Interest accumulated since the previous interest payment.
Agencia Tributaria (AEAT )
the Spanish tax authorities.
Agenzia delle Entrate
the Italian tax authorities.
American Depositary Receipt (ADR)
See Depositary Receipts for more detail.
American Depositary Share (ADS)
A security which has been created to permit investors in the U.S. to hold shares in non-U.S. companies, trade them on stock exchanges in the U.S and receive dividend payments in U.S. dollars. These securities are issued by an American Depositary Bank and represent ownership interests in the deposited securities of foreign companies. One ADS may represent a fixed number or fraction of deposited securities, referred to as the "ratio".
Arms length principle
A way of completing a transaction in which the agreement between the two parties is made freely and independently of each other, and without any special relationship, such as being a relative, having another deal on the side or one party having complete control of the other. In some cases it may be important to determine if a transaction was completed in accord with arms' length principle to identify whether the price, requirements, and other conditions were fair and representative of those commonly encountered on the market.
Asset Backed Security (ABS)
Debt instrument collateralized by underlying assets.
The central securities depositary of Australia. http://www.asx.com.au/settlement/asx-austraclear.htm
Automated Tender Offer Program (ATOP)
DTC's platform to facilitate process flow of instructions on corporate action events.
Banca d'Italia (BdI)
the national central bank of Italy.
Banco de España (BdE)
the national central bank of Spain.
Bank of England (BoE)
the national central bank of the United Kingdom.
Banque de France (BdF)
the national central bank of France.
Debt security that is negotiable by the person who possesses it (the bearer). A bearer bond is not registered in the owner's name, whoever physically holds the paper on which the bond is issued is the owner of the instrument. Interest is paid to a bearer bond holder when he or she submits a "coupon" which is a detachable stub at the bottom of the bond.
Beneficial Owner/ Beneficial Holder
The person or entity entitled to receive the benefits of ownership of a security (e.g. income, voting rights, power to transfer). Beneficial owners may be persons different than those with legal control of a security (see Legal Owner/Legal Holder).
A process preventing the transfer of a security.
A system which enables transfers of securities and other financial assets which do not involve the physical movement of paper documents or certificates.
A debt security under which an investor lends money to the issuer which, depending on the terms of the bond, is obliged to repay them the principal and interest for a specified period of time.
A legal document that certifies ownership of a debt issued by the issuer.
A pound sterling-denominated bond issued in London by a foreign institution or government.
the national central bank of Germany.
Bundeszentralamt für Steuern (BZSt)
the German tax authorities.
A financial institution that executes cash transfers on behalf of its clients.
Central Bank of Ireland (Cbol)
the national central bank of Ireland.
Central Securities Depository (CSD)
An institution that performs services which allow at a minimum the registration, safekeeping, settlement of securities in exchange for cash and efficient processing of securities transactions in financial markets. CSDs assume the role in the securities market that guarantees a safe and efficient transfer of securities that exist to a large extent only in book entry form.
A financial institution that provides clearing and settlement services for financial and commodities transactions. It is the legal counter party to both legs of every trade: the clearing house stands between two trading parties in order to reduce the risk of these parties failing to honor their trade settlement obligations.
Clearing System Participant
The Entity shown in the records of the Clearing Systems as the holder.
One of the ICSDs, is headquartered in Luxembourg and belongs to the Deutsche Börse Group. www.clearstream.com
Collateralized Mortgage Backed Securities (CMBS)
An asset-backed security whose cash flows are backed by the principal and interest payments of a set of mortgage loans. Payments are typically made monthly over the lifetime of the underlying loans.
Commercial paper is an unsecured promissory note with a fixed maturity of 1 to 364 days. U.S. Commercial Paper (or USCP) targets the U.S. investor population, whereas European Commercial Paper (or ECP) targets investors that are based in Europe.
Committee on Uniform Securities Identification Procedures (CUSIP)
A 9-character alpha-numerical code that uniquely identifies a security. The first six characters uniquely identify the issuer, the 7th and 8th digit, the issue and the 9th digit is an automatically generated checksum.
