Account Settlement Price
First price listed on the Forward Market on the settlement day. The account settlement price is the price on the base of which the settlement of a transaction executed during the current period can be postponed to the next period.

Active ETF
Exchange Traded Fund managed actively by adjusting its exposure to its benchmark index.

All or None
An order in NSC used to make sure the entire amount of the order is filled or none of it. This differs from “Fill or Kill” orders because “All or None” orders do not require immediate execution.

Portion of the return on an asset (or group of assets) that depends neither on its specific characteristics nor on market fluctuations. Alpha therefore measures the expected return on an asset (or group of assets) when the market (or benchmark) is totally flat. The higher the alpha, the less the performance of an asset or group of assets depends on the market.

Animation Contract
Refers to special agreements between brokerage firms and Euronext, aimed at boosting the liquidity of shares in medium-sized listed companies. Market authorities appoint a recognized specialist or animateur which agrees to quote spreads for the stock concerned on the central orderbook, subject to certain conditions.

Taking advantage of discrepancies between the traded price of an ETF and its indicative net asset value.

The price at which a trader or marketmaker is willing to sell.

Association Française des Entreprises d’investissement
The professional body charged with representing Euronext Paris member firms in discussions with French and European authorities, market authorities and employee unions.

Autorité des Marchés Financiers (AMF)
French securities regulator. Formed in August 2003 from the merger of two regulatory authorities, the Commission des Opérations de Bourse (COB) and the Conseil des Marchés Financiers (CMF), the AMF is an independent authority vested with legal personality. It has a three-fold remit:

• protect investments in financial instruments or any other instrument offered to the public,
• ensure that investors are properly informed,
• maintain orderly markets in financial instruments.

Average Maturity
The lifetime of a bond, concluding when the final payment of that obligation is due.

BEL 20 index
Stock index of the twenty most important Belgian companies listed on Euronext Brussels. Those twenty companies are chosen on the basis of their turnover and their market capitalization.

The situation where an investor on the Forward Market postpones a bear position to the next fortnight period, speculating on a continuous falling of the prices: delay of delivery of sold securities until the next settlement day.

A standard used for comparison. For example, the performance of some index mutual funds is compared to the performance of for instance the CAC 40 that serves as a benchmark.

The beta reflects the sensitivity of a share or portfolio relative to the overall market development. The beta of the overall market is defined as 1. A security with a beta of 1 indicates its price moves exactly with the overall market. A beta greater than 1 is more volatile than the overall market, while a beta less than 1 indicates that the security’s price is more stable than the market (in general and over a long time period).

The price at which a trader or market maker is willing to buy.

Big Bang Bis (Euronext Brussels) Belgian law of 6 April 1995 transposing the European ISD Directive into our legislation. That law introduces the European passport and re-organises the control on the financial markets.

Interest-bearing debt security issued by a company, local authority or central government, redeemable on a pre-arranged date for a set amount.

Confirmation and description of the execution of an exchange order.

Broker-dealer Individual Clearer
Broker-dealer individual clearer: following the Jan.1, 1992 introduction of distinct licences for each type of activity handled by brokerage firms, member firms with this status are authorized to clear only trades carried out on behalf of their clients or in their own name.

Broker-dealer Multi-clearer
Broker-dealer multi-clearer: following the Jan.1, 1992 introduction of district licences for each type of activity handled by brockerage firms, members firms with this status are authorized to clear not only their own transactions, but also those of one or more pure broker-dealers.

Indicates you want to purchase a security.

CAC 40
Index of leading shares listed on Euronext Paris. The CAC 40 is calculated from the prices of the 40 most actively traded shares on the exchange. The component stocks in the index change regularly.

CAC 40 portion
Portion of the reference portfolio with variable and changing exposure to the CAC 40 index.

Capital Adequacy Directive; European Directive of 15 March 1993 laying down rules with regard to the own resources of investment firms and credit institutions. This directive fits into the liberalisation of European financial services.

Call Option
Gives its buyer the right to buy the underlying value at a fixed price before a specified expiration date. Call buyers hope the price of the stock will rise. Call sellers hope the price will stay the same or go down.

Call Warrant
A warrant which gives the warrant holder the right, but not the obligation, to buy the underlying security at a predetermined price (the exercise or strike price), on (European style) or before (American style) a predetermined date (the expiry or maturity date). The value of a call warrant will generally appreciate when the price of the underlying security appreciates.

