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The following definitions may help you better understand the capital markets.
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A client account that uses credit from the investment dealer to buy a security. A client needs to deposit a margin amount with the balance advanced by the investment dealer against collateral such as investments. The investment dealer can make a margin call, which means the client must deposit more money or securities if the value of the account falls below a certain level. If the client does not meet the margin call, the dealer can sell the securities in the margin account at a possible loss to cover the balance owed. The investment dealer also charges the client interest on the money borrowed to buy the securities.
The place where buyers and sellers meet to exchange goods and services. It also represents the actual or potential demand for a product or service.
A company's market capitalization for a security is calculated by multiplying the last board lot price at the close of trading on the most recent market close by the number of shares outstanding, net of any escrowed shares.
A trader employed by a securities firm who is required to maintain reasonable liquidity in securities markets by making firm bids or offers for one or more designated securities up to a specified minimum guaranteed fill. Exchanges may have different designations for these individuals. For example, market makers for the stock of companies listed on Toronto Stock Exchange are referred to as Registered Traders.
An order to buy or sell stock immediately at the best current price.
A change in a company's affairs that could have a significant effect on the market value of its securities, such as a change in the nature of the business or control of the company. Under the principle of continuous disclosure, a listed company must issue a news release and report to the applicable self-regulatory organization as soon as a material change occurs.
A brokerage firm or investment dealer that owns a seat on TSX Venture Exchange, or is a member of the Investment Dealers Association of Canada. Also known at Toronto Stock Exchange as a Participating Organization.
A special term order with a minimum fill condition will only begin to trade if its first fill has the required minimum number of shares. For example, an order to buy 5,000 shares with a minimum volume of 2,000 shares can only trade if 2,000 or more shares become available.
These orders are guaranteed a complete fill upon entry. On Toronto Stock Exchange, a Registered Trader will provide the stock should the book be below the required limit. To be eligible for MGF, an order has to be a tradable client order with a volume less than or equal to the MGF size, which varies from stock to stock.
The minimum price change or tick on a futures contract.
An order with a volume that combines any number of board lots and an odd lot.
Part of the capital market established to buy and sell short-term financial obligations. These include federal government treasury bills, short-term Government of Canada bonds, commercial paper, bankers' acceptances and guaranteed investment certificates. Longer-term securities are also traded in the money market when their term shortens to three years.
A disclosure system that facilitates certain Canadian-U.S. cross-border securities offerings, issuer bids and takeover bids. It is intended to reduce costly duplication of disclosure requirements and other filings when issuers from one country register securities offerings in the other. Under the rules, eligible cross-border offerings are governed by the disclosure requirements of the issuer's home country.
Orders placed before the market opens to buy or sell shares of stocks when their options expire. These orders are guaranteed a complete fill at the opening price to offset expiring options. On Toronto Stock Exchange they must be ordered between 4:05 p.m. and 5:00 p.m. on the Thursday before the third Friday of each month.
A fund managed by an expert who invests in stocks, bonds, options, money market instruments or other securities. Mutual fund units can be purchased through brokers or, in some cases, directly from the mutual fund company.
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