A conduit is a unit that funds itself through issuing short-term debt and by investing in assets such as commercial loans or bonds. It is supported by credit lines from a bank but it is not always listed on the bank's balance sheet.
A request made by the Issuer of the bond to change the terms of the security agreement. Consents are made because such agreements require mutual consent in order to be implemented.
Any action by an issuer of investments, or by another party in relation to the issuer, affecting an investors entitlement to investments or benefits relating to those investments.
See Interest for more detail.
The date on which securities are issued or credited into an account.
The chain of financial institutions each of which is bound by contractual arrangements to safekeep the securities for its downstream correspondent. Payment distributions on a security normally follow the custodial chain up to the beneficial owner of the security.
A financial institution, usually a bank or trust company, that holds securities on behalf of its customers in safekeeping.
A procedure to obtain refund of German withholding tax for eligible non-German investors from the German Tax Agency (BZSt).
Delivery versus delivery (DvD)
A securities settlement mechanism which links two securities transfers in such a way as to ensure that the delivery of one security occurs if – and only if – the other security in the other transfer is delivered.
Delivery versus payment (DvP)
A securities settlement mechanism which links a securities transfer and a funds transfer in such a way as to ensure that delivery occurs if – and only if – the corresponding payment occurs.
De Nederlandsche Bank (DNB)
the national central bank of the Netherlands.
Dematerialised (Uncertificated) Securities
Securities solely existing in electronic form.
Deposit/Withdrawal at Custodian (DWAC)
A way to transfer securities between financial institutions at DTC.
Depositary Receipt (DR)
A financial instrument that represents a foreign company's equity or debt and is traded on a local stock exchange. Depositary Receipts are issued by depositary banks, which hold the underlying securities. Like any other security, DRs may trade freely, either on an exchange or in the over-the-counter market. One of the most common types of DRs is the American Depositary Receipt (ADR).
Depository Trust Company (DTC)
The Depository Trust Company (DTC) is the world's largest securities depository. Owned by members of the financial industry, DTC is a national clearing house for the settlement of trades in corporate and municipal securities and performs asset services for its participating banks and broker/dealers. DTC's network links more than 11,000 broker/dealers, custodian banks, and institutional investors, as well as transfer agents, paying agents, and exchange and redemption agents for securities issuers.
Dim sum bond
A Chinese Renminbi-denominated bond issued by a Chinese entity in Hong Kong. Enables foreign investors forbidden from investing in Chinese corporate debt in mainland China to invest in and be exposed to Chinese currency in Hong Kong.
Direction Generale des Impots (DGI)
the French tax authorities.
A proportion of earnings paid periodically to stockholders as a return on investment by a corporation. Not all corporations pay dividends to their holders; most corporations that pay dividends will do so quarterly or yearly.
Dividend Payment Date
See Payment Date for more detail.
Dividend Reinvestment Program (DRIP)
Option offered by the issuer of equity, under which the dividends, instead of being distributed to the stockholders, are reinvested into more shares of the company's stock, usually at a discount.
Double Taxation Treaty (DTT)
A treaty concluded between two countries in order to mitigate the effects of double taxation. Tax treaties tend to reduce taxes applicable in one treaty country for residents of the other treaty country, and establish procedures and requirements that must be met in order to reduce double taxation of the same income.
A financial institution who receives banking services from an institution and itself provides banking services to other financial institutions and is further down the custodial chain. For example, the clients of clearing system participants are downstream correspondents of the clearing system participants.
DTC Important Notice
A notification issued by DTC to its participants e.g. to inform these participants of upcoming corporate actions. DTC Important Notices are normally uploaded on DTC's website. http://www.dtcc.com/legal/imp_notices/dtc
E - F
Eidgenössische Steuerverwaltung (ESTV) / L’administration fédérale des contributions (AFC) / L’Amministrazione federale delle contribuzioni (AFC)
the Swiss tax authorities.