Carry Over
The situation where an investor on the Forward Market postpones a bull position to the next fortnight period, speculating on a continuous rise of the prices: delay of payment until the next settlement day.

Cash Extraction
A warrant strategy which consists of selling a stock portfolio or a single share and buying the corresponding number of warrants required to maintain the equivalent level of exposure.

Cash Portion
Portion of the reference portfolio exposed to EONIA plus 0.50% annually. Where the cash potion is negative, the fund has borrowed in order to finance its leverage. Also known as the non-risky portion.

Cash Settlement
The cash payment made by the issuer to a warrant holder following the exercise of a warrant. The settlement amount is equal to the intrinsic value, calculated in the manner described in the Pricing Supplement.

Cash Trading
Trading method used on Euronext markets that consists in paying for purchases and sales immediately after a trade.

Term used by Euronext to designate various types of derivative financial instruments issued by banks, which provide liquidity for them. Certificates are quoted continuously on a special segment of Euronext Paris and are indexed on movements in the underlying. Certificates are used for portfolio hedging or speculation.

Clearing House
The clearing house function assumed by Clearnet, Euronext subsidiary under RGV, France’s automated clearing and settlement system.

This comes into play in all trades between Bourse member firms. By eliminating counterparty risk, it cuts short the chain reaction a fail would otherwise trigger and has reduced uncleared trades in Paris to virtually nil.

Closed-end Mutual Funds
A mutual fund that issues a set number of shares, which then are only re-sold on the secondary market exchanges like regular stock shares.

Collective Investment Scheme
Savings vehicle based on a collectively held portfolio invested in securities and managed by a professional. In France, collective investment schemes can be incorporated (SICAVs) or unincorporated (FCPs).

Commodities clearing member
Commodities clearing member (adhérent compensateur en marchandises) “ACM”
A ACM is entitled only to clear and trade commodity futures and options for its own account and for clients.

A ACM can clear the trades of NEMs for whom it is the designated clearer.

Company Warrants
Options issued by companies to raise equity capital. Upon exercise, the company will issue new shares.

The computation of interest paid, using the principal plus the previously earned interest. Compounding measures the growth of an investment when dividends or appreciation are reinvested.

Conseil des Marchés Financiers
A professional body created in 1996 to replace the Conseil des Bourses de Valeurs and the Conseil du Marché à Terme, the CMF is responsible for regulating and monitoring investment services other than third party asset management. It thus supervises trade in financial instruments, clearing, account administration, new issues and the administration of public offerings. It also approves central securities depositories and their general operating regulations, as well as systems used for clearing and settlement of securities transactions. The CMF’s 16 members are appointed by the Ministry of the Economy and Finance, and include representatives of intermediaries (6), commodity markets (1), issuers (3), investors (3) and professional working in the sector (1), as well as two well-known experts in the field.

Contango Rate
0,085% of the value of the order; an amount the investor has to pay should he wishes to postpone his position on the Forward Market to the next fortnight period : backwardation or carry over.

Continuous Flow of Market Data
A continuous flow of market data provided exclusively to data vendors.

Available through Euronext, it includes both raw data such as prices, trade volumes and five best bids and offers, and in-depth information on financial instruments such as shares, trackers, warrants, bonds, etc.. Information services that use FIM pay for technical support as well as fixed fee for rights, and in turn charge their subscribers according to the volume of information received and the use it is put to.

Contract Note
A confirming note containing details of a trade, sent by a financial intermediary to its client. The contract note specifies the market side (buy or sell), the amount, the date, and transaction costs (brokerage fee, stamp duty, etc.). Also known as a trade confirmation.

Conversion ratio
The number of warrants that must be exercised to either buy (for call warrants) or sell (for put warrants) the underlying security. See also Parity.

Corporate Bond
Debt obligations issued by corporations as an alternative to offering equity ownership by issuing stock. Debt risk is judged by rating agencies. Bonds with ratings from BBB and higher are called ‘Investment grade’, bonds with lower ratings ‘High Yield bonds’ or ‘Junk bonds’.

Interest paid to the holder of a bond. See Dividend

Currency Warrant
A warrant based on an underlying Exchange Rate.

Portion of the assets of a guaranteed or protected fund that can be exposed to risk without jeopardising the guarantee or protection feature. For example, if a fund worth €100 needs €80 to honour the guarantee or protection, it can expose €20 (“the cushion”) to risk in order to boost returns.

Custody Fee
Amount charged by a financial intermediary for administering a securities account.

