Definitions

Above par
The term used to describe a security that is priced above its nominal value. Opposite: under par.
See also: Under par
Accept Order
This type of order is essentially the same as a normal order. However, if the sizes on the other side of the market are insufficient to fill the entire order, a partial execution results.In other words, if a match for the total amount does not take place, the balance of the order is cancelled.See also: Normal Order, On-Book Matcher
Accrued Interest
Accumulated but not-yet-payable interest on a fixed-income instrument. Normally, bonds are quoted as a percentage of their nominal value, i.e. the price is shown without inclusion of accrued interest payable because that amount is billed separately.
Active ETFs
A portfolio manager uses an active ETF to continually optimize the composition of the fund by buying or selling selected equities or other securities. This allows him to respond immediately to market trends and utilize opportunities to generate a profit. In each case, he aims to outperform the benchmark.
Active fund
Investment fund whose securities composition and weighting are selected, monitored, reviewed and adjusted by a fund manager in response to market conditions. Active funds generally have a higher total expense ratio than passive funds due to their higher costs of research, personnel and administration.
Active investment strategy
Active asset management is an investment strategy aimed at outperforming a given benchmark index, this by the manager’s either over- or under-weighting in the portfolio certain shares that are contained in the index.
See also: Passive investment strategy
Ad hoc publicity
The Listing Rules of the SIX Swiss Exchange regulate the obligations that companies listed on the SIX Swiss Exchange must fullfil in order to retain their listing. Their aim is to create transparency for investors with regard to potentially price-sensitive information, one method being ad hoc publicity.Examples of price-sensitive information are:publication of financial results mergers or take-overs, spin-offs, restructuring, capital changes, takeover offerssignificant changes in profit (e.g. drops in profit or profit warning) and financial reorganisations. Any information that could have a substantial influence on the share price generally falls under the rules governing ad hoc publicity. As the list of information subject to ad hoc publicity disclosure is not exhaustive, it is up to the company in question to determine what falls into this category.
Adjust
To correct the share price following changes in share capital, in particular in the case of the issue of subscription rights, share splits and share consolidation.
See also: Subscription right
Admission to trading
Domestic and foreign securities that are not listed on the SIX Swiss Exchange may also be admitted for trading on the SIX Swiss Exchange, on condition that they have a primary listing on a stock exchange recognised by the SIX Swiss Exchange. It therefore follows that they need neither a listing prospectus nor listing notice and that the information and reporting obligations for the maintenance of the trading admission are not as comprehensive for the individual securities as they would be if they were listed.The information and reporting obligations that apply mainly to the information required for the pricing of the securities and the orderly settlement of trading are not to be fulfilled by the issuer but by the sponsoring securities dealer. There is no ad hoc publicity obligation.
Aggregated Order
An aggregated order consists of bunched purchase or sell orders emanating from an asset manager or portfolio manager at a participant firm who is empowered to make buy and sell decisions on the basis of discretionary management agreements (powers of attorney) executed with his or her clients. A given aggregated order may bunch together only purchase or sell orders, and may pertain to only a single security; so-called portfolio or basket orders do not constitute aggregated orders.
Aggressor
Aggressors are participants who enter market orders to take out the orders already in the order book. Essentially, they exercise the size and price options on the book and, in doing so, systematically drain liquidity from it. Anyone who buys an option pays a premium, and in this case a higher ad valorem fee.
See also: Trading fees, Posters
Agio
Agio is the percentage difference between the nominal value of a security and its higher current price (e.g. issue price, initial trading price).If for example a bond is issued at 102%, it has an agio of 2%.
See also: Disagio
Algorithmic trading
Algorithmic trading is the term used to describe trading on the stock exchange without direct human intervention. Computers enter trading orders directly, based on predefined, quantitative (mathematical) models,  with an algorithm deciding on the timing and quantity of a buy or sell order. Parameters used include historical and current market data, price differences and trends.
Alpha
Alpha is the term used to denote the excess return on an investment relative to the benchmark that is generated by active management.  Alpha represents the out-performance or under-performance, of a fund, for example, relative to the benchmark. A positive alpha indicates that the fund has performed better than the benchmark; a negative alpha that it has performed worse.
Arbitrage
Exploitation of the price differences of securities by their simultaneous purchase and sale on different stock exchanges. Theoretically a way of generating risk-free profit.
Ask price forwarded from Ask
In securities-exchange jargon, the “ask” is the price at which a security is being offered for sale, thus the ask will always be higher than the “bid” price.
See also: Bid price
Ask price
In securities-exchange jargon, the “ask” is the price at which a security is being offered for sale, thus the ask will always be higher than the “bid” price.
See also: Bid price
Asset classes
An investment segment in which to invest, such as equities, bonds or commodities.
Automated trading
The electronic trading platform of the SIX Swiss Exchange guarantees the automatic execution and fully integrated settlement of all exchange transactions.
Bearer share
Shares which do not carry the name of the owner are referred to as bearer shares. In contrast to registered shares, the company is not aware who its bearer shareholders are. The transfer of bearer shares can be accomplished via a securities exchange or physically and the holder acquires the membership and asset rights vis-à-vis the company. Banks that know the name and address of bearer shareholders forward to them the invitation to the annual general meeting and receive dividend payments for the account of the given shareholder.
See also: Share, Registered share
Bear market
A longer-lasting phase of price declines is referred to as a bear market.
See also: Bull market
Benchmark
The yardstick (usually an index) that measures the relative performance of an investment portfolio. “Benchmark” is a term that is also used to express the comparison of a company’s key figures, products, processes and methods with those of its top competitors.
Beta
A measure of the volatility of a given share relative to the overall market (represented by an index).
Bid price forwarded from Bid
The “bid” is the price at which one or more investors are willing to purchase a security or commodity, thus the bid will always be lower than the “ask” price.
See also: : Ask price
Bid price
The “bid” is the price at which one or more investors are willing to purchase a security or commodity, thus the bid will always be lower than the “ask” price.
See also: Ask price
Blue chips
The term used to describe the shares of leading exchange-listed companies that have top-notch creditworthiness, strong earnings and a solid financial underpinning. Due to their large market capitalisation, they are frequently included in a given country’s benchmark stock index. The name has its origin in the blue chips that can be put on the line at the Monte Carlo casino.
See also: Mid cap, Small cap
Bond
Bonds are debt instruments. In contrast to the purchase of a stock, the buyer of a bond does not acquire equity in the company (i.e. an equity right) but instead loans the company money for a certain period of time. Bonds can carry a fixed or variable interest rate and have a predefined term to maturity and means of repayment. Special forms are e.g. warrant and convertible bonds. Bonds are fundamentally traded in nominal values. Their prices are expressed as a percentage of the nominal value, e.g. 92.56%.
Synonyms: obligation
Bonds
Bonds are debt instruments. In contrast to the purchase of a stock, the buyer of a bond does not acquire equity in the company (i.e. an equity right) but instead loans the company money for a certain period of time (a so-called demand right). Bonds can carry a fixed or variable interest rate and have a predefined term to maturity and means of repayment. Special forms are e.g. warrant and convertible bonds. Bonds are fundamentally traded in nominal values. Their prices are expressed as a percentage of the nominal value.
See also: Bond
Bullet bonds
This type of bond is generally repaid to the investor in a one-off payment at its nominal value upon maturity.
See also: Bond
Reverse floater forwarded from Bull floater
A Reverse floater floating rate bond, the interest rate of which is determined by the difference between a fixed rate and a reference interest rate. If the reference rate rises, the interest on the reverse floater declines, and vice versa (e.g. 10% minus 3-month Libor). In other words, the investor earns more interest if the reference rate sinks.
See also: Bond
Bull market
A longer-lasting phase of price gains is referred to as a bull market.
See also: Bear market
Call option
A call option carries the right but not the duty to buy an underlying asset (e.g. share or commodity) within a contractually determined period and at a predetermined price. Call options can generate sizeable profits when prices rise. Call options involve more risk than an investment in the underlying asset itself because any changes in the price of the underlying have a disproportional impact on the price of the option (leverage effect). Investors often fail to make use of their right to take delivery of the underlying asset, preferring to sell the option before the last day of trading on the stock exchange.
See also: Put option, Eurex, Futures market
Capital Events
Measures taken by a company which influence its capital structure (e.g. capital increases, splits, share exchanges, etc.).
See also: Capital increase, Split
Capital increase
A company obtains additional equity funding by means of a capital increase. A differentiation must be made between an ordinary, conditional and approved capital increase. Opposite: capital reduction.
Capital market
Companies obtain medium- and long-term loans and investments with terms of at least one year on the capital market. Capital market transactions involve trading in securities (shares, bonds, investment funds, etc.). Mortgages and other types of credit are traded on the credit market. The money market, in contrast, serves for trading in short-term financial instruments. The capital market is subdivided according to security type into a market for participation rights (e.g. shares and funds) and a market for debt securities (e.g. bonds). The capital market is also subdivided into a primary market and a secondary market. The primary market is the one in which securities are issued while the secondary market is the market in which they are traded.
See also: Derivative financial market, Money market
Capped Floater
Bonds that pay variable interest and have an upside limit (cap) above which the interest rate will not increase. They are the opposite of bonds with a minimum rate of interest.
See also: Bond, Floating rate note
CCP Central Counter party
Legal entity that acts as an intermediary between the parties to a securities trade and is the seller to every buyer and the buyer to every seller. The counter party risk of the trading parties is transferred to the CCP, which normally guarantees that both counter parties to a transaction remain anonymous.
Certificate
The body of a share or bond certificate, excluding the coupon sheet and renewal slip.
Clearing
Clearing is now generally accepted as a securities risk management process that offers various benefits:post-trade anonymity the elimination of counter party risk and the ability to support multi-lateral netting.Clearing is supported by a clearing house or central counter party (CCP) with the aim of avoiding unnecessary payments between banks by netting trades and settling only any remaining balances.SIS x-clear AG and LCH. Clearnet provide the SIX Swiss Exchange with clearing and risk management services.
See also: CCP Central Counter party
Closed-end fund
These are investment funds in the form of a corporation (usually a joint-stock company) that has a fixed capital base. A closed-end fund is not obliged to take back its shares on demand by the shareholder. Under Swiss law, this form of investment fund may not be marketed publicly in Switzerland.
Close of Trading
An exchange period of the SIX Swiss Exchange. At the end of continuous trading or a closing auction, matching ceases and the closing price is published.
See also: Trading Period
Closing Auction
A closing auction is held for equities and investment funds in order to determine the official daily closing prices. These auctions last 10 minutes and run from 17:20 until 17:30. No trading takes place during the closing auction and the exchange system functions in the same way as during the opening phase. The orders in the order book are fictitiously matched and a hypothetical closing price is calculated on a continuous basis; no actual transactions take place, however. Only at the end of the closing auction are the orders in the order book executed according to the largest best execution principle. This last paid price is the official closing price.As no transactions are carried out during the closing auction, the indices remain unchanged for the last ten minutes and are recalculated using the official closing prices.
See also: Exchange periods
Collared Floater
Bonds that pay variable interest and have an upside and downside limit on the payable interest. The interest rate can fluctuate between those two boundaries.
See also: Bond, Floating rate note
Collective investment scheme
Collective investment schemes are pools of assets accumulated for the purpose of collective capital investment and administered for the account of the participating investors.
