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Tax form for foreign individuals owning American securities to report income for the calendar year.
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1099
Series of tax forms used to report various types of income by financial institutions. 1099 forms include:
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Form that reports proceeds from Broker transactions, including the sale or exchange of securities.
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Reports dividends and distributions
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Reports interest income
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Reports Original Issue Discount
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Abandoned Property
Cash, stocks, bonds and other holdings that have been turned over to the state (in which the shareholder resides at the time of ownership, if foreign holder shares are escheated to the state of incorporation of the issuer) after several years of inactivity. Some states hold onto such property and allow the original owners and heirs to claim it indefinitely. In other states, if the property goes unclaimed for too long, it may become the state's property through a process known as escheatment.
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Accrued Interest
The interest accumulated on a bond since the last interest payment.
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Administrator
An individual empowered by a court to take charge of an estate if an individual has died without leaving a will.
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Administrator De Bonis Non
An individual empowered by a probate court to administer the remainder of an estate which was not included in a previous administration.
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Affidavit
A sworn statement (usually in the form of a letter) that has been notarized.
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Affidavit of Domicile
A notarized document that confirms the legal address of a decedent.
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Affidavit of Loss
A written statement declaring the physical loss of a security. The affidavit contains all details regarding the loss, the owner's name and any information pertaining to the security, such as serial number or date of issue. Once the statement has been made, one can issue a letter of indemnity, requesting the replacement of the security.
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Affidavit of Non-Receipt
A notarized form confirming that a shareholder never received the securities mailed by the Transfer Agent.
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Age of Majority
When a minor legally becomes an adult and can control their own assets. This age is determined by state law and is different for all states.
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American Depositary Receipt
A negotiable certificate issued by a U.S. bank representing a specified number of share(s) in a foreign stock that is traded on a U.S. exchange. ADRs are denominated in U.S. dollars, with the underlying security held by a U.S. financial institution overseas. ADRs help to reduce administration and duty costs that would otherwise be levied on each transaction
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American Depositary Share
A U.S. dollar-denominated equity share of a foreign-based company available for purchase on an American Stock exchange. ADS's are issued by depository banks in the U.S. under agreement with the issuing foreign company; the entire issuance is called an American Depositary Receipt (ADR) and the individual shares are referred to as ADS's.
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Amortization
The amount that is subtracted from the annual yield. Can also be the paying off a debit over a period of time.
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Annual Report
The annual publication that public corporations are required to provide to shareholders that explains their operation and finances. Information listed may include assets, revenue, operating costs and liabilities.
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Arbitrage
The simultaneous purchase and sale of an asset in order to profit from a difference in the price. It is a trade that profits by exploiting price differences of identical or similar financial instruments, on different markets or in different forms.
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Assets
A corporation's total resources which may include cash, investments, securities, inventories, machinery, or real estate.
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Attorney In Fact
An individual who has been authorized to transact business for another individual.
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Auction Market
A market where buyers enter competitive bids against other buyers and sellers enter competitive offers against other sellers at for the best price. Matching bids and offers are matched together and orders are executed.
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Automated Clearing House (ACH)
An electronic funds-transfer system run by the Automated Clearing House. This payment system deals with payroll, direct deposit, tax refunds, consumer bills, tax payments and many more payment services.
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B Notice
Notice sent to a taxpayer when an invalid Tax Identification Number is supplied.
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Baby Bond
Fixed income securities issued in small denominations, generally with a maximum face value of $5,000.
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Back-End Load
Fee that investor pays when selling mutual fund shares within a specified number of years, usually five to 10 years. The fee amounts to a percentage of the value of the share being sold. The fee percentage is highest in the first year and decreases yearly until the specified holding period ends, at which time it drops to zero.
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Balance Sheet
A financial statement summarizing a company's assets, liabilities and shareholders' equity for a specific date. These three balance sheets provide investors a summary of what the company owns and owes, as well as the amount invested by shareholders.
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Bear Market
Market condition in which the price of securities falls.
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Bear
Someone who believes that the market will decline.
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Bearer Bond
A bond that is owned by whoever is holding it, rather than having a registered owner. These bonds are no longer issued. (Coupons were also used for bearer bonds where an individual would clip and return for the interest.)
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Beneficial Holders
Individual who keeps their securities holdings within their brokerage accounts (in nominee or "street name"). Although these holders will not appear on the register of the security, they do appear in the holdings of the Depositary Trust Company.
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Block
A large amount of stock (usually more than 10,000 shares) bought or sold by institutional or other large investors.
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Blue Chip
A nationally accepted, financially sound company. Blue chips generally sell widely accepted products and services that are of the highest quality. Blue chip companies recognized for their long record of stable and reliable growth.
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Blue Sky Laws
State regulations designed to protect investors against securities fraud by requiring sellers of new issues to register their offerings and provide financial details. This allows investors to base their judgments on trustworthy data. Companies listed on a U.S. Exchange automatically receive most Blue Sky exemptions.
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Board of Directors
Elected by the stockholders, these managers of a company have final decision making authority for the company.
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Board Resolution
A written statement created by the board of directors detailing which officers are authorized to act on behalf of the corporation. The resolution will be found in the board minutes detailing decisions made during the meeting.
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Book Entry Advice
An account that contains a position that is in book entry form that is not DRS eligible, thus no physical certificates are held by the stockholder.
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Books Closed
No deposits of additional shares will be accepted, or deposits may only be accepted upon the receipt of legal certified documents. This happens for different reasons, including a request by the company prior to a public announcement, a difference between a local record date and a DR record date, a corporate action, or other regulatory matters.
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Books Open
Following a "books closed" event, the depositary bank will announce the books are open for issuance.
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Broker
A licensed individual or firm that charges fees or commissions for executing buy and sell orders submitted by an investor. It can also refer to a firm that acts as an agent for a customer and charges the customer a commission for its services.