Day Order
Automatically expires at the end of the day’s standard market trading session if it is not filled.

Deferred Settlement Service (SRD)
Facility on Euronext that allows market participants to buy or sell shares “on credit”, for an additional fee. In a buy trade, the investor does not settle the trade or receive the shares until the end of the month. In a sell trade, the investor does not deliver the shares or receive payment until the last trading day of the month. The facility is known as the SRD (Service de Règlement Différé).

Delivery Versus Payment
The acronym for DVP (delivery versus payment), or transactions in which there is simultaneous transfer of cash and securities following the trade. A basic feature of automated clearing and settlement, DVP reduces risk significantly: today fewer than 0.25% of all DVP instructions presented for settlement fail, on average, and even these are automatically recycled for settlement.

The sensitivity of a warrant’s theoretical value to a change in the price of the underlying security.

Institution responsible for safekeeping securities and ensuring that the decisions made by fund managers are lawful. A depository can delegate some of its functions, notably the safekeeping function, on a contractual basis to another institution authorised to operate as a custodian. However, it cannot delegate the task of ensuring the lawfulness of decision-making by the fund management company.

Speculative financial instrument, such as a future, option or swap, based on an underlying.

Effect on earnings per share and book value per share if all convertible securities were converted and all warrants and stock options were exercised.

Discretionary management
Customised investment method in which a client enters into an agreement authorising an intermediary to manage his or her assets, i.e. to decide when to buy or sell financial instruments for the portfolio without the investor’s prior consent. Discretionary management can be used for individual or institutional investors.

Technique to mitigate portfolio risk by investing in different securities and thus reduce the risk of holding any single investment that could affect portfolio performance.

Income received on an investment in shares. Dividends are usually paid annually and depend on, the results of the issuing company. See Coupon

Dividend Yield
A stock’s market value in relationship to its dividend amount expressed as a percentage. To calculate it, divide the dividend by the stock price.

Dow Jones Industrial Average (DJIA)
Measure of the performance of the collection of 30 “blue-chip” stocks traded on the New York Stock Exchange (NYSE).

European Overnight Index Average, calculated by the European Central Bank. The average effective interest rate on unsecured overnight lending reported by the banks on the Euribor panel, weighted by the volume of overnight lending. It is published the following day by Bridge-Telerate.

Exchange Traded Fund

Exchange Traded Vehicle

Euro Interbank Offer Rate. Indicates the cost of borrowing in the European Union.

EURO. NM Belgium
Belgian section of a synergy between the stock exchanges of Paris, Frankfurt Ãmsterdam and Brussels. Each of them incorporates in its own country a partly quote and partly order driven market for young growing companies. The market regulations will be congruent for all “new markets”.

The amount of profit a company realises over a given time period after all costs, expenses, and taxes have been paid.

Earnings Per Share (EPS)
The earnings of a corporation, also known as net income or net profit, divided by the number of shares outstanding.

Effective Gearing
The ratio between a percentage change in the underlying security and the resulting percentage change in the warrant’s price. Also called Elasticity.

Eurolist Market
The regulated market of the Euronext Paris, launched on 21 February and formed from the merger of the exchange’s three former markets. Companies are listed in alphabetical order and divided into three segments according to market capitalization: Segment A for companies capitalised at more than €1 billion, Segment B for those with capital of between €150 million and €1 billion, and Segment C for those capitalised at less than €150 million. Some 700 companies are listed on the Eurolist Market.

Pan-European exchange created from the merger of the equity and derivatives exchanges of Amsterdam, Brussels, Lisbon, London and Paris. Euronext Paris, the French arm of the holding company Euronext NV, operates the Paris markets and performs the following functions:

• operating the electronic trading systems, i.e. recording transactions between exchange members through a clearing house that guarantees payment and delivery,
• managing memberships and the listing and delisting of securities,
• disseminating market information and trade data,
• promoting the market to issuers and investors.

European passport
Mutual recognition of investment firms which issue from the European Union, giving them access to all stock exchanges of the E.U.

European style warrant
A warrant that can be exercised only on the expiry date.

Ex-Dividend Date
In general the date after the day that dividend has been announced.

Central location in which financial instruments (shares, bonds, etc.) are bought and sold. Exchanges are a source of financing for a country’s economy. They allow private and publicly owned companies and local and central government to raise funds to finance their investments. In France, the exchange is operated by Euronext Paris.