A bond issued outside of the issuer’s country or the country where the currency of the bond is normally employed. The Eurobond is not to be confused with the Eurodollar Bond, which is a U.S. dollar-denominated bond issued by a non-U.S. entity outside the U.S.
One of the ICSDs, is headquartered in Belgium and belongs to the Euroclear Group. www.euroclear.com
European Central Bank (ECB)
the central bank for Europe's single currency, the euro. Together with the national central banks of the EU Member States whose currency is the euro, the ECB defines and implements the monetary policy for the euro area.
The date starting from which trading of the given security occurs without the entitlement to a certain event (e.g., a dividend payment distribution).
Exchange and/or Tender Agent
An entity appointed by a company in order to implement an exchange of certain financial instruments for other financial instruments and/or cash.
An offer in which securities are offered as consideration.
Federal Reserve System (FED)
the central banking system of the U.S.
An institution that performs financial intermediation between two or more parties. Financial intermediaries can include chartered banks, insurance companies, investments dealers, mutual funds and pensions funds.
An interest rate that is fixed over the life of a debt security at a certain number specified in the terms of the respective security.
An interest rate that is not fixed and that may change according to fluctuations in the market or certain conditions, as per the terms of the respective debt security.
G - I
Generally Accepted Accounting Principles (GAAP)
The standard framework of guidelines for financial accounting used in the given jurisdiction.
Global Depositary Receipts (GDRs)
Depositary receipts that are normally listed on European Stock Exchanges. See Depositary Receipts for more details.
Global Registered Shares
Equity issued and registered in multiple markets around the world, normally including the issuer's home market.
Government Tax Residency Certificate
A legal document issued by the relevant government certifying that the individual or the entity listed is a resident of the country for tax purposes.
HM Revenue and Customs (HMRC)
the UK tax authorities.
Securities represented by paper certificates that are held by the central depository at all times and that are linked to a settlement system.
A legal agreement between the issuer of a bond instrument and the bondholders. The indenture establishes rights and obligations of bondholders, the trustee, and the issuer.
A fee paid by a borrower of assets or cash to the owner as a form of compensation for the use of the assets or cash, typically expressed as an annual percentage rate.
Internal Revenue Service (IRS)
the US tax authorities.
International Central Securities Depository (ICSD)
A central securities depository that settles international securities and various domestic securities, usually through direct or indirect links to local CSDs. The only ICSDs are Clearstream, Euroclear and SIX SIS.
International Securities Identification Number (ISIN)
A 12-character alpha-numerical code that uniquely identifies a security. An ISIN is comprised of a 2-digit ISO country code, a 9-digit national identifier (e.g. CUSIP for the US) and a 1-digit check number. Securities for which ISINs are issued include bonds, commercial paper, equities and warrants.
IRS Form 6166
A letter issued by the IRS to certify that a person claiming treaty benefits is a resident of the U.S. for federal tax purposes. IRS Form 6166 is printed on U.S. Department of Treasury stationery and certifies that the individuals or entities listed are residents of the U.S. for purposes of the income tax laws of the U.S.
IRS Form 8802
A form that is used to request Form 6166, a letter of U.S. residency certification, from the IRS.
A company, government, or other entity that offers securities for sale to the market.
Italian Substitute Tax
A withholding tax which income derived from certain Italian securities is subject to, under certain Italian regulation.
J - L
An Australian dollar-denominated bond issued by a non-Australian entity in the Australian market.
Know Your Customer (KYC) Principle
The principle that normally refers to the activities of customer due diligence that financial institutions and other regulated companies must perform to identify their clients and ascertain relevant information pertinent to doing financial business with them. In the USA, KYC is typically a policy and process implemented to conform to a customer identification program (CIP) mandated under the Bank Secrecy Act and USA PATRIOT Act.