See also: Collective Investment Schemes Act (CISA), Funds
Collective Investment Schemes Act (CISA)
Parliament passed the new Swiss Federal Act on Collective Investment Schemes (CISA) on 23 June 2006, which replaced the Investment Fund Act (IFA) and entered into effect in 2007. The CISA has as its purpose the protection of investors as well as the assurance of transparency and functional capability of the market for collective investment schemes. Collective investment scheme is the umbrella term for products such as ETFs, ETSFs and other investment funds.
See also: ETF / Exchange Traded Fund, ETSF / Exchange Traded Structured Fund, Funds
Commercial Register
The Commercial Register is an official register of companies conducting a commercial or manufacturing business or some other form of commercial operation. The applicable provisions are laid down in the Swiss Code of Obligations. The Commercial Register includes the name of the company, security number, share type, par value and number of shares in circulation.
Commission
The amount paid to the bank/broker for its having executed buy and sell orders for securities of any type. The commissions differ depending on the tariff model of the given financial institution and are frequently dependent upon the volume and price of the order, as well as the exchange on which it is executed. Since the end of 1990, the Swiss Cartel Commission has prohibited uniform, prearranged commissions.
Common stock
A common stock certifies all rights that a shareholder is entitled to, e.g. membership and voting rights.
See also: Preferred share
Company-specific risk
Company-specific risk (or unsystematic risk) is specific to an individual company. For example, the stock market or the share prices of comparable companies may rise yet certain company-specific news can have a negative influence on the share price. This company-specific news can include negative events such as strikes, management crises and poor annual results as well as positive news such as the winning of a major order, innovative products and a favourable market outlook. Extraordinary events within a company may affect the fluctuation in the share price (volatility) and cannot be foreseen.
See also: General risk
Conditional forward transaction
In contrast to unconditional forward transactions, conditional forward transactions give the buyer the right to decide in the future whether the transaction should actually be carried out under the agreed terms. This right makes the investment more lucrative and therefore subject to a premium. All forms of options are conditional forward transactions.
See also: Unconditional forward transaction
Continuous Trading
During the continuous trading period, new orders or quotes are continuously matched with orders or quotes already in the book according to the matching rules. All orders remain in the book until they match or expire.
See also: Exchange periods
Contrarian
A contrarian investor bets against the prevailing trend in the market or that of a given security. In other words, contrarian investors buy when prices are falling and sell when they are rising.
Convertible Bond
A convertible bond confers a temporary right to exchange the bond for a predefined number of equity securities, e.g. shares. A holder who exercises the conversion right is no longer a creditor (i.e. provider of debt capital) but instead becomes a shareholder (i.e. provider of equity capital). If the conversion right is not exercised, the convertible bond behaves just like a normal bond. Due to the possibility to convert the bond into equity rights (which represents added value for investors), the interest rate on convertible bonds is mostly somewhat lower than on normal bonds.
See also: Bond
Corporation
A type of company in which shareholders hold shares of the registered capital and are not liable for any amount exceeding their share.Short form: Amer. “Inc.”, Brit. “plc” (public limited company), Ger. “AG”
See also: Share
Counter party risk
Also default risk: The risk that a counter party to a contract will fail to fullfil their obligations and thus cause another contractual party to incur a financial loss.
Coupon
A collective expression for the detachable parts of a securities certificate that entitle the holder to receive a dividend or interest payment. In the capital market, “coupon” normally refers to the interest payment; in the case of bonds, they are also called interest coupons.
Creditor
A creditor is a natural person or legal entity that has the right to assert a claim against some other natural person or legal entity (debtor). Holders of bonds (i.e. debt instruments) are creditors of the company that has issued the bond. In the event of the company’s bankruptcy, the creditor’s ranking is of great significance in the way any residual assets will be distributed. Privileged creditors (e.g. employees) have a priority claim in this regard.
See also: Debtor, Debt security
Creditworthiness
Creditworthiness reflects an assessment of the financial characteristics of a company (or in general, of a borrower) in terms of its ability to incur and repay debt. The first characteristic expresses the willingness and the second the capability to fullfil the requirements that enable the associated payments to be made. Creditworthiness can be measured on the basis of various criteria, and it most commonly takes the form of an official “rating”. Creditworthiness is an especially important decision-making factor in the purchase of bonds.
CSD Central Securities Depository
The core competency of a CSD is the centralised settlement of securities transactions and the collective safe custody of securities.
Cum dividend (with dividend)
A share that is traded cum dividend (i.e. with a dividend) entitles the holder to receive a dividend at the next dividend payment date. This phase generally extends from the dividend announcement to the day before the shares are traded without a dividend (i.e. the ex-date).
See also: Ex dividend, Ex date, Record date, Payment date
Currency
A system of money in general use in a particular country, which serves as a benchmark and legal tender. The external value of a currency is defined by its exchange rate, the internal or domestic value is called purchasing power.
Currency risk
An investment in securities in a foreign currency harbours the risk of changing exchange rates.
Current market value
This represents the basis for the valuation of the fund’s assets. For securities funds, the current market value is derived from the closing prices of the currencies and portfolio holdings of the fund on the valuation date. In the case of real estate funds, it is established or verified by independent assessors. The auditors of the fund must provide an opinion on these assessed values.
Custodian account
Serves financial institutions as a means of safekeeping the securities their clients have deposited. The financial institution books all securities purchases and sales to this account and the related account statement reflects the value of all the client’s investments. For these administrative activities, the banks charge what is termed a custodian fee.
Dax®-Index
Most important German Equity Index. Calculated since 1988, it contains the 30 most important German companies listed on Deutsche Börse and is calculated once per second.
DB Rüd Blass Swiss Real Estate Funds Index
The DB Rüd Blass Swiss Real Estate Funds Index mirrors the price performance of a maximum of 10 Swiss real estate investment funds. The index was standardised at an initial baseline level of 100 as at February 1960 and calculated originally on an annual basis but, as of April 1982, is now computed monthly. The SIX Swiss Exchange has been calculating the index on behalf of Rüd Blass five times a day since 1 July 2001. While the NAV-weighted index takes into account the size of the real estate investment funds, the equal-weighting index calculates the arithmetic mean value of the various funds included in the index. Adjustments to the index are normally made two times a year on the first trading day of January and July.
See also: Index
Debenture
Other term for bond.
See also: Bond
Debt capital
The debt capital of a company is shown on the balance sheet and defined as the difference between assets and shareholders’ equity. A company’s debt capital consists of obligations vis-a-vis third parties, e.g. bank credits, loans and bonds that have been issued. Depending on the term of those obligations, a differentiation is made between short-term and long-term liabilities. The entitlements of providers of debt capital (e.g. investors who own the company’s bonds) differ from those of providers of equity capital. For having provided debt capital, an investor earns comparatively lower interest, but at the same time assumes less risk. Moreover, providers of debt capital have no ownership rights in the company (e.g. voting rights) or a claim on the company’s assets (e.g. to dividends).
See also: Shareholders’ equity
Debtor
A legal or natural person who, on the basis of a contract, owes a sum of money or some other performance. Opposite: creditor.
See also: Creditor
Delayed Opening
If the theoretical opening price equals or exceeds an Exchange-specified tolerance range, an automatic “stop trading” occurs and the opening in the given stock is delayed by either 5 or 15 minutes. The Exchange has laid down the tolerance ranges and time frames (stop-trading duration) in the Trading Guide.
See also: Stop Trading
Delisting
Definitive cessation of trading in a given security that no longer fullfils the continued listing requirements of the SIX Swiss Exchange.
Delivery versus Payment, DvP
Delivery versus Payment.
Derivative financial market
Some investors and companies seek ways of hedging their invested capital (diversification) on the derivative financial market while others seek investments involving a high degree of risk that offer high returns and leverage. Derivatives are financial instruments whose prices depend on underlyings such as shares, bonds, funds, interest rates and indices as well as even non-economic values such as the weather.
See also: Call option, Put option, Futures
Derivatives
Derivatives are financial contracts whose prices are derived from an underlying asset (e.g. shares, bonds, indices or currencies). These so-called “underlyings” are subject to changing market prices. Derivatives make it possible to uncouple such market price risks from the underlying and trade them separately. Derivatives can basically be broken down into two groups: unconditional (futures, forwards etc.) and conditional (options) forward transactions. Derivatives in so-called certificate form include warrants and structured products.
See also: Structured products, Unconditional forward transaction, Conditional forward transaction
Directives
Specific procedures associated with the Rules and Regulations of the SIX Swiss Exchange issued by the SIX Swiss Exchange Management.
Disagio
A disagio is the percentage difference between the nominal value of a security and its lower current price (e.g. issue price, initial trading price). If for example a bond is issued at 98%, it has a disagio of 2%.
See also: Agio
Discount bond
Discount bonds pay a lower rate of interest than classical bonds. However, so that investors’ desired return is nonetheless achieved, discount bonds are issued at a price significantly below parity (i.e. beneath the nominal value).
See also: Bond
Distribution
The profits of an investment fund are paid (distributed) to unit holders annually following the end of the fund’s fiscal year. Alternatively, there are so-called “reinvestment funds”, whose profits are reinvested rather than distributed.
See also: Reinvestment funds
Distribution funds
These funds distribute their annual investment income to shareholders at the end of the year. That income is derived from dividends, interest and the sale of securities. Opposite: reinvestment funds.
See also: Reinvestment funds
Diversification
Diversification is the method by which investors allocate their liquidity to a wide array of financial instruments that may even have opposing price trends. Depending on the degree of diversification, the risk incumbent in adverse price fluctuations is reduced, but so is the potential return. For the sake of diversification, an equity-based portfolio can, for example, be supplemented with investments in securities based on commodities such as gold, silver or foodstuffs.
Dividend
If a company has had a successful financial year, it normally books a profit. Shareholders have a right to a portion of that profit. The dividend represents the portion of a joint-stock company’s (plc) profit that is distributed to its shareholders.
See also: Dividend yield, Dividend policy, Cum dividend, Record date
Dividend policy
As a general rule, joint-stock companies pay out a portion of their profits to shareholders. This portion, expressed as a percentage, is referred to as the “payout ratio”. In keeping with economic principles, senior management decides what portion of the company’s profits should be retained. Companies with a low payout ratio or pay no dividend at all keep a larger portion of the profit in order to, for example, finance research, development, production and/or marketing. Over the medium to long term, those investments can pay off for shareholders in the form of a higher share price, thereby compensating for the lack of a dividend. Companies endeavour to maintain a consistent dividend policy with the goal of being able to maintain the annual dividend at least at the prior-year level, regardless of the current course of business.
See also: Dividend
Dividend yield
The dividend yield expresses the dividend as a percentage of the current market price of the shares. The gross dividend is used in this calculation, i.e. before deduction of any withholding tax.
See also: Gross dividend
Domestic bond
If an issuer places a bond in its home country and in local currency, one speaks of a domestic bond. Domestic bonds in Switzerland are always denominated in Swiss francs.
See also: Bond, Foreign bond, International Bond
Duration
Duration (also known as Macauley duration) is the average period of capital commitment. Unlike the simple term to maturity, it takes account of the varying coupons on the bonds, which naturally react in different ways to changes in interest rates. The greater the duration, the stronger the effect of changes in interest rates on the bond price in both the positive and negative sense. Duration analysis can be applied to entire bond portfolios. It can also be used to hedge bonds against adverse interest rate developments.