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Broker-Dealer
An individual or firm in the business of buying and selling securities operating as both a broker and dealer, depending on the type of transaction.
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Bull Market
Market condition in which the price of securities rises.
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C Notice
Notice administered by the IRS to the payers of earnings to begin backup withholding on a security holder. The security holder is responsible for contacting the IRS to resolve the issue.
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Call
The issuer's right to redeem bonds or preferred stock before maturity date. The date when an issuer may call securities is specified by the issuer when securities are issued.
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Call Option
An agreement to buy shares at a specified price within a specific time period. The buyer does not have to pay full price for shares unless they exercise the options.
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Capital
Financial assets or the financial value of assets, such as cash.
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Capital Gain/Loss
An increase or decrease in the value of an asset that gives it a higher/lower worth than the purchase price. The gain/loss is not realized until the asset is sold.
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Capital Reorganization
A voluntary, fundamental change in the financial structure of an organization.
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Cash Acquisition
A merger of two companies that is mutually agreed upon in which the stockholders or company being acquired receive cash for held shares.
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Cash Flow
A corporation's net income which includes amounts charged for depreciation, amortization, and reserve charges. Reserve charges are not paid in dollars but rather are bookkeeping deductions.
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Cash In Lieu
Payment for fractional shares since certificates are not issued for less than one share.
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Cede & Company
The nominee name used by the Depositary Trust Company.
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Central Securities Depositary
An automated, local securities clearing center for selling trades and safekeeping securities for participants.
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Certificate
A physical piece of paper representing ownership in a company. Stock certificates will include information such as the number of shares owned, the date, an identification number, usually a corporate seal, and signatures.
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Certificate of Appointment
Legal document verifying an individual's present possession of an office or position.
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Certificate of Incumbency
An official document listing names of incumbent individuals and their respective corporate office within an organization.
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Chapter 7
A bankruptcy proceeding in which a company ceases operation and goes completely out of business. A trustee is appointed to liquidate all company's assets, with that money used to pay off the company's debt.
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Chapter 11
A form of bankruptcy that involves reorganization of a debtor's assets. The form is filed by corporations which require time to reorganize their debts.
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Class Action
Action where an individual represents a group in a court claim who allege to have suffered a loss (financial, physical, etc.) due to unjustified or illegal actions by a company.
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Class of Stock
Types of ownership in a corporation, including preferred and common stock.
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European clearing corporation, this organization supports over 2,500 different companies in over 80 locations worldwide.
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Closed-End Fund
A publicly traded company that raises a fixed amount of capital through an initial public offering (IPO). The fund is then structured, listed and traded like a stock on a stock exchange.
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Co-Transfer Agent
An alternate agent that can transfer securities and deliver records of transfers to the transfer agent electronically.
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Collateral
Properties or assets offered to secure a loan. If there is a default on the loan, the collateral becomes subject to seizure.
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Commodity Futures Trading Commission (CFTC)
A U.S. federal agency established in 1974 by the Commodity Futures Trading Commission Act which ensures efficient operation of the futures markets.
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Common Stock
A security that represents ownership in a corporation. Holders of common stock exercise control by electing a board of directors and voting on corporate policy.
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Community Property
Property acquired by either spouse during the course of a marriage.
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Conglomerate
A corporation comprised of various and unrelated businesses.
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Conservator
A court appointed individual legally responsible for the property of an individual who is unable to take care of their own matters.
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Conversion Agent
An agent appointed to exchange a convertible security.
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Convertible Bond
A bond that can be converted into a predetermined amount company stock at certain times during its life, usually at the discretion of the bondholder. Terms are determined at the time of issue and include conversion date and amount of shares that the bond can be exchanged for.
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Convertible Stock
Stock that is exchangeable for a set number of units of another type of common stock.
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Corporate Resolution
A written statement made by the board of directors detailing which officers are authorized to act on behalf of the corporation.
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Cost Basis
The original value of an asset for tax purposes, adjusted for stock splits, dividends and return of capital distributions. This value is used to determine the capital gain, which is equal to the difference between the asset's cost basis and the current market value.
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Coupons
The interest rate stated on a bond when it's issued. The coupon is typically paid semiannually. (Coupons were also used for bearer bonds where an individual would clip and return for the interest.)
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Court Appointment
Court document officially naming the individual or institution that can transact business for a decedent or individual who is unable to handle their own matters.
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Credit Date
Date when shares are credited into an account or when a new account is created.
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Cumulative Preferred
A type of preferred stock with a provision that stipulates that if any dividends have been omitted in the past, they must be paid out to preferred shareholders first, before common shareholders can receive dividends.
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Committee on Uniform Securities Identification Procedures (CUSIP)
An identification number assigned to all stocks and registered bonds. The Committee on Uniform Securities Identification Procedures (CUSIP) oversees the entire CUSIP system.
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Custodian
A financial institution that has the legal responsibility for a customer's securities.
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Day Order
An order to buy/sell a security that expires if it is not executed on the same day that the order is placed.
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Dealer
An individual or firm that buys or sells securities for their own account. The dealer's profit/loss is the difference between the price paid and the price received for the security. The same individual/firm may function as a broker or dealer.
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Debenture
The most common type of bond. These bonds are backed by the credit of the issuer instead of company assets.
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Debit Date
The date when all or some of the shares in an account are issued or debited in certificate form or cash.
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Decedent
An individual who is no longer living.
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Declaration Date
The date on which the next dividend payment is announced by the board of directors of a company.
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Delayed Opening
A problem that arises which causes the postponement of a stock exchange beyond the normal opening of a day's trading. Postponements may occur due to an increase of buy or sell orders, a disproportionate amount of buyers and sellers, or the anticipation of corporate news.
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Deposit/Withdrawal at Custodian (DWAC)
The automated system for deposits and withdrawals of securities from the Depository Trust Company.