Exercice Automatique
The situation when, upon expiry, the value of a warrant (if positive) is automatically paid to the holder.

Exercise Price

The price at which the underlying can be purchased (call option) or sold (put option). The exercise price is determined at the time the option contract is formed.

To use the rights given by the warrants, e.g. to buy or sell the underlying security for call and put warrant, respectively. The exercise procedure is detailed in the Pricing Supplement.

Exit fee
See redemption fee

Expiry date
The date on which a warrant and the right to exercise it, cease to exist.

Expiry or completion date
The date after which the warrant may no longer be exercised or traded.

Foreign Exchange. Generally refers to the Foreign Exchange, or Currency, Market or a particular Exchange Rate.

Face Value
The displayed value on a bond also called principal or par value.

Fill or Kill (FOK)
The fill or kill instruction goes along with your order saying that your order must immediately be filled in its entirety or cancelled.

Financial Intermediary
Specialist (bank, investment firm, online broker, etc.) that trades on a financial market on behalf of investors. The services provided by an intermediary depend on its status: order reception/transmission, trading, custody etc..

Fixed Income
Bonds are regarded as fixed income investments. They obligate the borrower to pay the bond owner a fixed rate of interest during the term of the loan and to return the principal or face value when the loan matures, and a preferred shareholder would get a fixed dividend. A variety of institutions issue debt obligations, including governments and corporations.

Procedure in NTS (New Trading System) on the base of which prices are fixed.

Level of partial capital protection below which the net asset value of a SGAM leveraged ETF may not fall during a rolling one-month period.

Fonds Commun de Placement (FCP)
Unincorporated collective investment scheme. FCPs issue units that give the investor a right of collective ownership but no voting rights, i.e. the investor is a unit-holder not a shareholder. The administrative, accounting and financial aspects of an FCP are handled by a single management company that is entitled to delegate its tasks.

Fortnight Period (Euronext Brussels)
Period of two weeks on the Forward Market.

Forward Period (Euronext Brussels)
Section of the First Market on which most liquid financial instruments ate negotiated. This market is split up into two segments on the base of the liquidity or the negotiability: semi-continuous and continuous. On the semi-continuous segment, two price fixings a day are possible. On the continuous segment, continuous price fixings are possible from 10.00 a.m. until 4.30 p.m. The word “Forward” refers to the settlement: all exchange orders from a same fortnight period are settled within four days of the carry over day.

Futures Contract

Financial product through which a buyer and seller undertake to exchange a particular quantity of a commodity or financial instruments at an agreed price on a stipulated future date. Also known as a future.

Gamma is the sensibility of the Delta with respect to changes in the underlying price.

The ratio of the share price to the warrant price (multiplied by the conversion ratio, if applicable).

General Regulations
“General Regulations” adopted by the CMF and approved by the Ministry of the Economy and Finance after consultation with the COB and the Banque de France. This document sets out rules for the provision of investment services in France, with the exception of third-party asset management; general structures for regulated markets; and a framework for public offerings.

General Clearing Member
General clearing member (adhérent compensateur général) “ACG” – A ACG can perform the same functions as an ACI. However ACG is subject to higher capital requirements, since this is the only category of member that is authorized to designate an NEC while being an NEC itself and to sponsor more than one NEC.

Guaranteed/protected Fund
Fund that protects or guarantees the investor’s principal . The guarantee or protection feature can be partial or total; it may or may not include subscription fees; it may apply at one or more subscription dates; and it may be granted for one or more predetermined dates or periods.

The highest execution price of a trade that day, or on the last trading day.

Historic Volatility
A measure of actual price changes over a specific period of time.

Any person who has made an opening purchase transaction, call or put, and has that position in a brokerage account.

International Securities Identification Number. Used to identify financial instruments (shares, bonds, funds, etc.). Funds and listed companies use ISIN codes issued by Euroclear, France’s central securities depository. ISIN codes consist of a 12 character alphanumeric sequence, with the first two letter identifying the country of issuance.

The ITM assists the issuer in preparing for admission to listing, and makes a market in its shares for the three years following the intial offering. An ITM can also make a market in shares for which it did not act as listing advisor.

Implied Volatility
Measure of the underlying’s expected volatility during the warrant’s remaining lifetime. Implied volatility is calculated on the basis of the warrant’s market prices using a valuation model.