Duty to Trade on the Exchange
The obligation of a participant to execute all of its trades in securities that are listed on the SIX Swiss Exchange on the Exchange, i.e. via the electronic on-book matcher. This obligation applies only to transactions made during trading hours, and is limited to those orders which are below the obligatory exchange limit.
ECB / European Central Bank
The European Central Bank with headquarters in Frankfurt am Main is the equivalent of the Swiss National Bank within the EU. Its task is to implement European currency policy and to remain completely independent of the directives of governments or central authorities. The European System of Central Banks (ESCB) consists of the central banks of the EU Member States.
Emerging-markets fund
An investment fund that invests in emerging economies, such as those in the Asian-Pacific region and Latin America.
Employee shares
Listed companies frequently offer their employees the opportunity to acquire its shares at a price below the current market price. There are various reasons for doing so: e.g. to broaden the spectrum of shareholders, reward employees for their loyalty, allow them to participate in the company’s success as well as to have co-determination rights and, in rare cases, to cover the company’s need for additional equity capital.
Equity funds
Investment funds that invest primarily or exclusively (at minimum, two-thirds) in company shares. Generally this type of fund aims to achieve long-term growth.
See also: Funds
Equity security
Equity securities embody rights in a company or an association. They are held by virtue of their owner’s capacity as a member of the company or association. These rights may be purely proprietary in nature; they may also, however, confer a right to participation. Depending on the form of the company and the nature of the right, one or other of these aspects will be predominant. As a rule, equity securities confer an entitlement to a share in the profit generated and in any surplus on liquidation. The equity securities of relevance to the exchange are tradable and negotiable. Examples of non-tradable equity securities are limited partner’s shares or shares in a private limited company.
See also: Debt security, Share
ETF / Exchange Traded Fund
Exchange traded funds (ETFs) are traded on an exchange and are split into two categories: active and passive ETFs.
ETPs / Exchange Traded Products
Exchange Traded Products (ETPs) are collateralised, non-interest-paying bearer debt securities (debentures), which are issued as securities and may be sold and redeemed in the same structure and denominations on a continuous basis.
ETSF / Exchange Traded Structured Fund
Exchange traded structured funds (ETSFs) combine the payout regime of structured investment products with the legally prescribed safety of collective investment schemes. As a result, private and institutional investors benefit from the advantages of both investment vehicles.
See also: Funds
EURO STOXX 50
The most important index for the euro zone markets is the EURO STOXX 50, which contains the shares of 50 companies from 12 countries. The individual shares are selected according to criteria such as market capitalisation, turnover and sector.
See also: Index
Exchange
An exchange is an organised market in which the supply of securities meets demand for them. The key task of a securities exchange is to play the role of an intermediary ensuring transparency in dealings between investors and companies. Depending on the specific instruments traded, one speaks of securities, foreign currency, options, futures or commodities exchanges.
See also: SIX Swiss Exchange
Exchangeable bond
Exchangeable bonds are those that grant the holder the right to convert them into shares of another company than those of the issuer. The issuer can use this form of financial instrument to divest financial interests in other entities. SIX Swiss Exchange categorises exchangeable bonds as derivatives.
See also: Bond
Exchange Days
The days on which the systems functions of the SIX Swiss Exchange are available for on-order book and off-order book trading: as a rule, Mondays to Fridays inclusive. The trading hours (Opening, Continuous Trading and Close of Trading) of the individual segments are often referred to as the “trading day”.
Exchange fee
In accordance with the General Conditions, SIX Swiss Exchange levies fees for the services it renders. The document entitled Directive 16 – Fees contains the relevant provisions in this regard.
See also: Trading fees
Exchange Holidays
The days on which the systems functions of the SIX Swiss Exchange are not available for on-order book and off-order book trading: as a rule, Saturdays and Sundays, as well as Swiss federal holidays.
Exchange periods
Trading on the SIX Swiss Exchange is divided into different periods:Pre-opening, opening, continuous trading, close of trading, post-trading. Most transactions are executed during continuous trading.
See also: Pre-opening, Opening, Continuous Trading, Closing Auction, Close of Trading
Ex date
The ex date is the first exchange day on which the shares are traded ex dividend, i.e. without dividend. Usually, but not necessarily, the opening price is the last closing price less the dividend amount.
See also: Ex dividend, Dividend
Ex dividend
Shares bought after a share is traded ex dividend are no longer entitled to payment of the last dividend but only to the next dividend payment.
See also: Cum dividend, Dividend
Extendible bonds
Extendible bonds grant investors the right at one or more predetermined dates to prolong the term of the bond for a specified additional period of time. If that option is not availed, the bond will be redeemed at the end of its normal term. If the term is prolonged, the bond’s covenants remain in force until the new maturity date.
See also: Bond
Extraordinary Situations
Extraordinary situations are defined as interruptions of trading. To ensure fair and orderly trading to the greatest extent possible, SIX Swiss Exchange may take appropriate measures. The following interruptions can be applied: Non-OpeningDelayed OpeningStop TradingSuspension of Trading
Federal stamp duty
Stamp duty has been levied in Switzerland by the cantons since the beginning of the 19th century. This is basically a non-special-purpose tax levied by the Confederation on specific securities transactions. If you buy or sell a domestic share or bond traded on the SIX Swiss Exchange, you will be charged a specific percentage on the amount of the transaction. The counterparty is normally charged the same amount. Federal stamp duty is subject to many exceptions and special cases, which are regulated in the Swiss Federal Stamp Tax Act (StG).
Fill-or-Kill Order
This type of order is a further development of the accept order. Fill or kill means all or nothing: the order is executed at the best price in the order book under the condition that the entire number of shares required is immediately available. There is no partial execution. If no complete matching occurs, the entire order is deleted immediately.
See also: Standard Trading Interface (STI)
FINMA (Swiss Financial Market Supervisory Authority )
As a state regulatory body, FINMA is endowed with supreme authority over banks, insurance companies, stock exchanges, securities dealers and collective investment schemes. It is responsible for combating money laundering and, where necessary, conducts financial restructuring and bankruptcy proceedings. In addition, it has supervisory powers with respect to the disclosure of holdings and is the complaints body for decisions of the Takeover Board in the area of public takeover bids for listed companies.FINMA grants operating licences for companies and organisations subject to its supervision, monitors the supervised institutions with respect to their compliance with the requisite laws, ordinances, directives and regulations, as well as with the conditions for the granting of licences that must be complied with at all times. Where necessary and to the extent permissible by law, FINMA imposes sanctions, provides administrative assistance and regulates. In other words, it participates in the amendment of laws and corresponding ordinances, issues circulars and, where it is authorised to do so, its own ordinances. FINMA is also responsible for ensuring that selfregulation is acknowledged appropriately.
Floor Floater
The variable rate of interest payable on such bonds cannot be lower than the predetermined minimum rate (floor), thus investors are assured of a minimum interest yield.
See also: Bond, Floating rate note
Forwards
Forwards are customised futures transactions that are not exchange-traded. where the counterparties decide on the type and price of the object to be traded, the quantity to be delivered and the delivery date. Forwards are difficult to trade due to their lack of standardisation.
See also: Unconditional forward transaction
Free float
Free float is that portion of a company’s overall share capital that is not “locked up” in firm hands (e.g. the founder or his/her family, the company’s management, certain institutions, etc.). Free float represents those shares that can be traded on the exchange at any time. Small shareholdings of private investors are also counted as free float, even though those shares are in firm hands. For the listing of a company in the main segment of SIX Swiss Exchange AG, for example, a free float of at least 25% is required. Blue chips often have a much higher free float.
Fund assets
Total value of all the assets of a fund. The fund assets of a security fund comprise shares and/or fixed-income securities, a cash reserve and other assets.
Fund manager
A person whose decisions determine how a fund is invested. Active investment management aims at increasing the fund assets according to its strategy and objective as rapidly as possible while passive investment management has the aim of replicating the performance of a benchmark as closely as possible.
Funds
The term “fund” refers to a pool of assets accumulated for the purpose of collective capital investment. The fund market on SIX Swiss Exchange comprises exchange traded funds (ETFs), exchange traded structured funds (ETSFs) andother investment funds.The Swiss Federal Act on Collective Investment Schemes (CISA) regulates these forms of investment. Collective investment schemes are advantageous because they pool the money of investors and therefore can invest in assets such as shares, bonds, real estate and other financial instruments in a professional manner and at more favourable conditions. Funds are based on the concept of risk diversification). Private investors benefit from the ability to invest even small amounts in a broadly diversified portfolio. Because the fund’s assets are invested in a wide array of individual securities, losses incurred by a specific security have a lesser impact on the overall performance of the portfolio. Investment funds are offered by various financial service providers and differ in their composition. Exceptions in this regard are funds that only invest in a single underlying instrument (e.g. commodities).
See also: ETF / Exchange Traded Fund, ETSF / Exchange Traded Structured Fund, Collective Investment Schemes Act (CISA)
Futures
Futures are standardised forward contracts on securities, indices, foreign currencies, interest rates and commodities. They represent a firm commitment in terms of price, quantity and delivery date. With futures, the conditions for a purchase or sale at a specified time are predetermined at the time the transaction is executed.
See also: Unconditional forward transaction
Futures market
Futures transactions are transactions in which the price, number and delivery date of the traded securities are agreed when the transaction is concluded but delivery and payment take place at a future time. Usually the term “futures transaction” is used if the time period is three days or more. These characteristics ensure a clear demarcation to the spot market.
See also: Spot market
Going Public
The introduction of a company to the stock exchange by means of a public offering of its shares.
See also: IPO (initial public offering)
Greenshoe
If in an initial public offering (IPO) the shares are in such great demand that not all interested investors can be satisfied, what is termed a greenshoe comes into play. In such an instance, and if the offering prospectus provides for such, the underwriter can exercise its “greenshoe option” to place more shares than originally contemplated and at the same conditions as the original IPO, thereby increasing the number of exchange-tradable shares by a predefined amount.
Gross dividend
The gross dividend is the entire amount of a dividend, while the net dividend is the payment received by investors net of withholding tax.
See also: Dividend
Hedge funds
Hedge Funds are investment funds subject to no legal or other restrictions on their investment policies. They seek to use all investment forms multiply their capital over the shortest possible periods. Hedge funds offer the chance of very high profits, but also harbour a correspondingly high risk of capital loss.
See also: Funds
Hedging
Strategy designed to protect a position or a portfolio against any adverse changes in the market. A counter-position is built up to an existing securities position with the aim of minimising the risk of the portfolio.
ICSD International Central Securities Depository
International Central Securities Depositories (ICSDs) settle transactions in international as well as certain local markets, mainly by means of a direct or indirect (via local banks) link to CSDs.
Index
An index comprises an array of stocks, bonds, commodities or other asset types. The various prices of those assets (index components) are added together, mostly according to a certain weighting such as market capitalisation, and result in the total value of the index. Changes in the index act as a barometer of the given market. Indices can be calculated in various ways. A fundamental differentiation is made between a price index and a performance index (or total return index). In the latter, the interest or dividend income as well as changes in capital are included in the calculation. The most renowned Swiss indices are the SMI (Swiss Market Index), the SLI (Swiss Leader Index), the SPI (Swiss Performance Index) and the SBI (Swiss Bond Index).
See also: Performance index, Price index
Index adjustment
A regular adjustment made to an index on the basis of the fixed rules and regulations laid down by the index operator.