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Depositary
A bank that acts as a transfer agent, corporate action agent, and registrar to issue Depositary Shares which represent the securities of a non U.S. issuer that the Depositary custodizes in the local market.
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Depository Agent
A bank or trust company that is appointed by the individual or firm making a tender offer to receive any securities that are tendered, and to pay for them when authorized.
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DTCC, through its subsidiaries, provides clearing, settlement and information services for equities, corporate and municipal bonds, government and mortgage-backed securities, money market instruments and over-the-counter derivatives. In addition, DTCC is a leading processor of mutual funds and insurance transactions, linking funds and carriers with their distribution networks.
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Depreciation
A decrease in an asset's value caused by unfavorable market conditions.
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Direct Deposit
Electronic funds deposited directly into an individual's bank account rather than through a paper check.
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Direct Registration Statement (DRS)
Shares that are owned in book entry form that are DRS eligible and can be tracked electronically without the need for a physical certificate.
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Director
Individual who is elected by the shareholders to serve on the board of directors.
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Disbursement Agent
A bank or trust company that has a contract with a client company to serve as agent and record keeper on a merger of two or more companies, in which the shareholder receives cash in exchange for shares.
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Discount Broker
A stockbroker who provides no investment advice and carries out buy and sell orders at a reduced commission compared to a full-service broker.
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Dissenting Holders
Shareholders who exercise their legal right to challenge a Reorganization plan filed by a company.
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Dividend
A distribution, usually quarterly, of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.
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Dividend or Interest Disbursing Agent
A company or individual appointed by a corporation to distribute dividend income to its shareholders.
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Dividend Rate
The total expected dividend payment declared by a company's board of directors that shareholders will receive.
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Dividend Reinvestment (DRP)
A plan offered by a corporation that allows their shareholders to reinvest their cash dividends by purchasing additional shares or fractional shares on the dividend payment date.
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Dividend/Interest Order
Authorization from a security holder for dividend/interest payments to be issued to individuals other than the registered holder.
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Domicile
Legal residence.
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Dow Jones Industrial Average
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ.
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Due Bill
A financial tool used to document and identify the seller's duty to deliver securities sold to the buyer.
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Due Diligence Letter
A letter sent to locate a holder before unclaimed/abandoned property is transferred to the original issuer or to the state of the last known address.
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Dummy CUSIP Number
A temporary identification number attached to a security by a company until the official CUSIP number is assigned.
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Dutch Auction
A public offering auction structure in which the price of the offering is set after receiving all bids and determining the highest price at which the total offering can be sold. In this type of auction, investors place a bid for the amount they are willing to buy in terms of quantity and price.
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Earnings Report
A statement issued by a company that describes gains and losses over a specific time period. This is also referred to as an income statement.
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Electronic Funds Transfer
The electronic exchange or transfer of money from one account to another, either within a single financial institution or across multiple institutions.
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Employee Stock Option Plan
A stock option granted to specified employees of a company. Employee stock options carry the right to buy a certain amount of shares in the company at a predetermined price. These can be offered to officers or employees.
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Employee Stock Ownership Plan
A qualified, defined contribution, employee benefit plan designed to invest primarily in the stock of the sponsoring employer. They are "qualified" in the sense that the Employee Stock Ownership Plan's sponsoring company, the selling shareholder and participants receive various tax benefits.
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Employee Stock Purchase Plan
A company-run program in which participating employees can purchase shares of the company at a discounted price. Employees contribute to the plan through payroll deductions. At the purchase date, the company uses the accumulated funds to purchase shares in the company on behalf of the participating employees.
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Employer Identification Number (EIN)
A unique identification number assigned to a business's for tracking by the Internal Revenue Service. The Employer Identification Number is commonly used by employers for the purpose of reporting taxes.
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Equity
A stock or any other security that represents an ownership interest.
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Erasure Guarantee
A guarantee made by accredited institutions guaranteeing the legitimacy and accuracy of changes made to bonds and securities.
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Escheatment
The process of turning abandoned/unclaimed properties over to the state.
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Escrow
Money or securities held by a third party. The funds are held by the escrow service until it receives the appropriate written or oral instructions or until obligations have been fulfilled.
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Estate
Individual property, money, securities and debt held by an individual at the time of death.
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Estoppel
A legal term referring to someone who reneges on or contradicts a previous agreement or claim. Estoppel prevents someone from arguing something contrary to a claim made or act performed by that individual in the past.
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One of two principal clearing houses for securities traded in the Euromarket. Euroclear specializes in verifying information supplied by two brokers in a securities transaction and the settlement of securities.
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Exchange Agent
Agent appointed to exchange outstanding shares of merging companies for shares in the newly founded company or for cash.
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Executor
Individual(s) appointed in a will to administer an estate of someone who is deceased.
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Expiration Date
The day on which an option is no longer valid and, therefore, ceases to exist.
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Ex-Dividend Date
The date when the seller, not the buyer, of a stock will be entitled to a recently announced dividend, 2 days prior to record date.
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Face Value
The dollar value of a security stated by the issuer. For stocks, it is the original cost of the stock shown on the certificate.
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Federal Inheritance Tax Waiver
Authorization by the government given to transfer U.S. securities of a non-citizen decedent without charging any taxes.
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Fiduciary
A legally appointed individual who is authorized to hold assets in trust for another individual. The fiduciary manages the assets for the benefit of the other individual rather than for his or her own profit.
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The largest non-governmental regulatory body created after the merger of the National Association of Securities Dealers and the New York Stock Exchange's regulation committee. FINRA responsibilities include governing business between brokers, dealers and the investing public.
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Fiscal Year
A period that a company uses for accounting purposes and preparing financial statements, which may or may not be the same as a calendar year.
