mac Laddering Cornering Free rider Laundering Crack spread Freeze-out League table Creeping tender Front door Legging Crown jewel defense Front running Line Crown jewels Gather in the stops Lobster trap Crush spread Geisha Local Daimyo Ghosting Locked market Daisy chain Ginnie Mae Long and wrong Dawn raid Gnome Long bond Dead cat bounce Goldbricks Long end Dead hand clause Golden handcuffs Macaroni defense Dead hand poison pill Golden handshake Main Street Death spiral Golden hello Married put Dirty float Golden parachute Matilda Dirty price Good money Midget Dirty stock Grains Mini DK [Don’t know] Granny bond Momo Dog and pony show Graveyard market Moneyness Double dipping Gray knight Morning notes Down round Gray market Names Dragon Greeks Natural Dry powder Greenmail Near money Dwarf Greenshoe Nifty Fifty Elbow Gun jumping Noming the pipes Elephant Gunslinger Omnipresent specter Elephant hunting Haircut One man picture Embeddo Handle OPM [Other people’s EPS bootstrapping Hard landing money] Evergreen Head and shoulders Over the wall Fallen angel Heavy market Overlined Fannie Mae High street bank Pac-Man defense Fighting the tape Hit the bid Painting the tape Fill or kill Hot money Paris club Fire sale Hung deal Parking Flash price Incubator Penny jumping Flight to quality Jobber Penny stock Flip in pill Jobbing People pill Flip over pill Junk bond Phantom stock FOREIGN LANGUAGE TERMS ix Piercing the corporate Safe harbor rule Tailgating veil Samurai Take the offer Pig on pork Saturday night special Teaser Piggy-backing Scalper Teeny Pink sheets Scorched earth Texas hedge Pinning the strike defense Thin market Pip Seat Third market Pipeline Selling away Tight market Point Shadow calendar Tombstone Poison pill Shadow stock Tom-next Poison put Shark repellent Ton Poop and scoop Shoe Too big to fail Porcupine provision Shogun Torpedo stock Portfolio pumping Short against the box Toxic waste Pot Short end Triple witching hour Pre-pack Short squeeze Turkey Puffery Sinker Twisting Puke point Size Tying Pump and dump Sleeping beauty Underwater Punt Snowballing Upstairs market Pup company Softs Vanilla Quiet period Spark spread Vulture bid QT [Questioned trade] Special Vulture fund Raider Spinning War chest Rainmaker Spring loading Weak hands Red herring Square Wet barrels Red-lining Squeeze Whipsaw Repo Stack and roll Whisper numbers Reverse Stag Whisper stock Reverse head and Stapled stock Whistleblower shoulders Sticky deal White knight Reverse repo Story paper White squire Reverse tying Street name Widows and orphans Revolver Stripping the yield Winding-up Rich curve Window dressing Riding the curve Strong hands Without Rio trade Stub Yankee Roadshow Stuck deal Yard Roller coaster Supersinker Yield burning Rolling down the Sweetener Zombie curve Tag along rights Round trip Tail x ACRONYMS FOREIGN LANGUAGE TERMS Ad valorem Conseil du Pfandbriefe Ajustabonos Surveillance Pro-forma Amakudari Corpus Pro-rata Arbitrageur Daimyo Samurai Aufsichtrsrat Entrepôt Schuldschein Bancassurance Ex-gratia Shibosai Banque d’affaires Filz Shikko yakuin Bolsa Force Majeure Shogun Bordereau Geisha Shokken Borsa Gensaki Tranche Bourse Gyosei Shido Uberrimae fidei Boutique Hausbank Ultra vires Bund Keiretsu Vis major Bundesbank Laissez faire Vostro Caveat emptor Mochiai Vorstand Chaebol Nostro Zaibatsu Conseil Noyau dur Zaitech d’Administration Pari passu ACRONYMS ABS Asset-backed security B2B Business-to-business ACH Automatic clearing [exchange] house B2C Business-to-consumer ADR American Depository [exchange] Receipt BA Banker’s acceptance ADS American Depository BACS Bankers’ Automated Share Clearing Service AGM Annual general BBA British Bankers meeting Association ALM Asset-liability BIS Bank for International management Settlements APT Arbitrage Pricing BTF Block trading Theory facility ARM Adjustable rate CAPM Capital Asset Pricing mortgage Model ART Alternative risk tranfer CBO Collateralized bond ATS Alternative trading obligation system CD Certificate of deposit ACRONYMS xi CDO Collateralized debt EBITDA Earnings before obligation interest, taxes, CFD Contract for depreciation and differences amortization CFTC Commodity Futures EBRD European Bank for Trading Commission Reconstruction and CHAPS Clearinghouse Development Automated Payment ECB European Central Bank System ECN Electronic CHIPS Clearinghouse communications Interbank Payment network System ECP Euro commercial paper CIF Cost, insurance, freight ECU European currency unit CLO Collateralized loan EFP Exchange for obligation physical CMO Collateralized mort- EFT Electronic funds transfer gage obligation EMTN Euro medium term note COD Cash on delivery EMU European Monetary CP Commercial paper Union CPI Consumer Price Index EONIA Euro overnight index CPR Conditional average prepayment rate EPS Earnings per share CSA Credit support annex ERM Enterprise risk CTA Commodity Trading management Advisor ESOP Employee stock CTD Cheapest-to-deliver ownership plan D&O Directors’ and officers’ ETF Exchange-traded fund [insurance cover] EURIBOR Euro Interbank Offered DAC Deliver against cash Rate DCF Discounted cash flow FASB Financial