Index funds
The composition of an index fund reflects an underlying securities index. The objective of such a fund is to participate in the given index’s price development. Index funds are offered by various investment companies on practically all well-established indices. In comparison to traditional equity funds, index funds exhibit relatively low volatility and therefore present investors with an interesting alternative to other forms of share investment.
See also: Funds
Indicative Net Asset Value (iNAV)
The indicative net asset value (iNAV) is calculated for exchange-traded funds at least once per minute during trading hours to serve as a means for investors to monitor and access correct information. The iNav is an indication of the amount of fund assets being traded and is calculated on the basis of the prices of the individual positions in the fund portfolio. The composition of the fund, updated on a daily basis, is included in the calculation along with the amount of cash the fund has at its disposal. The thus calculated fund assets are divided by the number of outstanding fund units to arrive at the iNAV.
See also: Net asset value
In-house fund
In-house funds of banks are fund-like segregated pools of assets, units in which may be offered only to the existing portfolio management customers of a given bank. Such in-house funds may not be advertised to the general public.
Insolvency
Insolvency refers to a company’s impending or acute inability to meet its obligations. If the insolvency is prolonged, the company has to file for bankruptcy.
Synonyms: impending
Institutional investors
Institutions that trade large volumes of securities on the money and capital markets (e.g. pension funds, insurance companies, investment companies).
Institut Monetaire Luxembourgeois (IML)
This regulatory body is Luxembourg’s equivalent to the Swiss Federal Banking Commission for purposes of investment fund supervision. It approves fund prospectuses and monitors compliance with the legal and regulatory provisions associated with investment funds.
Interest coupon
When interest becomes payable, the appropriate coupon on a bond or medium-term cash bond must be detached and presented in order for the holder to receive payment.
See also: Coupon
Interest rate
The return (or yield) of a security. A differentiation is made between nominal interest, compounded interest and yield (i.e. the actual rate of return).
See also: Return
International Bond
The key features of international bonds, previously referred to as Eurobonds, are the foreign currency in which they are denominated as well as the foreign domicile of the issuer. From a Swiss standpoint, a bond is international if the registered office of the issuer is not in Switzerland and the bond is denominated in some other currency than Swiss francs.
See also: Bond, Foreign bond, Domestic bond
Reverse floater forwarded from Inverse floater
A Reverse floater floating rate bond, the interest rate of which is determined by the difference between a fixed rate and a reference interest rate. If the reference rate rises, the interest on the reverse floater declines, and vice versa (e.g. 10% minus 3-month Libor). In other words, the investor earns more interest if the reference rate sinks.
See also: Bond
Investment certificate
A security that permits the investor to participate in the price changes of an underlying asset. In principle, investment certificates are fixed-income securities of an issuer without interest payments but with fixed payout modalities at a specific expiry date.
Investment-Index
Investment Index This index of investment companies comprises all investment companies listed on the SIX Swiss Exchange . These companies are not included in the SPI® so as to prevent securities held by investment companies from being counted twice. Like all SIX Swiss Exchange equity indices, the Investment Index is free-float-adjusted.The Investment Index was first calculated as a performance index and as a price index on 01.07.1998. The dividend-corrected index (IGSTR) was standardised at 1000 points, the price index (IGSP) at 100 points. The two indices are calculated every three minutes.
Investment policy
An investment policy relates to the determination and realisation of specific investment objectives. It involves the selection of securities according to their type, country of origin, industry and underlying company, as well as decisions relating to the time of purchase and sale, planning the term structure of bond, managing liquidity, etc.
IPO (initial public offering)
When a company issues its shares to the public for the first time, the process is referred to as an initial public offering (IPO). A private company whose shares were previously held exclusively by a limited circle of individuals becomes a public company when its shares are listed on an exchange. Most times, an IPO is handled by an underwriting syndicate consisting of one or more investment banks.
See also: Offering, Going Public
ISIN
ISIN stands for international securities identification number. Each securities issue traded on an exchange is identified by a twelve-digit ISIN consisting of letters and numbers. Even if the security is traded on various exchanges and in different currencies, it still has the same ISIN because it is always a matter of the same security.
Issue price
Shortly before the launch of the IPO an issue price is set for the shares of the company in question. It must fall within the previously set price range and is usually determined by the bank assuming the position of lead manager or by a syndicate. The issue price is used as a reference price for the first trade.
Issuer
The issuer can be a company or a public sector body that generates capital through an issue of securities such as shares or bonds.
See also: Offering
Issuing commission
Fee paid by the investor when purchasing active fund units to cover the issuing costs. Depending on the type of fund in question, it is usually between 1% and 5%. No issuing commission is paid on exchange-traded funds, however.
Junk bonds
Risky bonds with high coupon rates, mostly from issuers with questionable creditworthiness.
LIBOR
The London Interbank Offered Rate (LIBOR) is the interest rate that banks in London charge each other for short-term loans. LIBOR is also an important rate for banks and financial services companies across the world.
Limit order
A limit order is an order placed with an upper or lower limit. The shares in question are bought in the order book at a specific or better price.
Liquidity
Liquidity is a measure of the extent to which a company can meet its payment obligations on time. The more liquid a company is, the more financial leeway it has to act at short notice (see Cash flow).Liquidity is also the term used to describe the marketability of securities. Liquid securities are characterised by high turnover, low bid-ask spreads and a large free float.
See also: Liquidity risk
Liquidity risk
The risk of not having enough liquid assets at a certain time and of therefore being unable to fullfil certain obligations.
See also: Liquidity
Listing
The listing of a company or, as it were, the company’s securities on SIX Swiss Exchange involves the verification of all listing-relevant criteria and documentation. The applicable regulations for a listing are laid out in the Listing Rules and the various additional rules, and are specified in Directives, Circulars and Messages. As the result of its listing, the issuer becomes subject to maintained listing requirements such as the obligation to publish periodical financial reports as well as the duty to comply with rules governing ad hoc publicity, applicable accounting standards, the disclosure of financial interests, corporate governance and the disclosure of management transaction. Not all securities traded on SIX Swiss Exchange are actually listing on the Exchange: for example, certain international bonds that are listed on some other exchange recognised by SIX Swiss Exchange are merely “admitted to trading.”
See also: Admission to trading
Listing Rules
The SIX Swiss Exchange Listing rules and associated rules govern the procedure for admission of securities to trading (listing) on the SIX Swiss Exchange.
Loan participation note
In terms of their functioning and investment risk, LPNs are comparable to an investment in “normal” bonds. In return for the investor’s commitment of capital (nominal amount), the issuer makes regular interest payments and, at maturity, the note is repaid at par. However, in contrast to “normal” bonds, there is a three-party relationship involved in an LPN: normally, a bank is deemed to be the “legal issuer” from the investor’s standpoint; however, the actual borrower is some other company in the background (the “commercial issuer”). That company obtains its debt financing from the legal issuer indirectly in the marketplace, in that the latter issues LPNs for the sole purpose of financing the loan that has been granted to the former. The legal issuer deposits the capital repayments and interest payments in a segregated account secured against bankruptcy and guarantees that investors are entitled to these cash flows.
Locked-in transaction
Stock exchange trades that are forwarded electronically from a trading platform to a settlement system without any modification of the trade details being possible. No manual intervention is possible between conclusion of the trade and its settlement.
Long position
A long position is established when financial instruments are bought. The investor expects to be able to sell them at a higher price at a later date. Opposite: short.
See also: Short position
Lottery bonds
Repayment of this type of bond is generally effected by means of a draw conducted at various points in time. Usually, these bonds feature a repayment-free phase as well as a redemption period, during which the bonds are drawn by serial number in several tranches.
See also: Bond
Major shareholders
Shareholdings in companies that are domiciled in Switzerland and have at least a portion of their shares listed in Switzerland must be reported to the company in question and the SIX Swiss Exchange if the shareholdings exceed, fall below or reach certain thresholds. The thresholds are 3, 5, 10, 15, 20, 25, 33 1/3, 50 and 66 2/3 % of the voting rights. Details are set out in the Federal Act on Stock Exchanges and Securities Trading (SESTA) and Stock Exchange Ordinance-FINMA (SESTO-FINMA).
Management fee
The fund management of a collective investment scheme charges an administrative fee for various administrative tasks known as the management fee. Depending on the type of fund, this fee can vary from 0.15% to 3% or more. The fund prospectus sets out how the fees are to be charged to investors.
Market maker
Market makers are banks or brokers the undertake to post binding bid and ask prices as well as minimum sizes for certain securities and thereby “make a market” in those securities. Frequently, the issuer of a security also acts as its market maker.
Market order
A buy or sell order without a price limit that is almost always the type used for tradable shares. The shares in question are bought for the lowest (= best) price currently offered in the order book.
See also: Normal Order, Accept Order
Matching
The automatic execution of exchange orders in the same security which correspond in price (bid price higher or equal to the asked price). Pricing (the setting of current prices) in stock exchange trading is carried out in the same way for all securities according to the matching rules set by the SIX Swiss Exchange. On the basis of these rules, the electronic exchange system calculates the opening prices, the prices during continuous trading and the closing prices of all securities.
See also: Matching Rules
Matching Rules
Pricing and execution of transactions during exchange trading takes place for all participants in the same manner in accordance with the rules of pricing, i.e. the so-called Matching Rules, as set forth by SIX Swiss Exchange.
Mid cap
Term for companies with medium-sized market capitalisation.
See also: Blue chips, Small cap
MiFID
MiFID stands for Markets in Financial Instruments Directive; or Directive on Markets in Financial Instruments. MiFID has been in force since 1 November 2007. It was drawn up by the European Union with the aim of improving investor protection, increasing competition and harmonising the European financial market.This directive aims in particular to strengthen the rights of investors, and focuses on the provision of appropriate information, suitable recommendations and transparent pricing. The banks are instructed to categorise their investors into private and professional clientsto execute transactions at the most favourable conditions possible for the client in terms of cost, speed and the probability of execution and settlement (best execution)to ensure that the client receives suitable recommendations only and to minimise resolve or disclose any conflicts of interest.MiFID applies to the EU/EEA Member States and to the financial services providers registered there. Swiss financial services providers formalise the MiFID guidelines in practice.
Collared Floaterforwarded from Mini-max floater
Bonds that pay variable interest and have an upside and downside limit on the payable interest. The interest rate can fluctuate between those two boundaries.
See also: Bond, Floating rate note
Mistrade
A mistrade occurs when the price of the transaction deviates significantly from the market price or if fair and orderly trading is not guaranteed.
Monetary market
Money or capital, so-called financing activities, are invested and borrowed on the monetary market. These activities include, for example, purchasing financial products such as shares, bonds or funds, taking out a mortgage, paying money into a savings account or buying foreign currency.
See also: Capital market, Derivative financial market
Money market
The main participants in the money market are the banks, whose primarily goal is to secure liquidity. The money market is a well-developed market organisation characterised by impersonal relationships between borrower and creditor, the high credit ratings of all market participants and its high degree of standardisation.
Net asset value
The term used to reflect the total value of an investment fund’s assets (usually indicated on a per share/unit basis). In determining the net asset value (NAV), the current value of all assets held by a fund are added up and any expenses deducted. The resulting amount is then divided by the number of the outstanding fund shares/units.