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Fixed Charge
Any type of fixed expense that occurs on a regular basis, including, salaries, utilities, loan payments and mortgage payments.
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Floor
The trading area where options, stocks and options are bought and sold on the New York Stock Exchange. The floor is almost the size of a football field.
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Flowback
When issued ADRs are cancelled resulting from net U.S. selling, reducing the liquidity of the ADRs.
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Securities and Exchange Commission issued form that must be submitted by all "foreign private issuers" that have listed equity shares on exchanges in the U.S. Form 20-F calls for the submission of an annual report within six months of the end of the company's fiscal year, or if the fiscal year-end date changes.
Form 20-F reporting and eligibility requirements are stated in the Securities Exchange Act of 1934. The information requirements are not as strict as for domestic U.S. companies; companies in which less than 50% of voting shares are held by U.S. investors may be eligible.
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A filing with the Securities and Exchange Commission required for the registration of certain securities by foreign issuers. SEC Form F-1 is required to register securities issued by foreign issuers for which no other specialized form exists or is authorized. This form is required under the Securities Exchange Act of 1933.
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A filing with the Securities and Exchange Commission required for the registration of certain securities by foreign issuers. This filing is used to register shares represented by American depositary receipts issued by a depositary against the deposit of the securities of a foreign issuer.
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Fractional Shares
A share of stock that is less than one full share. Fractional shares usually come about from stock splits, dividend reinvestment plans and similar corporate actions. Fractional shares cannot be acquired from the market.
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Funded Debt
A company's debt, such as bonds, long-term payables or debentures that will mature in more than one business cycle. This type of debt is funded by interest payments made by the borrowing firm over the term of the loan.
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Fungible
Securities representing the same class of equity that can be traded across multiple markets.
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Global Registered Shares
Shares issued and registered in multiple markets around the world. Global registered shares represent the same class of shares.
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Good Delivery
Certain qualifications that need to be met before a security sold on a stock exchange can be delivered. Qualifications include the security being in proper form to comply with the contract of sale and transferring the title to the purchaser.
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Good 'Til Cancelled (GTC)
An order to buy or sell a security at a set price that remains active until the investor decides to cancel or execute the trade.
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Grantor
The creator of a trust for benefit of another individual or organization.
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Growth Stock
Stock with record growth in earnings at an extremely fast rate.
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Guardian
A court appointed individual who has been granted legal responsibility to care for a child or adult who does not have the capacity for self care.
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Holder
The name of the registered owner of a security and individual who has the rights, benefits and responsibilities of ownership, which may include voting rights and dividend payouts.
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Hypothecation
Securities in a margin account that are used as collateral for money loaned from a brokerage.
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Income Bond
Type of debt security where only the principal is promised to be paid to the investor, only if the issuing company has enough earnings to pay for the principal.
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Indenture
A contract between an issuer of bonds and the bondholder stating all of the rights and obligations of the bondholder.
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Index
A statistical measure of change in a securities market.
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Individual Retirement Account (IRA)
A retirement plan that provides tax advantages and is established by an individual on their own.
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Inheritance Tax Waiver
Authorization by the tax department of a decedent's estate to transfer the securities of a decedent without charging any taxes.
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Initial Public Offering (IPO)
The first sale of stock by a private company to the public. In an IPO, the issuer obtains the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), the best offering price and the time to bring it to market.
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Initial Public Offering Prospectus
Legal document prepared for all potential investors detailing a company's financial history, products and services, and management background.
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Institutional Investor
Entities that trade securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. Institutional investors face fewer protective regulations because it is assumed that they are more knowledgeable and better able to protect themselves.
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Interactive Voice Response (IVR)
Technology which allows a computer to interact with individuals through the use of voice and keypad inputs.
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Interest
Payments made by borrowers to lenders for borrowing money. Interest is usually expressed as an annual percentage rate.
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Intermarket Trading System (ITS)
An electronic computer system linking the trading floors of all the major equity American exchanges. This system allows all eligible market makers and brokers the ability to execute buy/sell orders at different exchanges whenever they see that a better price quote available.
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A U.S. government agency, established in 1862, that is responsible for the collection and enforcement of taxes.
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International Securities Identification Number
Identification number for securities traded in non-U.S. markets.
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Inter-Vivos Trust
A trust used in estate planning that is created during the lifetime of the trustor, which is also known as a living trust.
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Interest
The charge for the privilege of borrowing money, which is usually expressed as an annual percentage rate.
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Intestate
Individual who is deceased without leaving a will.
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Investment
Using money with the purpose of making a profit, gain income, increase capital, etc.
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Investment Banker
Individual representing a financial institution that raises capital for corporations. Investment bankers buy public shares of a company presenting an initial public offering and resell them to the public.
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Issue
Offering securities in an attempt to raise funds. Also, issues are stocks that have been offered to the public.
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Joint Tenancy
A type of ownership where two or more people own property together, each with equal rights and obligations. Upon an owner's death, that owner's interest in the property is transferred to the survivors without the property having to go through probate.
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K-1 Form
A tax document used to report the incomes, losses and dividends of a business's partners or S-corporation's shareholders. Rather than being a financial summary for the entire group, the Schedule K-1 document is prepared for each partner or shareholder individually.
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Kelmar Audit
An auditing firm known for their prominent audits of general ledger property.
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Keogh Plan
A tax deferred pension plan available to self-employed individuals or unincorporated businesses for retirement purposes.
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Letter of Transmittal (LOT)
Letter sent to a shareholder announcing spin-off, merger, or exchange and how they can participate. Shareholders complete and return a form, which includes a W-9 and Affidavit of Loss, along with the securities in order to receive cash-in-lieu payments or exchanged securities.
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Letters Testamentary
A court document appointing the executor to distribute assets of an estate.
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Level-I Depositary Receipts
Lowest level of sponsored ADRs that are issued, providing issuers with minimal regulatory and reporting requirements.