Legal Owner / Legal Holder
In relation to a particular security, the person entitled to enforce, against the issuer, rights conferred on a holder by its constitutional documents, and in the case of a security in registered form, it is the registered holder. The legal owner is not always the beneficial owner.
Letter of Transmittal
A document used by a security holder to accompany its securities in a corporate action event.
Securities that are listed on a stock exchange. For securities to be listed, the issuer must file a listing application with the relevant stock exchange and register the securities with the appropriate bodies.
A financial institution designated to arrange for the listing of securities on an exchange.
Long Form Reclaim
The procedure used to reclaim any excess withholding tax on earnings from the tax authorities in the country where the issuer of the securities on which the excess tax has been applied is domiciled.
M - O
A Canadian dollar-denominated bond issued by a non-Canadian entity in the Canadian market.
Final payment date of a debt instrument, on which the principal and the remaining interest normally is due to be paid.
A special type of signature guarantee required for the transfer of securities in the U.S. and Canada. By affixing a Medallion Seal, the guarantor (who must belong to a Medallion Program) certifies that (a) the signature was genuine, (b) that the signer was the appropriate person to make the endorsement and (c) that the signer had the legal capacity to sign. The guarantor assumes financial responsibility should the endorsement turn out to be fraudulent. Medallion Program members include most large U.S. financial institutions such as banks, brokerages and credit unions.
Medium-term note (MTN)
A debt instrument that usually matures in 5 to 10 years
A standard tax reporting form established by Spanish regulation and used for long form reclaims from the Spanish tax authorities.
Nationale Bank van Belgie / Banque Nationale de Belgique (NBB/BNB)
the national central bank of Belgium.
A company with the purpose of registering securities in its own name on behalf of other persons, and administering those holdings
Numero Identificacion Fiscal (NIF)
A unique number under which Spanish citizens and institutions report their income for taxation purposes.
A legal document prepared by an issuer stating the objectives, risks and terms of a new issue of unregistered securities. While an Offering Memorandum contains full disclosure of risks and no misrepresentations, it may include less information than a prospectus.
Original Issue Discount (OID)
The difference between the price of a debt instrument (bond or debenture) and its stated redemption price at maturity.
Over The Counter Market (OTC)
A common term utilized to describe the market for financial instruments that are not traded on any of the official exchanges. The OTC market is comprised of a network of broker/dealers who complete transactions via telephone or computer rather than in a centralized marketplace.
P - Q
A Chinese Renminbi-denominated bond issued by a non-China entity in the People's Republic of China market.
An entity appointed by a corporation to distribute dividend income to its shareholders, or interest to its bondholders.
The date on which the issuer of the security is due to make dividend payments or interest payments to security holders.
A number expressed as a factor of one that is used to indicate the remaining principal balance of a note.
Power of Attorney
Legal authorization to represent or act on another's behalf in a specified manner.
The part of the capital markets that deals with the issuance of new securities.
The proportional limitation of distribution of cash and/or securities.
Pro rata temporis
Being in proportion to the length of the time period involved.
A legal document prepared by an issuer and filed with the SEC stating the objectives, risks and terms of a new issue. The prospectus gives detailed information on the issue and on the issuer's condition and prospects.
Quasi-debt financing involves issuing equity-debt securities. These securities are also referred to as hybrid securities. Convertible bonds and preferred stocks are examples of quasi-debt instruments.
The minimum number of bondholders that need to attend a bondholders meeting in order for the voting points - that were voted in favour for - to become legally binding.
The procedure used to apply for a refund of any excess tax withheld on earnings from the withholding agent, before it has been transferred to the relevant tax authorities.
The date as of which an investor must be a recognized owner of securities to be entitled or subject to a certain event in connection to these securities.
Type of debt instrument ownership for which the owner's name is recorded by the issuer or their agent and interest payments are sent directly to the owner.
The owner of a registered security, as per the records maintained by the issuer or its agent.
The agent appointed by the issuer of a security to maintain the records of ownership of such security.