See also: Indicative Net Asset Value (iNAV)
Net dividend
When a joint-stock company distributes a dividend, it is paid out after deduction of withholding tax, thus the investor receives the net dividend.
See also: Gross dividend, Dividend
Newsboard
Trading relevant news published by the SIX Swiss Exchange is made available to the public on the newsboard.
See also: Market Data Interface (MDI)
Non-opening
If all market orders in a particular security cannot be executed during an auction, then the order book of that security will fall into a non-opening status. The non-opening status will finish when either the market order overhang is removed or an order that satisfies the market order overhang is entered.
See also: Exchange periods
Normal Order
Normal orders are the most frequently used type of order. A normal order may be entered into the on-book matcher without a price parameter (market order) or with one (limited order). Any parts of a normal order that are not executed remain in the order book until they can be executed.
See also: Standard Trading Interface (STI), Market order, Limit order
Offering
The issuance of new or existing securities is referred to as an offering (or public offering). In this process of acquiring debt or equity capital, the securities are issued at the same conditions during the offering phase.
See also: Price range, Subscription period
Official notice
Companies listed on the SIX Swiss Exchange must report certain security-related and corporate events to the SIX Swiss Exchange. These official company reports are in turn announced by the SIX Swiss Exchange in the form of official notices. Official notices provide the following information:in the case of equity securities: name change, dividend/ex-dividend trading, capital reductionIn the case of bonds and conversion rights: general details about the issuer (name changes, change in the auditors, etc.), bond (amortisation, premature repayment, etc.) and conversion rights (capital events in the underlying etc.)In the case of derivatives: general details about the issuer, derivative (adjustment to the strike price or subscription ratio, attainment of threshold values which influence the price or valuation, etc.)Official notices are not to be confused with ad hoc publicity.
Off order book trading / off-Exchange trading
Normally, securities trading in Switzerland is conducted via SIX Swiss Exchange AG. However, the Exchange System also supports off order book (off-Exchange) forms of trading. For all transactions they execute away from the Exchange System, participants are subject to a reporting requirement. In the broadest sense, off order book trades comprise all securities transactions that have not been concluded directly on the Exchange (for example, via the OTC market).
See also: Reporting Requirement
Off-Order Book Transactions
All transactions in securities listed on the SIX Swiss Exchange that have not been executed through the on-book matcher. During trading hours, only orders that exceed the obligatory Exchange limits may be executed with an off-order book functionality. (Trade confirmation and Reported Trade).
See also: Trade Confirmation, Reported Trade, On-Order Book Transactions
On-Book Matcher
The on-book matcher maintains both orders and quotes and matches these against all other orders and quotes in accordance with the matching rules of the on-book matcher (OBM).
See also: Market Model
On-Order Book Transactions
All trades that are executed through the on-book matcher of the SIX Swiss Exchange. During trading hours, all orders that are below the obligatory Exchange limits must be traded on-orderbook.
See also: Off-Order Book Transactions, On-Book Matcher
Open-end fund
An open-end fund is a fund with a variable capital base. It may continuously issue new shares, but is also obliged to redeem its shares at their net asset value upon demand by the investor. All Swiss investment funds correspond to this type of fund.
Opening
The exchange period of the SIX Swiss Exchange in which orders entered during the pre-opening are executed, i.e. matched, at the opening price. The matching principle used during the opening is called “principle of highest volume transacted”, whereby the greatest possible number of securities are executed at a single price.
See also: Non-opening, Delayed Opening, Pre-opening
Opening Price
The price that results from the opening procedure.
See also: Theoretical Opening Price
Option
An option is an agreement that grants a contracting party the unilateral right to buy (call) or sell (put)a predetermined quantity of a commodity, security or any other assetat a fixed pricewithin a defined period of time.Options are traded on futures and options markets.
See also: Futures market, Conditional forward transaction
Order
An order is an offer to buy or sell a security. The various types of orders of SIX Swiss Exchange are:Normal OrderAccept OrderFill-or-Kill OrderVolatile OrderSee also: Accept Order, Normal Order, Fill-or-Kill Order, Volatile Order
Order Book
In the SIX Swiss Exchange the on-book matcher, the interplay between supply and demand, takes the form of an order book. i.e. the listing of all buy and sell orders currently entered for a given security at a given point in time. All registered traders may view the book. The volume declines or the position disappears from the order book as soon as an order is matched. The entry of a new buy or sell order increases the volume of an existing order. A new position is created in the absence of an existing order at this price. Market buy and sell orders, i.e. those to be executed at the best price, are shown at the top of the list in the order book. The remaining buy orders are sorted and listed according to ascending price and the remaining sell orders according to descending price. Orders at the same price are sorted according to their time of entry (price-time priority). Orders of the same price for a particular security are displayed cumulatively. The detailed order book reflects no such cumulation.
Order validity
Buy and sell orders can be entered with a time limit. The SIX Swiss Exchange distinguishes between the following order validities:Good for dayGood till dateSee also: Type of order
Outperformance
Indicator of whether or not a given security or fund has generated a higher return than the overall market or its particular benchmark. Opposite: Underperformance.
See also: Underperformance
Par
The price of a security corresponds to the par value. If the price is above the par value, it is said to be “above par” and if below it is said to be “below par”. The price thus factors in a premium or a discount.
Participant
Securities dealers that have aquired the authorisation of the Swiss Financial Market Supervisory Authority FINMA and have direct access to the Trading Platform (SWXess).
Partly Paid Bonds
In the case of bonds with partial payment upon subscription, only a portion of the nominal value must be paid at the time of issuance. The remainder becomes payable at a predetermined later date.
See also: Bond
Passive ETFs
Passive ETFs track the prices and returns of an underlying index. This value, known as the “underlying”, is comprised of one or more equity, bond or commodities indices from one or more countries. In other words, active and passive ETFs are just as flexible and liquid an investment vehicle as equities. Thanks to regulated trading over the exchange, investors enjoy additional security and transparency.
Passive investment strategy
An approach to investing aimed at mirroring the performance of a given benchmark index. It is the opposite of an active investment strategy.
See also: Active investment strategy
Passivly managed fund
Investments fund that replicates an index (and therefore its performance) 1:1. ETFs are passively managed funds.
See also: ETF / Exchange Traded Fund
Payment Date
This is the day on which the dividends are paid out to those shareholders who, according to the record date, are entitled to dividend payments regardless of whether the shares are still in the custody account or have already been sold.
Performance
The change in value (increase/decrease) of a security over a specific period of time.
See also: Return
Performance index
The calculation of a performance index treats all cash dividends, interest payments or other income earned from the ownership of securities (e.g. proceeds from subscription rates for shares) as if they were reinvested in the fictitious portfolio. The index is likewise adjusted to take account of any changes in capital. This means that the performance index is always higher than a price index. Performance indices often carry the designation “TR” (total return). The SPI (Swiss Performance Index) is the most widely-known performance index in Switzerland. The SMI is also calculated as a performance index although the media mainly refer to the level of the price index.
See also: Index, Price index
Perpetual bond
A perpetual bond has no fixed term. Repayment occurs only in the event that the company is liquidated. However, it is possible to provide for premature repayment. The interest rate is either fixed for the entire term or fixed for an initial period (for example, ten years) and subsequently determined for additional periods of equal length in accordance with a formula laid down by the terms and conditions of the bond.
See also: Bond
Portfolio
The entire securities holdings of an investor. The portfolio may include any type of asset such as equities, bonds, ETFs, warrants etc.
Portfolio Orders
Portfolio (or basket) orders consist of a number of different securities.
See also: Order
Posters
Posters are orders that contribute liquidity to the order book. They remain in the order book until executed against by an aggressor order. Poster orders are of a binding size and price. The addition of liquidity to the order book is rewarded by lower ad valorem fees (trading fees).
See also: Aggressor, Trading fees
Preferred share
Compared to common stock, preference shares are granted certain pre-emptive rights in terms of claims to assets of the company, as stipulated in the articles of incorporation. Examples: a pre-emptive right in the distribution of profits (a higher dividend, i.e. a preferred dividend); a priority claim to assets upon the winding up or liquidation of the company; a priority in the exercise of purchase rights, etc. Preference shares tend to be rare in Switzerland.
See also: Common stock
Pre-opening
The exchange period on the SIX Swiss Exchange during which all participants may enter and cancel orders without any executions taking place. For each security a theoretical opening price is continuously calculated and displayed.
Price/Time priority
Orders are automatically sorted according to price and time-of-entry criteria.In the case of a purchase order, this means: unlimited buy orders (market orders) are executed first, followed by limit orders (starting with the highest limit). In the case of a sell order, this means: unlimited sell orders (market orders) are executed first, followed by limit orders (starting with the lowest limit). Finally, orders placed at the same price are executed according to the time of entry (time priority).
Price index
The calculation of a price index is based only on the prices of the securities contained in the index. Dividend income or other income and capital changes are not taken into account. As the share price on the day of the dividend distribution, for example, falls by the amount of the dividends paid out, this has an influence on the level of the price index. This means that the price index is always lower than the corresponding performance index. Price indices often carry the designation “PR” (price return). The SMI (Swiss Market Index) is the most widely-known price index in Switzerland.
See also: Performance index, Index
Price range
A price range is specified during the issue phase on the basis of which the issue price for the IPO shares is set. Prior to the fixing of the final issue price, major institutional investors may reveal their price expectations, which are usually within this price range. The price range is also an indication for private investors about the range in which the issue price and first paid price may lie.
See also: IPO (initial public offering)
Price Step
The smallest possible price increment (minimum tick size) in which the price of an investment product may fluctuate.
Primary market
The primary market is the environment in which securities are initially offered to the public. It serves as a means for companies to obtain short- or long-term capital. By issuing securities, a company can finance large investment outlays that are apportioned in small amounts. When a company decides to take that route, it enters the money or capital market as an issuer.Private and public entities can issue various types of securities: shares, bonds, debentures, Pfandbriefe, warrants, etc.In an initial step, the securities are placed directly with investors or “taken down” indirectly by investment banks without the intermediation of a securities exchange. In Switzerland, this is mainly accomplished via of a “firm deal” underwriting by a bank or consortium of banks. After examining the books of the issuer, the bank/consortium takes down the entire issue of bonds or shares at a predetermined price. Thus the underwriting syndicate assumes the entire placement risk and the issuer can gain access to the proceeds of the issue.If the company wishes to have the securities traded on an exchange (i.e. the secondary market), the bank(s) see to the continuation of the issuance process, which among other things involves the obligation to draw up a prospectus, determine the subscription period, as well as submit the listing application to the exchange. When a joint-stock company “goes public” by means of an initial public offering (IPO) of its shares, the proceeds constitute or increase the equity capital of the company. If bonds are issued, the company’s debt capital is established or increased.
See also: Secondary market
Principle of Highest Volume Transacted
In auctions, the principle of highest volume transacted applies, according to which the prices must be determined in a way that enables the largest possible volume to change hands.
Product Guide
Provides current information with respect to the SIX Swiss Exchange product specifications and the various possible trading parameters.
Put option
A put option carries the right but not the duty to sell an underlying asset (e.g. shares or commodities) within a contractually determined period and at a predetermined price. Put options can generate sizeable profits when prices are falling. Put options on shares involve more risk than investment in the shares themselves because any changes in the price of the underlying have a disproportional impact on the price of the option (leverage effect). Investors often fail to make use of their right to deliver the underlying asset, preferring to sell the option before the last day of trading on the stock exchange.