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Level-II Depositary Receipts
These are listed on an exchange in the U.S. because the non-U.S. issuer has registered the securities under the Exchange Act of 1934 and has entered into a listing agreement. Level-II Depositary Receipts require more in-depth SEC reporting than Level-I Depositary Receipts.
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Level-III Depositary Receipts
These are sold in a public offering and listed on the U.S. stock exchange. Issuers register the offering under the Securities Act of 1933 and report under the Exchange Act of 1934.
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Leverage
The amount of debt used to finance a firm's assets. A firm that has more debt than equity is considered to be highly leveraged.
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Liabilities
Claims against a corporation which include accounts, wages and salaries payable, dividends declared payable and accrued taxes payable.
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Limit Order
A buy or sell order placed with a broker for a set number of shares at a specified price or better price.
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Limited Partnership (LP)
Two or more partners who conduct a business jointly, and in which one or more of the partners is liable only to the extent of the amount of money that partner has invested. Limited partners do not receive dividends but have access to income flow and expenses.
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Listed Securities
U.S. securities listed on a U.S. stock exchange. These securities are registered with the Securities Exchange Commission under the Securities Exchange Act of 1934.
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Listing Agent
A bank assigned to arrange the listing of securities on an exchange.
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Liquidation
Selling an account's entire share balance.
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Listed Stock
The stock of a company that is traded on a securities exchange.
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Living Trust
A trust used in estate planning that is created during the lifetime of the trustor, which is also known as an Inter-vivos trust.
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Load
Commission charged to an investor when buying or redeeming mutual fund shares. This may be a one-time fee charged initially when buying into the mutual fund (front-end load), when the investor redeems the mutual fund shares (back-end load), or on an annual basis as a 12b-1 fee.
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Long Term Incentive Plan (LTIP)
A reward system designed to improve employees' long-term performance by providing rewards that are not normally connected to the company's share price. The employee must fulfill various conditions/requirements that prove that they have contributed to increasing shareholder value. The incentives for doing this are usually conditional company shares, which are distributed in two parts. The first part represents an immediate distribution of half of the shares, while the remaining half of the shares will only be presented to the employee if they stay with the company for a predetermined number of years.
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Margin
Borrowed money used to purchase securities.
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Margin Call
A broker requirement from an investor using margin to deposit additional funds or securities so the margin account is brought up to the minimum maintenance margin. Margin calls occur when an account value decreases to a value calculated by a broker's particular formula.
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Market Maker
A security dealer that accepts the risk of holding a certain number of shares of a particular security in order to facilitate trading in that security.
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Market Price
The current quote of a particular stock.
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Master Limited Partnership (MLP)
A type of limited partnership that is publicly traded.
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Maturity Date
The date on which an obligation becomes due and is repaid to the investor and interest payments stop. This is also the date that a bond can be redeemed.
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Medallion Signature Guarantee
A guarantee seal applied to securities necessary for the transfer of securities. The Medallion seal affixed is applied by a guarantor who must be a member of the Medallion Program.
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Merger
The combining of two or more companies, generally by offering the stockholders of one company securities in the acquiring company in exchange for the surrender of their stock.
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Money Market Fund
A mutual fund that holds investments in high-yield money market mechanisms such as federal securities.
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Municipal Bond
A bond issued by a state, municipality or county to finance its capital expenditures. These bonds are exempt from federal taxes and most state and local taxes.
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Mutual Fund
An assortment of securities owned by any investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual funds are operated by money managers, who invest the fund's capital in an attempt to produce capital gains and income for the fund's investors.
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National Association of Securities Dealers (NASD)
A group of brokers responsible for establishing legal and ethical standards of its member for over the counter markets.
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The world's first electronic stock market created in 1971 and facilitates trading and provides price quotations on more than 5,000 of the more actively traded over the counter stocks.
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A registry of individuals who relocate or change their address within the United States maintained by the United States Postal Service. Access to the registry is sold to firms that engage in direct mail and use of NCOA is required in order to obtain bulk mail rates.
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National Market System
System for reporting transactions of active over the counter securities, and is sponsored by the NASD and NASDAQ.
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Net Asset Value (NAV)
A mutual fund's price per share value. The per-share dollar amount is calculated by dividing the total value of all the securities in its portfolio by the number of fund shares outstanding.
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Net Change
The difference between today's closing price of a security and the previous day's closing price. Net change can be positive or negative and is quoted in terms of dollars.
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New Issue
A security that has been registered, issued and will be sold on a market for the first time.
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New York Futures Exchange (NYFE)
A subsidiary of the New York Stock Exchange dedicated to trading futures products.
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New York Share
Represents equity outstanding that allows for a portion of its capital to be outstanding in both the home market and U.S. market through more than one share registrar. These shares are traded on a U.S. stock exchange but a separate registrar is maintained in the home country.
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A stock exchange based in New York City, which was founded in 1792 and is considered the largest equities-based exchange in the world based on total market capitalization of its listed securities.
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New York Stock Exchange Composite Index
Performance measurement of every stock on the New York Stock Exchange that are broken down into four sectors, including industrial, utility, transportation, and financial.
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Nominee
An individual whose securities are transferred in order to facilitate transactions, while leaving the customer as the beneficial owner.
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Notice of Pendency
A letter sent to possible members of a class action suit.
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Odd Lot
An amount of a security that is less than the normal unit of trading for that particular security.
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Offer
When one party conveys interest to buy or sell assets from another party. The offering price is the highest price the buyer will pay to purchase an asset, and the lowest that the seller will accept for the asset.
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Open-End Fund
A type of mutual fund that has no restrictions on the amount of shares the fund will issue. If there is a high demand, the fund will continue to issue shares no matter how many investors there are. Open-end funds also buy back shares when investors wish to sell.