An index is a number that measures changes in the economy or financial markets. Some indexes are used as benchmarks that economic or financial performance is measured against. Some well-known market indexes include the Euronext 100 and Next 150, the CAC 40, the BEL20, the AEX, and indices from the USA like Standard & Poor’s 500 index, Dow Jones Industrial Average (R), NASDAQ Composite (R) Index.

Index fund
Fund that meets one of two criteria:

• the investment objective is based on movements in a stock index and the fund replicates the index by buying and selling its components,
• the fund is listed and its net asset value matches a stock index.

Indicative Net Asset Value
Theoretical value of an ETF, disseminated by Euronext throughout the trading session. The indicative net asset value (NAV) is used as the reference price:

• by liquidity providers and intraday investors,
• to calculate price ranges (+/-1.5% or +/-3% depending on the EFT’s investment zone).
Based on the previous day’s end-of-trading NAV, the indicative NAV is updated every 15 seconds to reflect changes in the underlying index or portfolio. Euronext stops disseminating the indicative NAV if the level of the index or portfolio is unavailable. It informs the market of any changes in the calculation method.

Individual Clearing Member
Individual clearing member (adhérent compensateur individuel) “ACI” – An ACI can clear and trade all MATIF futures and options for its own account and for clients. An ACI can clear the trades of own-account traders (NCPs) and market makers for whom it is the designated clearer. An ACI can also clear the trades of NECs, provided the ACI itself is not an NEC.

Information Ratio
Indicator that measures the stability of excess returns on an asset or group of assets relative to a benchmark. The information ratio divides this outperformance by its tracking error (i.e. the standard deviation of the outperformance). A high information ratio indicates that the asset or group of assets regularly outperforms the benchmark.

Initial Public Offering (IPO)
The first time a company makes its shares available for sale to the public.

Company that issues securities.

The price at which the last trade was executed. After market close, this is the closing price.

Level of Cushion
See Cushion

Possibility to purchase shares and other types of investment product in an amount higher than the invested capital.

Leverage Effect
A property of warrants which describes the fact that changes in a warrant’s price (in percentage terms) will be larger than those observed for the underlying security. Leverage is also called Elasticity or Effective Gearing.

Life Insurance
Insurance policy valid for a limited period (term life) or throughout the insured’s life (whole life) whereby an insurer undertakes to pay benefits either to the insured, if he or she is still alive when the policy terminates, or to one or more beneficiaries if the insured dies before the maturity date.

Limit Order
A buy or sell order only at a price that you specify (the Limit) or better.

A security is said to be liquid when investors can easily buy and sell the security, as a result of an abundance of buyers and sellers.

Listing Sponsors
The listing sponsor is a long-term financial partner that helps the company prepare for listing on Alternext and guides it throughout its life on the exchange. It assists the company in meeting its market transparency requirements and fulfilling its other obligations. The presence of the listing sponsor is intended to bolster investor confidence. More info

The lowest execution price of a trade that day, or on the last trading day.

Created in June 1995, the MIDCAC index has 100 component stocks, all medium-sized French companies listed in Paris, and is calculated on the basis of opening and closing prices.

The Paris traded options market founded in 1987. Monep handles equity options, long and short-term options, and index futures.

Marché Libre
A non-regulated market administered by Euronext Paris for transactions in the securities of companies not listed on the Premier Marché, Second Marché or Nouveau Marché. Opened September 23, 1996.

Market Capitalization
Market value of a company at a given point in time. Market capitalization is calculated by multiplying the number of shares by the share price.

Market Maker
A legal entity that trades for its own account. A market maker must at all times display bid and ask prices, for which minimum quantities and maximum spreads are defined instrument by instrument. A market maker must also meet minimum volume requirements in the contract(s) in which it makes a market. In return, market makers pay lower transaction fees.

Market Order
An order to buy or sell as quickly as possible at the best price available (the prevailing price) when the order reaches the market place.

Maturity Date
Date on which the face value and final interest payment of a fixed income security (for example, bond or note) is due and payable by the debt issuer. For bonds, maturity can range from one day to 30 years or more.

Members Firms of Markets
Member firms of markets are investment service providers (“entreprises d’investissement” or “établissements de crédit”) licensed to trade in securities and/or clear securities transactions.

Minimum Reference portfolio value for x% exposure
net asset value above which the exposure of a  ETF is set at its maximum contractual level.

Money (at the money)
A warrant whose exercise price is near or equal to the underlying’s price.

Money (in the money)
A warrant with an exercise price below (for a call warrant) or above (for a put warrant) the price of the underlying security.