See also: Call option, Eurex, Futures market
Raiffeisen Repo Index Domestic
The Raiffeisen Repo Index Domestic family tracks the performance of the bonds issued in Swiss francs by domestic issuers which are included in the bond basket of the Swiss National Bank.The Raiffeisen Repo Index Domestic is divided into eleven sub-indices on the basis of duration. Like the index as a whole, the sub-indices are offered as performance, price, yield and duration indices. In total, 48 of these indices are available to measure this particular highly liquid segment of the bond market. Like the indices of the SIX Swiss Exchange, the Raiffeisen Repo Index is calculated according to the Laspeyres method by using the weighted mean of a pre-defined universe of issues. The Raiffeisen Repo Index was standardised at 100 points and first published before commencement of trading on 31.03.2003. It is calculated and published every ten minutes between 8:30 a.m. and 5:30 p.m. (three times a day for the yield and duration indices).
See also: Index
Real estate fund
A real estate investment fund invests its assets in developed and undeveloped properties that are diversified in terms of geography and the particular building or land parcel. Such funds may also invest in other securities that represent some form of real estate investment. In keeping with the Collective Investment Schemes Act (CISA), the manager of a real estate fund must invest in select properties. The precise valuation of a real estate fund is no easy matter. For that reason, the manager – at the approval of the supervisory authorities – must commission independent, qualified assessors to determine the valuation of the fund’s various properties. The assessors must examine and determine the fair market value of all of the fund’s properties upon purchase or sale and for application in the annual financial statements, as well as evaluate construction costs.
See also: Collective Investment Schemes Act (CISA)
Real time
Real time means that securities and index market data are displayed without delay.
Redemption
The normal form of repayment of fixed income securities according to the bond indenture that contains a redemption price as well as a redemption plan. If provided for in the indenture, an extraordinary redemption by the issuer is possible.
Synonyms: repayment
Redemption price
The price at which an investment fund is obliged to take back shares to the debit of the assets of the fund. The redemption price corresponds to the net asset value, less any associated transaction commissions.
Reference Price
Comparative value used by the SIX Swiss Exchange for making various calculations, such as opening price, delayed opening or stop trading). During continuous trading, the reference is the last-paid price, and in the pre-opening it is the closing price of the previous trading day.
Registered share
Holders of registered shares are always recorded in the share register of the given company, thus the company knows their name, birth date, address and number of shares they own. As a result, the company has an overview of the ownership proportions and it is easier to get in contact with the shareholders. As soon as an investor acquires registered shares, his/her bank is obligated to provide the company immediately with the particulars of the new shareholder.
See also: Share, Bearer share
Registered shares with limited transferability
As the name implies, these are registered shares that can be transferred to another holder only if the company’s board of directors so approves. The advantage to the company is that it can maintain an overview of its shareholder base. The articles of incorporation can specify reasons why an entry in the share register can be denied.
See also: Registered share, Bearer share
Regulatory Standards
The following regulatory standards can be distinguished:Main, Standard Domestic, Standard Standard for Investment Companies, Standard for Real Estate Companies, Standard for Collective Investment Schemes, Standard for Depository Receipts, Standard for Bond Standard for Derivatives
Reinvestment funds
Funds that continuously reinvest all profits and income they have earned.Opposite: Distribution Funds
See also: Distribution funds
Rentenfonds
The German term for a bond fund.
Reported Trade
All transactions which a participant has concluded off-order book with a non-participant are reported by the participant through use of the reported trade functionality. The report trade functionality is also used for trade corrections and reversals of reported trades.
Reporting Requirement
There is an obligation to report to the SIX Swiss Exchange all transactions that have been made in securities that are listed on the SIX Swiss Exchange. For trades executed by the on-book matcher, this reporting takes place automatically. Off-order book trades executed during trading hours must be reported to the Exchange within 30 minutes. Following the close of trading, off-order book trades must be reported at latest by the opening of the following trading day.
Retractable bonds
Retractable bonds give the investor the right to have the nominal value of the bond repaid on a predetermined date or in several partial payments on several different dates. If this right (also known as an option) is not exercised, the bond runs until maturity or until the next option date under the same terms and conditions.
See also: Bond
Return
The return is the total amount earned on invested capital, expressed as a percentage. It is calculated based on the increase (or decrease) in value of the investment arising from dividend distributions and any gains (or losses) in the share price within a specified time frame. The return is also known as the performance. The distribution and reinvestment of the dividend represent a major component of the investment return of a fund and other financial instruments.
Reverse floater
A Reverse floater floating rate bond, the interest rate of which is determined by the difference between a fixed rate and a reference interest rate. If the reference rate rises, the interest on the reverse floater declines, and vice versa (e.g. 10% minus 3-month Libor). In other words, the investor earns more interest if the reference rate sinks.
See also: Bond
Round Lot
A standard round lot is equivalent to the smallest tradeable denomination. The round lots can vary depending of the type of security (Shares, Bonds, Derivatives etc.)
Routing / Routing Member
The routing scenario applies when both parties to the transaction keep their inventories of International Bonds and ETFs with Clearstream Luxembourg or Euroclear. In this scenario, SIX SIS is only involved as a routing agent and not in actual settlement.
SBI / Swiss Bond Index
The Swiss Bond-Index SBI® family reflects the price developments of CHF-denominated bonds listed on SIX Swiss Exchange. The SBI® indices provide valuable data on the Swiss capital market, in particular information on:the current level of interest ratesthe origin and creditworthiness of the issuersthe average term to maturity of the listed bonds as well as the total capitalisation as an indicator of the extent to which the capital market is being tapped Strict criteria apply in determining which bonds are included in the SBI® indices. Each issue must have a remaining term to maturity of at least one year and an original offering volume of more than CHF 100 million. In addition, only fixed-rate bonds are included and each must have a rating of  «BBB» or higher. In this regard, SIX Swiss Exchange determines a «composite rating», which is arrived at by taking into account the ratings of Standard & Poor’s, Moody’s and Fitch, as well as those of three major Swiss banks and Fedafin.
See also: SBI total, SBI domestic, SBI foreign, Index
SBI domestic
The indices of the SBI Domestic index family cover all domestic bonds included in the SBI Total index: only CHF-denominated bonds of Swiss companies and the Swiss Confederation are admitted to this index family. The SBI Domestic family of indices encompasses a main index and various sub-indices, which are calculated according to ratings, remaining terms to maturity and sectors. Each index is published as a price index, total return index, yield and duration index. The price and performance indices were standardised on the basis of 100 and calculated back to 29.12.2006.
See also: SBI / Swiss Bond Index, Index
SBI foreign
The indices of the SBI Foreign index family cover all foreign bonds included in the SBI Total index: only CHF-denominated bonds of foreign issuers are admitted to this index family. The SBI Foreign consists of the Government, Corporate and Supranational sectors. The SBI Foreign index family encompasses a main index and various sub-indices, which are calculated according to ratings, remaining terms to maturity and sectors. Each index is published as a price index, total return index, yield and duration index. The price and performance indices were standardised on the basis of 100 and calculated back to 29.12.2006.
See also: SBI / Swiss Bond Index, Index
SBI total
The indices included in the SBI Total index family encompass roughly a thousand different bonds that have been issued by the Swiss Confederation and domestic companies as well as by other governments and foreign companies. The SBI Total index family consists of the SBI Domestic and SBI Foreign. It encompasses a main index and various sub-indices, which are calculated according to ratings, remaining terms to maturity and sectors. Each index is published as a price index, total return index, yield and duration index. The price and performance indices were standardised on the basis of 100 and calculated back to 29.12.2006.
See also: SBI / Swiss Bond Index, Index
SECOM
SECOM is an automated, electronic system for the processing and settlement of national and international securities transactions.
Secondary market
The market for trading in securities on an exchange is referred to as the secondary market. In the secondary market, the listed companies are no longer seeking capital; rather, the investor interacts with other suppliers and demanders of securities. This is where the actual securities trading starts. Within this framework, only those securities that are public and accessible to all investors are traded. In order for securities to be traded on SIX Swiss Exchange AG, the issuer must fulfil various requirements as laid out in the Listing Rules, among others the publication of a listing prospectus. To maintain the listing, issuers must fulfil additional requirements, such as the publication of price-sensitive facts. For that reason, information on listed companies are published in the media almost on a daily basis.
See also: Primary market
Securities
Securities are negotiable instruments that are tradable, interchangeable, profitable, available in great number and suitable for trading on the stock exchange. Securities are a subgroup of negotiable instruments and do not include money-market paper, bank notes and cheques.
See also: Security
Securities fund
A securities fund is, according to the Swiss Federal Act on Collective Investment Schemes (Collective Investment Schemes Act), an open, collective investment that invests in securities and book-entry securities. Securities funds may invest in negotiable instruments and book-entry securities traded on a stock exchange or other regulated market open to the public.
See also: Funds, Collective Investment Schemes Act (CISA)
Security
A security is a certificate that evidences an inalienable right that cannot be asserted or transferred to others without presentation of the certificate. For example, unless the shares are presented, a shareholder may not attend the company’s annual general meeting, whereby today the physical presentation is no longer necessary. A confirmation from the company that the securities are owned and held in custody suffices. Examples of securities are:sharesunitsbonds and other fixed income instrumentsderivativescertificates chequesNot defined as securities are banknotes, coupons, etc.
Security number
In Switzerland the security number is a unique, national identifier for securities such as shares, bonds, funds and derivatives listed on the stock market or admitted for trading. SIX Financial Information is the official numbering agency responsible for the issue of security numbers and ticker symbols in Switzerland and the Principality of Liechtenstein. The security number consists of numbers only and is part of the ISIN.
See also: ISIN
Segment
A category of securities within the market that has been established by the SIX Swiss Exchange on the basis of certain criteria, such as type of security, listing requirements, trading volume, trading times, etc.
Settlement
Settlement is the transfer of ownership and exchange of securities generally on a delivery versus payment (DvP) basis which leads to settlement finality of a trade and is usually supported by a safe custody depository such as the Central Securities Depository (CSD) or International Central Securities Depository (ICSD).
See also: CSD Central Securities Depository, ICSD International Central Securities Depository
Share
On one hand, a share represents the proportionate co-ownership right (equity right) that the shareholder has in a joint-stock company (plc) and, on the other, it is a physical security which evidences that proportion. Shares embody membership rights (right to vote at the general meeting of shareholders, right to obtain and inspect company information) and rights to assets (i.e. the right to a share of the company’s profits, to participate in capital increases, as well as to receive a portion of any liquidation proceeds). See also: Registered share, Registered shares with limited transferability, Bearer share, Equity security
Share capital
The basic equity capital of a joint-stock company. In Switzerland, the minimum share capital is CHF 100,000.
Share certificate / Unit
The physical security that certifies the co-ownership right to a portion of an investment fund’s assets. However, delivery of the units is made only in rare instances because it is considerably more advantageous when they are kept in custody.
See also: Security
Shareholder
The owner of shares in a joint-stock company who can exercise the rights associated with the shares and is thus co-owner of the company.
