Lingo topic · 52 terms
Sessions and market structure
Trading hours, the interbank market, dealers and liquidity.
A
B
- Banking InstitutionsCommercial and investment banks: the biggest players in currency markets, trading for clients and for themselves.
- BookA dealer's full set of open positions, or the list of buy and sell orders waiting at each price.
- Buy-SideThe investors who buy financial services and products: fund managers, pension funds, hedge funds and the like.
C
- Central Counterparty Clearing HouseAn institution that steps between buyer and seller, becoming the buyer to every seller and the seller to every buyer, to guarantee trades.
- Central Limit Order BookA single shared list of all buy and sell limit orders on a venue, matched by price and then by time.
- ClearingThe behind-the-scenes process of confirming a trade, working out who owes what and preparing it for settlement.
- Commercial CorporationsOrdinary businesses that trade currencies because they buy and sell abroad, not to speculate.
- Continuous Linked SettlementA system used by big banks to settle both sides of a currency trade at the same moment, so neither side pays without being paid.
D
- Daily Cut-OffThe time each day when the forex trading day officially ends, usually 5 p.m. New York time, and overnight interest is applied.
- Dark PoolA private trading venue where large orders are matched without showing them to the public order book first.
- DealerA firm or person who trades from their own account, quoting prices and taking the other side of customers' trades.
- DeliveryThe actual handing over of the asset or currency in a trade; the delivery date is when it happens.
- DeskA team inside a bank or broker that trades a particular market, such as the FX desk or the rates desk.
- Direct Price StreamLive prices sent electronically from a bank or liquidity provider straight to a client's system.
E
- E-Trading DeskThe team at a bank that runs its electronic pricing and trading, where algorithms quote and fill most client orders.
- Electronic Brokering ServicesA major electronic platform where banks trade currencies with each other, especially EUR/USD and USD/JPY.
- Electronic Direct TradingTrading currencies electronically straight with one bank, through that bank's own platform or price feed.
- Electronic Indirect TradingTrading currencies electronically through a venue that pools prices from many dealers, instead of with one bank directly.
- Electronic Market MakerA firm that uses algorithms to quote buy and sell prices continuously, earning the spread across huge numbers of trades.
F
- Financial InstitutionA company whose business is money: banks, brokers, insurers, investment funds and similar firms.
- Front OfficeThe client-facing and money-making side of a bank or broker: traders, salespeople and researchers.
- FX SwapTwo linked currency trades: swapping currencies now and swapping them back at a set rate on a later date.
H
I
- Institutional InvestorA large organisation that invests money on behalf of others, such as a pension fund, insurer, bank or hedge fund.
- Interbank MarketThe top tier of the currency market, where big banks trade with each other directly or through electronic platforms.
- Interbank RatesThe prices at which banks trade currencies or lend money to each other, usually better than what retail customers get.
- Investment FundsPools of money from many investors managed by professionals, such as mutual funds, ETFs, pension funds and hedge funds.
J
L
- Last LookA brief window in which a liquidity provider can reject an order on its quoted price after seeing it.
- LiquidityHow easily something can be bought or sold quickly without pushing its price around.
- Liquidity AggregatorTechnology that combines price feeds from several banks and liquidity providers to show and trade on the best available prices.
- Liquidity ProviderA bank or trading firm that continuously quotes buy and sell prices, standing ready to trade, and so supplies liquidity.
M
- Market MakerA firm that always stands ready to both buy and sell, earning the spread in return for being there.
- Market MicrostructureThe study of the nuts and bolts of trading: how orders meet, how prices form and who gets filled when.
- Mine and YoursOld trading-floor shorthand: "mine" means I buy at your price, "yours" means I sell at your price.
O
P
R
S
- SettlementThe final step of a trade, when the money and the asset actually change hands.
- Settlement PeriodThe time between agreeing a trade and actually exchanging the money and assets.
- Settlement RiskThe danger that you deliver your side of a trade but the other party fails to deliver theirs.
- SWIFTThe global messaging network banks use to send each other secure payment instructions.
T
- ThinA market with few buyers and sellers active, so prices can jump on small orders and spreads widen.
- Tom-NextA short swap that moves a currency position's settlement from tomorrow to the next day, used to roll positions overnight.
- Top of BookThe best available buy price and best available sell price in an order book right now.
V
- Value DateThe day a trade actually settles and the money changes hands.
- Voice Direct TradingTrading currencies by phone directly with a dealer, the old-school way, with no middleman or screen.
- Voice Indirect TradingTrading currencies through a human voice broker who matches buyers and sellers over the phone.
W
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