Money (out of the money)
A warrant with an exercise price above (for a call warrant) or below (for a put warrant) the price of the underlying security.

Multi-clearer non broker
Multi-clearer (non-broker): following the January 1, 1992 introduction of distinct licences for each type of activity handled by brokerage firms, member firms with this status are authorized to handle clearing operations only.

Figure used to multiply the cushion in order to calculate risky asset exposure.

Mutual Fund
An investment company that pools money from shareholders and invests in a variety of securities, including stocks, bonds and money market instruments.\

A mutual fund stands ready to buy back (redeem) its shares at their current net asset value, which depends on the total market value of the fund’s investment portfolio at the time of redemption. As open-end investments, most mutual funds continuously offer new shares to investors.

Own-account trader (Négociateur pour Compte Propre) “NCP” – Natural or legal persons authorized solely to trade for their own account.

Broker-dealer (Négociateur Courtier) “NEC” – a legal person trading for its own account and for third parties, consistent with the investment services for which it has been authorized by applicable banking and financial authorities. An NEC must be designated by a ACG or by an ACI with which it has signed a clearing and guarantee agreement.

Commodities trader (négociateur en marchandises) “NEM” – A legal entity authorized to trade commodity futures only. Must sign a clearing and guarantee agreement with a clearing member.

The electronic trading system used in France since 1986 for equities and bonds. Now, the system is used on all Euronext cash products. Operates from 9.00 a.m. to 5.30 p.m..

Net Asset Value (NAV)
Price of a unit or share in a collective investment scheme, obtained by dividing the scheme’s net assets by the number of units or shares. NAV is calculated and published on a regular basis, at a frequency specified in the prospectus or stipulated by law and regulations. The frequency may be changed. Where the assets of the scheme exceed €80 million, NAV is calculated daily. In exceptional circumstances, redemptions may be suspended. Further, some schemes may place limits on subscriptions, as specified in the Financial Security Act. All redemptions and subscriptions are based on the net asset value.

Segment of Euronext Paris specialised in ETFs.

Nouveau Marché
A market segment to meet the needs of fast-growing young companies seeking capital to finance expansion.

Nouveau Marché Special Box
The purpose of this section is to group issuers whose financial and investment characteristics have been affected by events that could have a lasting impact. The Euronext Paris instruction NM3-03 specifies the examination criteria and the operating procedures of the “compartiment spécial” (special box).

OAT treasury issues
Stripping (here: of OAT treasury issues): in stripping, the interest and principal of a bond are separated, then listed and traded indepedently. Stripping of OATs has been authorized by the French Treasury since June 1991, and can only be undertaken by SVTs. Its reverse consists of recombining interest and capital to recreate the original OAT.

Open-end Fund
A mutual fund with no limit to the number of shares that can be issued.

Open-ended investment fund
An investment fund whose manager is required to deliver units on demand and to buy them back at the market price when instructed to do so. This structure ensures that the net asset value always roughly corresponds to the price of the units.

The right, granted for a limited time period, to buy (call option) or sell (put option) a quantity of a product (underlying) at a pre-set price and date.

PEA (Plan d’Epargne en Actions)
Equity savings scheme. Shares held in a PEA for more than five years are exempt from tax (but not social security levies). Not all shares are eligible for inclusion in a PEA. The scheme must invest either in shares of companies incorporated in the European Union or in French collective investment schemes with at least 75% of their assets invested in EU-incorporated companies.

The theoretical number of warrants that give the right to either buy (for call warrants) or sell (for put warrants) one unit of the underlying security. (See also Conversion Ratio). Note, however that the minimun trading size is 1 warrant.

Payout Formula
The payout formula for a warrant calculates the expiry value of the warrant. This amount is equal to the difference, if positive, between the Exercise Price of the warrant and the Expiry Price of the underlying. This amount may need to be converted into sterling, if the underlying is non-sterling denominated, and/or adjusted by the warrant’s parity.

Portfolio insurance
Method that consists in regularly and automatically adjusting the proportion of risky assets (i.e. those exposed to a market index) and non-risky assets (cash) in order to provide total or partial protection for the principal invested in a portfolio.

Price or premium
The amount paid for the warrant.

Price/Earnings Ratio
Price of a stock divided by earnings per share.

Pricing Supplement
The document containing the full terms and conditions of a warrant series. A summary of the Pricing Supplement is called a Term Sheet.

Primary Market
Market for new issues of securities (initial public Offerings, etc.), where companies issue shares directly to shareholders. See Secondary market

The face value of a bond.