See also: Annual general meeting of shareholders
Shareholders’ equity
The shareholders’ equity of a company is show on the balance sheet and is defined as the excess between assets and liabilities. Shareholders’ equity consists of capital that a company has received from its legal owners. The providers of this equity (e.g. investors who own the stock) have other pretensions than providers of debt financing – for example, a higher return – because they assume a higher degree of risk, or because of their membership rights (e.g. voting rights) and a claim to the company’s assets (e.g. right to receive a dividend). The total amount of shareholders’ equity is also a determining factor for a listing on SIX Swiss Exchange AG.
See also: Debt capital
Share price
The cost of a share as determined by supply and demand.
Short position
The selling of securities that are not owned yet by the seller, for the purpose of buying them later for a lower price and profiting from the difference between the sale and repurchase price. For private investors, short selling is not advisable as it involves many risks. Opposite: long
See also: Long position
Short sale
A short sale involves the selling of a security that the investor does not own, the purpose of which is to buy back the security at some point in the future for a lower price and earn the profit between the sale price and repurchase price. The opening of such a transaction results in a so-called short position.
SIC
SIC is an online payments transfer system for CHF transaction, operated by SIX Interbank Clearing.
LinksSIX Interbank Clearing
SICAF
Abbreviation for Société d’investissement à capital fixe. The French term for a closed-end investment fund that is a legal entity in the form of a joint-stock company.
SICAV
Abbreviation for Société d’investissement à capital variable. The French term for an open-end investment fund that is a legal entity in the form of a joint-stock company and issues participation certificates in the form of shares.
SIX Exchange Regulation
As an autonomous division within SIX Group, SIX Exchange Regulation is responsible for the enforcement of the issuer and participant regulation in accordance with the applicable stock exchange laws with regard to the Stock Exchanges SIX Swiss Exchange and SIX Structured Products Exchange Ltd.
SIX SIS
SIX SIS AG assumes two roles in one: on the one hand, SIX SIS is the national Central Securities Depository (CSD) of the Swiss financial market. On the other hand, it is also an International Central Securities Depository (ICSD), providing complete services for the clearing, settlement and custody of national and international securities. SIX SIS operates one of the worlds few online real-time settlement systems (SECOM) allowing market participants to settle their transactions via a single technical interface. As far as securities settlement and custody are concerned, SIX SIS provides top-quality services: thanks to our highly developed settlement technology, we offer not only faster but also more economical services than our competitors.
SIX Structured Products Exchange Ltd
SIX Structured Products Exchange Ltd is the exchange for structured products in Switzerland.
LinksSIX Structured Products Exchange Ltd
SIX Swiss Exchange – Sponsored Segment
The trading segment SIX Swiss Exchange – Sponsored Segment enables SIX Swiss Exchange participants (in this context, “sponsoring securities dealers”) to initiate trading in equity securities of domestic or foreign issuers that have a primary listing on an exchange recognised by the Regulatory Board on the trading platform of the SIX Swiss Exchange, without having to go through the listing procedure.
SLI  – Swiss Leader Index
The SLI Swiss Leader Index comprises the SMI shares plus the 10 largest stocks in the SMIM. In other words, it includes the 30 largest and most liquid securities in the Swiss equity market. » show more Since 02.07.2007, the SLI has been calculated and published in real time. To facilitate comparability with other indices, the SLI was calculated back to the end of 1999. The SLI was standardised at 1000 index points as of 30 December 1999.Unlike the other indices, the SLI has an upper weighting limit. The four largest stocks are capped at 9 %. Where necessary, the index weighting of the other securities is limited to 4.5 %. The SLI was launched as an alternative to the blue chip SMI index. The SMI has the disadvantage that the five largest stocks have a combined index weighting of about 70 %, so price fluctuations in those shares have a disproportionate impact on the index. The capping factor in the SLI increases the weighting of the smaller stocks, so the price risk is more widely diversified. Moreover, as a result of the capping factor, the SLI fullfils the regulatory requirements of Switzerland, the EU and the USA, thereby allowing new markets and investor groups to be accessed. Because the weightings change continuously, SIX Swiss Exchange calculates and adjusts the capping factor every three months
See also: Index
Small cap
A term used to describe stocks with a low market capitalisation.
See also: Blue chips, Mid cap
SMI Expanded
The SMI Expanded combines the SMI and SMIM indices and includes the 50 most highly capitalised stocks in the Swiss equity market. It covers roughly 95% of the market capitalisation of Switzerland’s freely tradable corporate stock and is calculated both as a performance and price index. The SMI Expanded was standardised as at 31 December 1999 with a baseline value of 1000 for the performance index and 100 points for the price index; it was formally introduced on 15 November 2004. To enhance tradability and comparability with other indices, the price index was pegged at 1000 on 2 August 2005, retroactive to 31.12.1999.
See also: SMI – Swiss Market Index, SMI MID, Index
SMI MID
The SMIM (SMI Mid) includes the Swiss equity market’s 30 largest mid-cap stocks that are not already represented in the blue chip SMI index. Like all other SIX Swiss Exchange AG share indices, it is free-float capital weighted and only the tradable shares of a given company are used in calculating the index. As is the case with the SMI, the selection of its components is made according to the market capitalisation and trading turnover of the given stock, whereby the SPI EXTRA serves as the basis for the SMIM.The SMIM is calculated both as a performance and a price index. It was standardised as at 31 December 1999 with a baseline value of 1000 for the performance index and 100 points for the price index; it was formally introduced on 15 November 2004. To enhance tradability and comparability with other indices, the price index was pegged at 1000 on 2 August 2005, retroactive to 31.12.1999.
See also: SMI – Swiss Market Index, SMI Expanded, Index
SPI ex SLI
The SPI ex SLI affords the possibility to follow share price developments outside the SLI and serves as a benchmark for those shares. It was launched on 3 September 2007 and is calculated in realtime. Its baseline value of 1000 points was pegged as at 31.12.1999. As is the case with the SPI and SPI EXTRA, the SPI ex SLI is a free-float adjusted index and is calculated both as a performance and price index.
See also: SPI – Swiss Performance Index, Index
SPI EXTRA
The SPI EXTRA affords the possibility to follow share price developments of small- and mid-cap stocks outside the SMI, and serves as a benchmark for those shares. It was launched on 29 April 2004 and is calculated in realtime. Its baseline value of 1000 points was pegged as at 31.12.1999. As is the case with the SPI and SMI, the SPI EXTRA is a free-float adjusted index and is calculated both as a performance and price index.
See also: SPI – Swiss Performance Index, Index
Split
In a split, the number of a company’s shares is increased by a certain ratio. This action makes the shares “cheaper” (while having no impact from an accounting point of view) and thus more attractive for new purchasers. Particularly in the USA, splits are very popular because companies do not wish to “price themselves out of the market” for smaller investors. As an example, a 2:1 split means that a stock which previously cost 50 CHF is converted into two shares, each of which then costs only 25 CHF. Following such a split, the shareholder owns twice as many shares, each of which has half its former value.
See also: Share, Capital Events
Spot market
Securities such as shares, bonds, funds, warrants and structured products or goods such as commodities are traded on the spot market. The spot market is characterised by simultaneous delivery and payment. Transactions thus take place immediately or within a short period of time (T+3: transactions are usually settled three working days after they take place).
See also: Futures market
Spot Trades
Exchange transactions that are settled on a “trade date plus three” (T+3) basis, i.e. delivery and payment for a specific transaction take place on the third banking day following the date of the trade, in accordance with the SIX Swiss Exchange Customs and Usages.
Spread Spread
In the financial and securities exchange world, spreads have a wide array of connotations, but for investors the price-related spread is of greatest significance. In this regard, the spread is the price difference between the bid and ask price. A wide spread is an indicator of a (temporary) lack of liquidity in a given product. The spread between various interest rates – be it in connection with currencies, or bonds of equal maturities that are denominated in different currencies – is referred to as the yield differential.
Stock Exchange Act
The Swiss Federal Act on Stock Exchanges and Securities Trading (SESTA) lays out the requirements for establishing and operating securities exchanges as well as for the professional conduct of securities trading. Its objective is to ensure transparency for and the equal treatment of all market participants.
Stock Index
A stock index reflects at predetermined intervals the price development of the given stock market (e.g. the Dow Jones Industrial Average Index). Indices consist of a certain group of stocks, by whose prices an index value is calculated by means of a defined formula and weighting of the constituent stocks.
See also: Index
Stop Trading
A trading halt of either 5 or 15 minutes if the potential next paid price diverges by X% or more from the reference price. The security will be reopened according to the pricing principles applicable at the opening or, in case of a market-order overhang, go into a non-opening status.
Stop Tradingforwarded from Stop Trading
A trading halt of either 5 or 15 minutes if the potential next paid price diverges by X% or more from the reference price. The security will be reopened according to the pricing principles applicable at the opening or, in case of a market-order overhang, go into a non-opening status.
STOXX Europe 50
Index representing the 50 biggest and most heavily traded shares of all of Europe.
See also: Index
STP – Straight-Through-Processing
Straight-Through-Processing enables the entire trade process for financial markets to be conducted electronically without manual intervention.
Structured products
In structured products, financial instruments (e.g. shares or bonds) are combined with derivatives to create a stand-alone product that is then certificated. The repayment value of a structured product depends on the price development of the underlying securities.
See also: Derivatives
Subscription period
The subscription period is the period during which investors can subscribe at a predetermined price to securities such as equities or bonds due to be launched on the market. The subscription period is set by the issuer and can, depending on the issuing conditions, be prematurely shortened (in the case of oversubscription) or extended (greenshoe option).
See also: Price range
Subscription right
When a company increases its equity capital, shareholders normally receive subscription rights that enable them to maintain their proportionate ownership in the company by purchasing new shares at a predetermined (favourable) price.
Suspension
A trading halt in a given security initiated by the SIX Swiss Exchange upon the presence of extraordinary circumstances. The duration of the suspension – normally a few hours to several days – is determined by the SIX Swiss Exchange on a case-by-case basis.
Swap
The future exchange of payment flows at contractually predetermined conditions and dates.
Swiss National Bank
The Swiss National Bank conducts the country’s monetary policy as an independent central bank. It is obliged by the Constitution and by statute to act in accordance with the interests of the country as a whole. Its primary goal is to ensure price stability, while taking due account of economic developments. In so doing, it creates an appropriate environment for economic growth.
See also: ECB / European Central BankLinksSwiss National Bank
Swiss Value Chain
The Swiss Value Chain is an integrated service of SIX Group Ltd, which was created in 2008 as the result of the merger of the SWX Group, the SIS Group and Telekurs Group. It is an infrastructure company with an international activity range and one of the main pillars of the Swiss financial centre. The company covers the entire value chain provided by the infrastructure of the financial marketplace – from securities trading, settlement and safekeeping to financial information and payment transactions.