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Open Order
An order to buy or sell a security at a set price that remains active until the investor decides to cancel or execute the trade.
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Optional Cash Payments
Additional funds sent in by a shareholder in a dividend reinvestment plan which is used to purchase additional shares.
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Original Issue (OI)
Securities issued when a company is first incorporated.
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Original Issue Discount
The difference between the stated redemption price at maturity and the issue price.
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Over-the-Counter Market (OTC)
The market for shares not traded on any U.S. exchanges. This is regulated by the National Association of Securities Dealers and contains brokers who complete transactions via computer and telephone rather than in a centralized marketplace.
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Owner
The name of the individual who is the registered owner of a security.
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Par
The face value of a bond.
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Partnership
An organization or two or more individuals who manage and operate the business, sharing rights and obligations.
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Passed Dividend
Exclusion of a regular or scheduled dividend.
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Payable Date
The date on which a declared stock dividend is scheduled to be paid.
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Paying Agent
An agent who accepts payments from the issuer and distributes the payments to the holders of the security.
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Penny Stock
A stock that trades at a low price, usually under a dollar.
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Personal Representative
Court appointed individual who distributes estate assets.
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Pink Sheets
A daily publication assembled by the National Quotation Bureau with bid and ask prices of over-the-counter stocks. Unlike companies on a stock exchange, companies quoted on the pink sheets system do not need to meet minimum requirements or file with the Securities Exchange Commission. Pink sheets refer to the color of paper which the quotes were once printed.
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Portfolio
The variety of holdings of securities by an individual or institution.
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Poison Pill
An approach used by corporations to discourage hostile takeovers. The target company attempts to make its stock less attractive to the acquirer. There are two types of poison pills, "flip-in" and "flip-over". A "flip-in" allows existing shareholders to buy more shares at a discount. A "flip-over" allows shareholders to buy the acquirer's shares at a discounted price after the merger.
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Power of Attorney
Legal document giving one individual the power to act for another individual.
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Premium
The amount that a bond or preferred stock can sell above its par value.
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Primary Distribution
The first sale of stock by a private company to the public.
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Private Investment in Public Equity (PIPE) Deal
A deal that occurs when private investors take a sizable investment in publicly traded corporations. This occurs when equity valuations have declined and the company is looking for new sources of capital.
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Private Offering, Resales, and Trading through Automated Linkages (PORTAL)
Automated trading system developed by the National Association of Securities Dealers which provide security descriptions and pricing information.
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Preferred Stock
A class of stock ownership in a corporation that has a higher claim on the assets and earnings than common stock. Preferred stock has a dividend that must be paid before dividends to common shareholders and the shares usually do not have voting rights.
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Pre-Release
American Depositary Receipt which is secured by cash collateral instead of securities which are deposited. These are commonly used by brokers who settle cross border trades.
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Principal
An individual's capital, or the face value of a bond.
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Private Placement
The sale of securities to a small group of select investors as a way of raising capital. Investors usually include large banks, mutual funds, and pension funds. Private placement is the opposite of a public issue, in which securities are made available for sale on the open market.
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Probate
The legal process in which a will is reviewed to determine whether it is valid and authentic. Probate can also refer to the general administering of a deceased individual's will or the estate of a deceased individual without a will.
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Prospectus
A legal document required by and filed with the Securities and Exchange Commission. A prospectus provides details about an investment offering for sale to the public and contains details that an investor needs to make an educated investment decision.
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Proxy
The authority to act on behalf of another party. Shareholders who do not attend a company's annual meeting may choose to vote their shares by proxy by allowing someone else to cast votes on their behalf.
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Proxy Statement
Information given to shareholders that coincide with the solicitation of proxies.
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Qualified 423(b) Plan
An Employee Stock Purchase Plan that is based upon the length of time the shares were held prior to being sold. This plan provides special tax treatment to employers that offer this type of plan.
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Qualified Institutional Buyer (QIB)
Institutions that manage at least $100 million in securities which include banks, savings and loans institutions, insurance companies, investment companies, employee benefit plans, or an entity owned entirely by qualified investors. Also included are registered broker-dealers owning and investing, on a discretionary basis, $10 million in securities of non-affiliates.
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Quote
The most recent price at which a security traded, which continuously changes throughout the day.
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Rally
A continued increase in a stock price or market following a decline.
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Ratio
The number of whole or fractional shares represented by a single American Depositary Share.
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Record Date
A date established by the issuer of a security for the purpose of determining the shareholders who are entitled to receive a dividend or distribution.
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Registered Bond
A bond whose owner is registered with the bond's issuer and recorded on the bond.
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Registered Owner
Individual who owns a security and elects to hold their shares directly, rather than with a broker.
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Registrar
An organization that is responsible for record keeping of shareholders.
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Registration
Legal title illustrating the ownership of a security.
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Regulation S (Reg. S)
Adopted by the SEC in 1990, these are conditions by which offers and sale of securities outside of the U.S. are exempt from Securities Exchange Commission registration requirements.
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Restricted Securities
Shares of stock in a corporation that are not easily transferable or able to be sold publicly in the U.S.
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Reverse ACH (Reverse EFT)
Automatic purchases made by shareholders who are enrolled in a dividend reinvestment plan. These purchases are deducted directly from their checking or savings account.
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Reverse Stock Split
A reduction in the number of a corporation's outstanding shares that increases the value of its stock or its earnings per share. Certificates are surrendered by shareholder and new certificates are issued.
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Rights Offering
Issuing rights to a company's existing shareholders to buy a proportional number of additional securities at a given price within a fixed period. This is usually offered at a discount.
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Road Show
A presentation by an issuer of securities to potential buyers which is intended to create interest in the securities.
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Roth IRA
An individual retirement plan similar to the traditional IRA, but contributions are not tax deductible and qualified distributions are tax free. Non-qualified distributions from a Roth IRA may be subject to a penalty upon withdrawal.