Document informing investors about an offering of securities by a listed company (IPO, capital increase, etc.) or a collective investment scheme. Investment scheme prospectuses, which are given to investors before they subscribe, provide detailed information about the risks to which the scheme is exposed. They also contain additional information about the terms and conditions of the product and the way it operates. It is important to read the prospectus carefully in order to analyse the proposed investment.

Level to which the capital is partially protected, below which the net asset value of a SGAM Flexible ETF may not fall in any rolling one-year period.

Providers of investment services
Providers of investment services include both investment companies (“entreprises d’investissement”) and banks/other credit institutions authorized to offer investment services (“établissements de crédit”).Investment companies are entities whose core business consists of one or more activities relating to investment services, i.e., own-account or third-party trading, third-party asset management, and intermediation on primary markets. Former “Sociétés de Bourse” or Bourse member firms qualify as investment companies. Investment service providers are licensed to operate by the Comité des Etablissements de Crédit et des Entreprises en Investissement, with the exception of asset management companies, which are licensed by the COB. Investment-service providers must have prior authorization from the Conseil des Marchés Financiers (CMF) for all activities, with the exception of asset management, which is authorized by the COB.

Pure Broker-Dealer
Pure broker-dealer: following the January 1st, 1992 introduction of distinct licences for each type of activity handled by brokerage firms, this status is attributed to member firms that subcontract clearing operations to outside suppliers.

Put Option
Gives the buyer the right to sell a number of shares of stock at a price until the option’s expiration date. Put buyers hope the price of the stock will fall. Puts may also be purchased to protect an investment in case the price of the stock goes down.

Put Warrant
A warrant which gives the warrant holder the right, but not the obligation, to sell the underlying security at a predetermined price (the strike or exercise price), on (European Style) or before (American Style) a predetermined date (the Expiry or Maturity Date). The value of a put warrant will appreciate when the price of the underlying security depreciates.

Sale of an investor’s shares or units in a collective investment scheme.

Redemption Fee
Exit fee, based on the same principle as the subscription fee, charged when shares or units are redeemed (i.e. sold).

The current “spread” relating the bid and the ask for a security. The bid is the highest price at which someone is willing to buy a security. The ask is the lowest price at which someone is willing to sell a security.

Reference Portfolio
Portfolio that provides an investment objective for a capital-protected financial product with changing exposure to the benchmark index.

Reference Portfolio Value
Value of the reference portfolio.

Reference Price
Price used to established the opening price for the next day’s trading session. The reference price is the last traded price or indicative price recorded in the trading system.

Regulated Market
A body of rules drawn up by the entity responsible for a regulated market, setting out membership requirements, as well as procedures for transactions and admission of investment products. Once approved by the CMF, this set of rules allows the relevant market to qualify for “regulated market” status.

Asset management technique used to replicate movements in an underlying index. With full replication, an asset is invested in a basket of stocks with weightings similar or identical to those in the benchmark index. Synthetic replication .

A repurchase agreement or repo: the temporary sale of securities against cash under which the assignor (seller) agrees irrevocably to take back securities at an agreed date, and the assigner (buyer) to return them.

Rho is the sensibility of the warrant price with respect to changes in the interest rate.

Risky Asset Exposure
Fraction of a fund’s assets that is exposed directly or synthetically to a particular market risk, either though direct investment or through derivatives. Some funds may have minimum levels of risky asset exposure.

SBF 120 Index
A French stockmarket index introduced in autumn 1993.Component stocks include CAC 40 stocks plus a selection of 80 additional major, continuously-traded French stocks. Calculated continuously.

SBF 250 Index
A French stockmarket index introduced in autumn 1993. 250 component stocks in all, representing all sectors of the Premier Marché. Calculated twice daily.

SBF 80 Index
A French stockmarket index introduced in 1998. Component stocks are the eighty SBF 120-index stocks not included in the CAC 40. The SBF 80 is calculated continuously.

An index based on a selection of convertible bonds with the highest market capitalization. Calculated twice daily.

Second Marché Index
An index composed of all French securities listed on the Second Marché, calculated twide daily.

Secondary Market
Market where previously issued shares are bought and sold. See Primary Market

Securitised derivative
Instruments that derive their value from another security (the underlying security), such as a shares, share price index, currency or bond.

Security evidencing ownership in the capital of the issuing company. Shares may pay dividends to their owners and entitle them to vote at shareholder meetings. Shares may be listed on the stock exchange. Also known as a stock or an equity.