SWX IAZI Real Estate Indices
The SWX IAZI Swiss real estate indices are based on the Laspeyres formula and a pool of transaction data. They are published quarterly. The SWX IAZI Real Estate Performance Index reflects the price developments of the SWX IAZI Real Estate Price Index as well as the net cash flow yield of the IAZI Swiss Property Benchmark®. The performance index takes into account the net cash flows and annual percentage change in value (capital gains/losses) of the underlying properties. The applicable net cash flow return is based on the IAZI Swiss Property Benchmark®, which comprises income properties (direct investments) with a market value in excess of CHF 70 billion (ca. 20 % commercial, 20 % mixed, 60 % residential; status as of 2006). The SWX IAZI Investment Real Estate Price Index is based on approximately 50 % of all (voluntary) changes in ownership of Swiss income properties (residential/mixed) at actual market conditions. SWX IAZI Private Real Estate Price IndizesAnonymised information from banks, insurers and pension funds on actual changes of ownership serves as the basis for calculating the indices as well as for the valuation of specific properties. With these surveys, IAZI covers more than 60 % of the property transactions concluded in Switzerland, an amount in excess of 25,000 ownership changes per year. The SWX IAZI Private Real Estate Price Index reflects the two most significant forms of private residential property, i.e. single-family homes and freehold flats (condominiums). The weighting of the sub-indices (SWX IAZI Private House Price Index and SWX IAZI Condominium Price Index) is based on relative market capitalisation. See also: Index
SWX Immobilienfonds Index
Included in the SWX Immobilienfonds Index are all exchange-listed real estate investment funds in Switzerland. They are weighted on the basis of their market capitalisation, and the index is recalculated every three hours. In computing the SWIIT performance index, dividend payments are reinvested, while such distributions are not reflected in the SWIIP price-based index. Both indices were computed at the behest of Zurcher Kantonalbank for the first time on 3 January 1995 at an initial baseline level of 100 points. On 2 April 2002, the SIX Swiss Exchange took over both of these market barometers from ZKB and integrated them into the SWX Index Family.
See also: Index
SXI Bio+Medtech
The SXI Bio+Medtech index covers the biotechnology, advanced medical devices, medical supplies and healthcare providers sectors. The index is calculated in realtime and was pegged at 1000 points as at 31.12.1999.
See also: Index
SXI Life Sciences
TThe SXI Life Sciences index covers companies in the pharmaceutical industry as well as those included in the more focused SXI Bio+Medtech index. It is calculated in realtime and was pegged at 1000 points as at 31.12.1999.
See also: Index
Tender bond
The issuer of a tender bond indicates in advance the interest rate, term to maturity and (approximate) amount of capital required, albeit without revealing the issue price. In order to subscribe to the bonds prior to their being traded on the exchange, interested investors must not only be prepared to pay the specified amount (e.g. CHF 30,000) but also submit a bid for the issue price (e.g. 100.6%). In allocating the bond issue, the issuer takes into account the best bids until its capital requirements are met. If that sum is achieved with, for example, an average bid of 100.5% or higher, the entire issue will be placed at that price. Investors who bid more than 100.5% will get their full allotment. Those who bid precisely 100.5% will, under circumstances, get only a partial allotment, while lower bidders will come away empty-handed.
See also: Bond
Term to maturity
Period of time during which a security is in circulation and valid. For bonds, this is the term between issue and repayment.
See also: Offering, Redemption
Theoretical Opening Price
A theoretical price which is calculated and continuously published according to the bid and ask prices on the order books during auctions (pre-opening, stop trading, post-trading).
Ticker symbol
Every security listed or admitted for trading on the SIX Swiss Exchange is identified by its ticker symbol. SIX Financial Information is the official numbering agency responsible for the issue of security numbers and ticker symbols in Switzerland and the Principality of Liechtenstein.
See also: ISIN
Price Stepforwarded from Tick Size
The smallest possible price increment (minimum tick size) in which the price of an investment product may fluctuate.
Tracking
Mirroring the price of an underlying instrument.
Trade
When bid and ask orders or quotes match they are thereafter referred to as trades.
Trade Confirmation
The trade confirmation functionality enables a participant to confirm and report all trades that have taken place off-order book with other participants. Trade confirmations can also be used to reverse all types of trades (on- and off-orderbook trades) that have occurred between participants, if necessary.
Trade Correction
The functionality trade correction enables the trader to correct the following trade details: Order capacity (customer or principle), client reference ID, and client domicile.
Trade Reversal
If both parties involved in a trade agree to reverse the trade, they can do so with the trade confirmation or trade report functionality.
Trader License
By successfully completing the SIX Swiss Exchange trader examination, a candidate will have demonstrated his or her professional knowledge. By aquiring the SIX Swiss Exchange trading license the traders registration can be upgraded from provisional (expires after 1 year) to definitive registration.
Trade Slip
For each transaction, the SIX Swiss Exchange provides the contracting parties with confirmation in the form of trade slips. A trade slip contains all important information relating to the transaction.
Trading currency
The trading currency is the currency in which a security is traded on the stock exchange. If a share traded in US dollars is bought by an account held in Swiss francs, the amount paid is converted at the current exchange rate.
Trading fees
The SIX Swiss Exchange levies a fee for all on- and off-order book transactions, which includes the reporting fee. The trading fees are of a modular structure. They consist of a fixed transaction fee and a turnover-dependent “ad valorum” fee that is expressed in basis points and subject to an upper (cap) and lower (floor) limit. It is dependent on the specific type of execution. The fee model rewards orders that generate liquidity in the order book.
See also: Exchange fee
Exchange periodsforwarded from Trading hours
Trading on the SIX Swiss Exchange is divided into different periods:Pre-openingopeningcontinuous tradingclose of tradingpost-tradingMost transactions are executed during continuous trading.
See also: Pre-opening, Opening, Continuous Trading, Closing Auction, Close of Trading
Trading Period
Trading periods are the individual phases of trading during the business day. The following trading period exist: pre-openingopeningcontinuous tradingclose of tradingpost tradingSee also: Pre-opening, Opening, Continuous Trading, Close of Trading
Transaction costs
The costs incurred upon the purchase or sale of a security (e.g. bank commission, brokerage fee).
See also: Commission, Exchange fee, Trading fees
Turnover
On the stock exchange, turnover is generally the volume of a security traded multiplied by its price. As the last paid price is in constant flux, the turnover of each individual transaction is calculated and the amounts continuously added together.
See also: Volume
Orderforwarded from Type of order
An order is an offer to buy or sell a security. The various types of orders of SIX Swiss Exchange are:Normal OrderAccept OrderFill-or-Kill OrderVolatile OrderSee also: Accept Order, Normal Order, Fill-or-Kill Order, Volatile Order
UBS 100 Index
Included in the UBS 100 Index are the 100 SPI® companies with the highest market capitalisation. On behalf of UBS, SIX Swiss Exchange AG calculates this index every three minutes. The index rules are analogous to those of the SPI®.
See also: SPI – Swiss Performance Index, Index
UCITS
The European directive governing investment funds, the goal of which is investor protection. The latest UCITS III directive also permits funds to pursue alternative strategies using options, futures and swaps.
Umbrella funds
A fund composed of several subfunds. Together the subfunds constitute a legal entity, thereby rendering only one admission procedure necessary for the umbrella. Additional sub-funds can be created following the first-time admission.
Unconditional forward transaction
Unconditional forward transactions involve no advance premium because the rights and duties are evenly distributed among the contractual parties and must be executed at the agreed time. Specifically, this includes futures (exchange-traded forward transactions) and forwards (off-exchange forward contracts).
See also: Conditional forward transactionLinksEUREX
Underlying instrument forwarded from Underlying
The underlying instrument (also referred to as the “underlying”) of a derivative (e.g. option, warrant, futures contract) is the basis on which the price of the derivative (e.g. a share, bond, index, currency or commodity) is determined and dependent.
See also: Derivatives
Underlying instrument
The underlying instrument (also referred to as the “underlying”) of a derivative (e.g. option, warrant, futures contract) is the basis on which the price of the derivative (e.g. a share, bond, index, currency or commodity) is determined and dependent.
See also: Derivatives
Under par
The term used to describe a security that is priced below its nominal value. Opposite: above par.
See also: Above par
Underperformance
Indicator of whether or not a given security has performed worse than the overall market or its particular benchmark. Opposite:outperformance.
See also: Outperformance
Company-specific risk forwarded from Unsystematic risk
Company-specific risk (or unsystematic risk) is specific to an individual company. For example, the stock market or the share prices of comparable companies may rise yet certain company-specific news can have a negative influence on the share price. This company-specific news can include negative events such as strikes, management crises and poor annual results as well as positive news such as the winning of a major order, innovative products and a favourable market outlook. Extraordinary events within a company may affect the fluctuation in the share price (volatility) and cannot be foreseen.
See also: General risk
Value Date
Settlement date, i.e. the banking day on which the securities involved in a given trade are paid / delivered; for transactions in securities that are listed on the SIX Swiss Exchange, this is the second banking day immediately following the trade date.
Volatile Order
Volatile orders are designed for high transaction rate trading activities such as algorithmic trading. They can be entered as normal volatile orders, accept volatile orders or fill or kill volatile orders. Volatile order users (proprietary users) are able to enter and delete orders. Also the mass order withdraw functionality can be used.
Volume
The volume is the number of shares, fund products and derivatives that change ownership in a transaction. In the case of bonds volume relates to the number traded, with the minimum denomination being taken into consideration depending on the type of bond in question.The volume serves as the basis for the calculation of turnover. A differentiation is made between the volume of an individual transaction and the total volume and between the volume traded off-exchange and on-exchange.
See also: Turnover
Voting rignt
The right of a shareholder to vote at the annual general meeting of a joint-stock company.
See also: Shareholder, Annual general meeting of shareholders
VSMI
The objective of the VSMI model is to make pure volatility tradable. To that purpose, an index is created that does not reflect price changes but instead only changes in volatility. The basis for calculating the term-independent main index (which has a constant, rolling term to maturity of 30 days) are the implied variances in Eurex options on the SMI. Various sub-indices cover the specific terms of the Eurex options. In this connection the implied variance of all option contracts in a given term are taken into account for each term to expiry.
See also: Index
Warrant
A warrant confers the right to buy (call) or sell (put) a specific amount of a specific underlying instrument at a specific price at a specific point in time (European-style warrant) or at any point during a specified period of time (American-style warrant). Warrants are essentially a securitised form of standardised options and are usually traded on a securities exchange.
See also: Conditional forward transaction
Warrant bond
Warrant bonds are fixed income securities that grant the holder an additional, time-limited right to acquire equity securities (e.g. shares) of the issuer at a predetermined price (exercise price). This certificated right (warrant) can be traded separately. The difference to a convertible bond also lies in the fact that a warrant bond continues to exist even after the warrant has been exercised. The right to receive interest payments and repayment at maturity remains in force, just like a normal bond, however the warrant is no longer a part of the bond once it is exercised.
See also: Bond
Warrant forwarded from Warrant certificate
A warrant confers the right to buy (call) or sell (put) a specific amount of a specific underlying instrument at a specific price at a specific point in time (European-style warrant) or at any point during a specified period of time (American-style warrant). Warrants are essentially a securitised form of standardised options and are usually traded on a securities exchange.
See also: Conditional forward transaction
Yield to maturity
The yield to maturity indicates the average annual return on an investment, calculated through to the maturity date.
See also: Return
Zero bond
A debt security that pays no interest payments. Instead it is issued at a large discount to its nominal value. In other words, at the beginning of the investment, a relatively small amount must be paid which then progressively increases in reflection of interest and compound interest on the amount until the nominal value of the zero bond is reached at maturity. The longer the term to maturity (or the higher the yield), the lower the issue price.
Zero bond forwarded from Zero coupon bond
A debt security that pays no interest payments. Instead it is issued at a large discount to its nominal value. In other words, at the beginning of the investment, a relatively small amount must be paid which then progressively increases in reflection of interest and compound interest on the amount until the nominal value of the zero bond is reached at maturity. The longer the term to maturity (or the higher the yield), the lower the issue price.