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Round Lot
A group of shares that can be evenly divided by 100 shares.
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Rule 12g3-2(b)
Under the Exchange Act of 1934, an exemption from supplying information. In order to qualify for the exemption the issuer must regularly supply the Securities and Exchange Commission copies of investor information, files with a stock exchange, or information distributed to its security holders.
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Rule 15C211
Designed to allow a non-reporting public company's securities to be quoted on The Financial Industry Regulatory Authority ("FINRA") Over-the-Counter Bulletin Board ("OTCBB") by filing some simple disclosures.
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Rule 144A
A Securities & Exchange Commission rule, which modifies a required two-year holding period on privately placed securities to permit qualified institutional buyers to trade these positions among themselves.
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An index measuring the performance of the smallest 2,000 companies of the largest 3,000 publicly traded companies.
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An act passed by U.S. Congress in 2002 protecting investors from the possibility of fraudulent accounting activities by corporations. This act mandated stern reforms to improve financial disclosures from corporations and prevent accounting fraud.
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Scale Order
A type of buy or sell order that consists of several limit orders at incrementally increasing or decreasing prices.
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Secondary Market
A market where investors purchase securities from other investors, rather than from issuing companies themselves. The New York Stock Exchange and the NASDAQ are secondary markets.
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Section 19a
These notices report estimated amounts of each fund's current distributions paid from net investment income, net realized capital gains, and return of capital based on each fund's respective fiscal year end. The amounts and sources of distributions reported in these notices are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the fund's investment experience during the remainder of its fiscal year and may be subject to change based on tax regulations. The fund will send a form 1099-DIV for the calendar year that will tell how to report these distributions for federal income tax purposes.
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Securities Act of 1933
Created as a result of the 1929 market crash, this legislation has two main goals, to ensure more transparency in financial statements so investors can make informed decisions about investments, and to establish laws against misrepresentation and fraudulent activities in the securities markets.
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Securities Exchange Act of 1934
Law created to provide governance of securities transactions on the secondary market (after issue) and regulate the exchanges and broker-dealers in order to protect the investing public. The 1934 Act also established the Securities and Exchange Commission (SEC).
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A government commission comprised of five commissioners created by Congress in 1934 to regulate the securities markets and protect investors. This act also monitors corporate takeovers within the U.S. The statutes administered by the SEC are designed to promote full public disclosure and to protect the investing public against fraudulent and manipulative practices in the securities markets.
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Securities Information Center (SIC)
An organization established in 1977 to operate the Securities and Exchange Commission's Lost and Stolen Securities Program. Missing, lost or stolen securities that are must be reported to the SIC, which maintains the database.
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Security
An instrument representing stocks, bonds, and other investment tools.
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Series
Multiple issues of preferred stock or multiple classes of common stock issued by the same corporation.
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Settlement
The finality of a transaction in which a customer pays a broker or dealer for securities purchased or delivers the securities sold and receives the proceeds of a sale.
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Short Sale
A market transaction in which an investor sells borrowed securities because of an expectation of a price decline. The investor is required to return an equal number of shares at some point in the future.
A short seller will make money if the stock decreases in price. The profit that the investor receives is equal to the value of the sold borrowed shares minus the cost of repurchasing the borrowed shares.
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Single-Listed Depositary Receipts
Depositary Receipt whose underlying share is not publicly traded in the issuer's home market, and only listed and traded in the DR market. Cancellation will not result in delivery of a locally listed ordinary share.
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Small Estate Affidavit
Notarized document stating an estate's value and listing the individual who is authorized to distribute proceeds from the estate.
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Social Security Number (SSN)
A nine digit number used by the Internal Revenue Service for tax purposes. All Americans are assigned a SSN, while corporations and trusts are assigned a TIN for tax reporting.
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Sole Proprietorship
Unincorporated business owned by a sole individual who pays personal income tax on profits.
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Specialist
A member of a securities exchange who acts as the market maker to facilitate the trading of a given stock. Specialists hold inventory of the stock, post the bid and ask prices, manage limit orders and execute trades.
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Speculator
An individual who assumes a very large risk in the hope of a gain.
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Spin-Off
The formation of an independent company through the sale or distribution of new shares of an existing business/division of a parent company. Shareowners in the parent company will receive shares in the new company with the total value of new shares remaining the same.
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Sponsored American Depositary Receipt
An American depositary receipt (ADR) that is issued in collaboration with the underlying foreign company whose equity shares will underly the ADR shares. With the corporation's sponsorship, ADRs created in the issue afford their owners the same rights normally given to stockholders, such as voting rights.
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An attestation standard put forth by the Auditing Standards Board (ASB) of the American Institute of Certified Public Accountants (AICPA) that addresses engagements undertaken by a service auditor for reporting on controls at organizations that provide services to user entities, for which a service organization's controls are likely to be relevant to a user entities internal control over financial reporting (ICFR).
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An index of 500 stocks designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large cap universe.
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Stock
A type of security that indicates ownership in a corporation and represents a claim on part of the corporation's earnings.
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Stock Acquisition
A mutually agreed upon merger of two companies in which the shareholders of the companies being acquired receive the acquiring company's stock in exchange for their shares.
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Stock Bond/Power
Form used to execute security transfers.
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Stock Dividend
A dividend payment made in the form of additional shares, instead of a cash payout.
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Stock Legend
Shares that cannot be sold, exchanged or transferred unless requirements are met. These requirements are printed on the stock certificate.
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Stock Split
A corporate action in which a company's existing shares are divided into multiple shares. Although the number of shares outstanding increases, the total dollar value of the shares remains the same compared to pre-split amounts, since no value has been added as a result of the split.