Person who owns shares in a company. When a shareholder acquires shares in a company, he or she also acquires rights on that company, viz. to receive information from it, to attend its general meetings, and to receive dividends.

Sicovam Code
SICOVAM Code, the official code assigned by Sicovam SA to each security traded in France. Used by traders and back-office units, this is attributed by Sicocam SA in its role as Agence Française de Codification (AFC). When a single issue involves securities with different features – i.e., for different tranches/maturities of a given bond issue – several different codes may be assigned.

Société d’Investissement à Capital Variable (SICAV)
Incorporated collective investment scheme with variable capital. SICAVs are companies and issue shares, unlike FCPs, which are unincorporated and issue units. The sole purpose of these companies is to manage a securities portfolio on behalf of their shareholders, who can buy or sell shares on a daily basis depending on the net asset value of the portfolio.

The latest trading price of the underlying share or index.

Spread (bid/offer)
Difference between the lowest offers price and highest bid price on the secondary market.

Stock Dividends
A dividend paid in stock rather than cash.

See Exercise Price

Strike Price
The price at which the owner of a warrant can purchase (call) or sell (put) the underlying. Used interchangeably with exercise price.

Acquisition of shares or units in a fund by an investor.

Subscription Fee
Entry fee, generally calculated as a percentage of the invested amount, that investors pay each time they buy shares or units in a fund. There are actually two types of fee: a commission charged by the fund to ensure that all unit-holders or shareholders are treated equally (an investor who buys into a fund generates individual expenses that should not be borne by the other investors) and a commission paid to the company that manages or distributes the fund.

Process whereby the fund manager creates and cancels shares or units.

Synthetic Replication
Method of constructing an investment with derivatives (options, futures, etc.), enabling the fund manager to capture the performance of the index components with holding them directly.

Target 2

Large-Value Payment System

The sensitivity of a warrant’s value to the passage of time. Theta, (% week) shows the theoretical fall in warrant price in 7 days with all other factors remaining the same.

Time decay
A term used to describe how the value of a warrant erodes or reduces with the passage of time. Time decay is quantified by theta.

Time value
The portion of a warrant’s price that is not accounted for by the intrinsic value.

Tracker fund
The fund that manages the capital invested in a specific tracker.

Tracker or Exchange Traded Fund
Trackers are open-ended mutual funds that seek to match the returns of a market index. The funds usually invest in the securities that make up the corresponding index. When you invest in index funds , you are essentially seeking to “buy the market” and not trying to outperform it.

Tracker share
A unit in a tracker fund. This is also the minimum trading unit of a tracker.

Tracking Error
Indicator measuring the volatility of the return on a portfolio relative to the return on the underlying index. The unit of measurement is the standard deviation over a period of time, usually 60 days. In a passively managed portfolio, the lower the tracking error, the better the replication of the index.

Transferable securities
Securities issued by public or private legal entities which are transferable by book entry or delivery and which confer identical rights per category and give direct or indirect access to a portion of the issuing legal entity’s capital or a general right against its assets. Units in unit trusts and securitisation funds are also transferable securities (art. L211-2, Monetary and Financial Code).

Financial instrument that underlies an option, future, warrant or other instrument.

Underlying Index
The index that a tracker follows

Variability of a security, fund, market or index over a given period of time.

Volatility (Historic)
A measure of actual price changes over a specific period of time.

Volatility (Implied)
Measure of the underlying’s expected volatility during the warrant’s remaining lifetime. Implied volatility is calculated on the basis of the warrant’s market prices using a valuation model.

The sensitivity of a warrant’s theoretical value to a change in volatility.

Speculative financial instrument issued by credit institutions and used to buy (call warrant) or sell (put warrant) the underlying (share, bond, index) at a set price on a pre-arranged date.

The annual rate of return on an investment paid in dividends or interest, expressed as a percentage.

For a mutual fund, the yield is the rate of return earned by the securities in the fund’s portfolio, less the funds expenses during the specified period. A fund’s yield is expressed as a percentage of the maximum offering price per share on a specified date.

Zero Coupon Bond
Zeros are securities that do not pay interest during their terms but are sold at a discount from their face value. A zero coupon bond generally increases in value as it approaches maturity, and the return comes solely from its appreciation. The dollar amount difference between the purchase price and the maturity value represents the yield or accretion value. Maturities range from 1 to 30 years.

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