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Stop Limit Order
An order that is executed at a specified price (or better) after a given stop price has been reached. Once the stop price has been reached, the stop limit order becomes a limit order to buy or sell at the limit price or better.
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Stock Unit
A combination of multiple securities, such as common stock and warrants, sold together as a single product.
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Street Name
Securities held in the name of a broker or other nominee, instead of being held in the customer's name.
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Subscription
Offer given to existing shareholders to purchase newly issued securities before new securities are offered to other individuals. Subscription prices are set below the normal market price.
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Successor Custodian
An individual who succeeds another custodian.
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Successor Trustee
A trustee who succeeds a previous trustee and who has the same power as the previous trustee.
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Surety Bond
A bond that guarantees payment if the second party fails to meet the terms of a contract. The surety bond protects the first party against losses resulting from the second party's failure to meet the obligation. There are three parties involved: The Principal, the business or individual who will be performing a contractual obligation. The Oblige, the party who receives the obligation, which is normally a government entity, and the Surety, who guarantees the principal's obligations will be performed.
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Surety Premium
Fee paid by a shareholder to cover insurance for replacing lost securities or by an estate of a deceased shareholder who transfers shares without probate.
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T+3 (Transaction date + 3)
The settlement date of a security transaction. All purchases and sales of securities are settled on the 3rd business day following the transaction date.
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Tax Basis
The original value of an asset for tax purposes, adjusted for stock splits, dividends and return of capital distributions. This value is used to determine the capital gain, which is equal to the difference between the asset's tax basis and the current market value.
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Taxpayer Identification Number (TIN)
Nine digit number used by the Internal Revenue Service for tax purposes. Corporations and trusts are assigned a TIN for tax reporting, while individuals are assigned a social security number.
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Taxpayer Equity and Fiscal Responsibility Act of 1982 (TEFRA)
Federal tax legislation passed in 1982 that requires taxpayers to provide their correct Tax Identification Number to financial institutions (by filling out a W-9 form) who report income from securities to the Internal Revenue Service.
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Tenancy by the Entirety
Joint ownership permits spouses to jointly own property as a single legal entity, with the survivor becoming the sole owner.
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Tenancy in Common
Shared, equal ownership of property for two or more people. Each owner has the right to leave his or her share of the property to any beneficiary upon the owner's death.
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Tender Offer
An offer to purchase some or all of a shareholders shares in a corporation in order to gain controlling interest. The price offered is usually at a premium to the market price.
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Termination
The request to end participation, either by selling all shares or issuing a certificate, in a dividend reinvestment plan account.
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Testamentary Trust
A trust established by a deceased individual's will.
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Third Market
Trading made by non exchange-member brokers of exchange-listed securities.
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Ticker Symbol
A combination of letters that represent a particular security listed on an exchange when traded publicly.
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Trade Date
The date that the purchase or sale of a security is performed.
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Trader
An individual who buys and sells assets in a financial market, either for themselves, or on behalf of another individual.
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Transfer
A change in ownership of an asset, from one individual or account to another.
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Transfer Agent
A trust company, bank or financial institution assigned by a corporation to maintain records of investors and account balances and transactions, to cancel and issue certificates, to process investor mailings and to deal with shareholder problems and inquiries.
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Transfer on Death (TOD)
A registration form designating beneficiaries to receive assets at the time of an individual's death without having to go through probate.
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Treasury Shares
A portion of shares that a company holds in their own treasury.
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Trust Agreement
A formal relationship in which the trustor grants a trustee the right to hold assets for the benefit of a beneficiary of the trust.
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Unclaimed Property
Cash, stocks, bonds and other holdings that have been turned over to the state after several years of inactivity. Some states hold onto such property and allow the original owners and heirs to claim it indefinitely. In other states, if the property goes unclaimed for too long, it may become the state's property through a process known as escheatment.
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Underwriter
A company or entity that administers public issuance and distribution of securities from a corporation. An underwriter works closely with the issuer to determine the offering price of the securities, buys them from the issuer and sells them to investors via the underwriter's distribution network.
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Unrestricted Securities
A security that can be sold publicly within the U.S. because it has been registered with the Securities and Exchange Commission.
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Unsponsored American Depositary Share
An American depositary receipt that is issued without the involvement of the foreign company whose stock underlies the ADR.
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U.S. Payable Date
The date which U.S. holders receive stock dividend distribution for Depositary Receipts.
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Usufruct
An individual or company that has temporary rights to gain income from someone else's property.
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Vest
The time when stock options granted to an optionee are available for exercise.
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Volume
The number of shares or contracts traded in a security or an entire market during a given period of time.
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Voluntary Contribution
The purchase of additional shares by an individual of a dividend reinvestment account.
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Voting Instruction Cards
A card that notes voting issues that will be reviewed at a shareholder's meeting and is issued in exchange for common stock.
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Voting Right
The rights of a shareholder to vote on matters of corporate affairs and policies.
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This form is used by foreign corporations and individuals certifying their non-American status.
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Form issued by the Internal Revenue Service that grants a non-U.S. citizen an exemption from taxation on dividend income, interest, sales, etc.
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Form issued by the Internal Revenue Service used to verify Tax Identification Numbers for U.S. citizens.
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Waiver of Probate
An affidavit required to transfer securities from non-probated estates.
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Warrants
A security giving shareholders the right to purchase securities from the issuer at a specific price within a certain time frame.
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Will
A legal declaration instructing how an individual wishes their property to be distributed after death.
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Originally made up of 5,000 stocks, this is one of the broadest indexes designed to track the overall performance of the American stock markets, making up more than 6,700 companies.
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Withholding
Any tax that is taken directly out of an individual's income before they receives the funds.
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Yield
The return on an investment from the interest or dividend received from a security. The return is expressed as a percentage based on the investment's cost or current market value.
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Zero Coupon Bond
A bond that does not pay interest but is priced at a discount from its redemption price.