Relief at Source
The procedure used to apply for reduction of withholding tax to the treaty rate at the source of payment, which, in case the reduction is granted by the withholding agent, results in the payment being distributed at the eligible reduced tax rate.
Securities not registered with the appropriate regulatory body (e.g., Securities and Exchange Commission in the U.S.) which therefore may be restricted in terms of public transfers.
A Japanese yen-denominated bond issued by a non-Japanese entity in the Japanese market.
Second Level Bank
Under Italian law, an Italian bank or a resident brokerage company (or a permanent establishment in Italy of a bank or of a non resident brokerage company) that maintains a direct electronic link with the Italian Ministry of Economy and Finance, and in which the securities are directly or indirectly deposited.
The financial market in which previously issued financial instruments such as stock, bonds, options, and futures are bought and sold.
A broad term that refers to stocks, bonds and other investment instruments.
Service Public Fédéral Belge Fiscals Federales
the Belgian tax authorities.
The date on which, following a financial transaction, financial instruments are to be delivered or received.
Shares or stock
Financial instruments representing unit of ownership interest in a corporation or financial asset.
SIX SIS AG
The central securities depositary of Switzerland and one of the ICSDs.
the Norwegian tax authorities.
the Danish tax authorities.
the Swedish tax authorities.
Sociedade Gestora de Sistemas de Liquidação e de Sistemas Centralizados de Valores Mobiliários, SA (or INTERBOLSA)
One of the two central securities depositaries in Portugal. Link: https://www.interbolsa.pt
Society for Worldwide Interbank Financial Telecommunication (SWIFT)
A network that enables financial institutions to send and receive information about financial transactions in a secure, standardized and reliable form.
Special Purpose Vehicle (SPV)
A legal entity created solely to serve a particular function, such as the facilitation of a financial arrangement or the creation of a financial instrument.
Sponsored ADR Program
A depositary receipt program that is established at the direction of the issuer and in accordance with a deposit agreement between the issuer and the depositary bank.
Distribution of profit to shareowners in the form of additional shares of stock, normally proportionate to the shareowner's holdings.
An increase in the issuer's total number of outstanding shares, normally accompanied by a proportionate decrease in the value per share.
Offer given to existing shareholders to buy newly issued securities before the new securities are offered to others. The subscription price is set below the prevailing market price.
Target to Securities (T2S)
a European Central Bank project aiming to centralize the Settlement operation in the post trade value chain for nearly all securities on a single pan-European platform. http://www.ecb.int/paym/t2s/html/index.en.html
The legal requirement for the withholding agent to withhold or deduct tax amounts from a payment before payment distribution and pay that tax to the government.
Taxpayer Identification Number (TIN)
A unique number under which tax residents are known to the tax authorities they are domiciled in for taxation purposes. In the U.S., TIN is a nine digit number, which for individuals is also their U.S. Social Security Number.
An offer made by the Issuer to buy securities at a specific price.
The X/N system
Belgian withholding tax collection regime operating on the basis of the pro rata temporis principle. http://www.debtagency.be/pdf/clearing_GB.pdf
The date on which the purchase or sale and the terms of the transaction of securities are agreed upon.
The conveyance of right, title or interest in an asset from one person to another.
An agent appointed by an issuer to maintain records of holders of its securities. Transfers agents cancel and issue certificates and resolve problems arising from lost, stolen or destroyed certificates.
U - Y
A security which may be sold publicly in a given jurisdiction as it has been registered with the relevant regulatory bodies and all required filings and conditions with respect to the security have been completed.
Unsponsored ADR Program
A depositary receipt program for which no agreement is entered into between a depositary bank and the issuer. An unlimited number of depositary banks may issue depositary receipts evidencing ownership of the underlying securities held in custody in the issuer's home market.
A financial institution who receives banking services from an institution and itself provides banking services to other financial institutions and is further up the custodial chain. For example, clearing system participants are upstream correspondents for their clients.
the Finnish tax authorities.
A type of security that gives the holders the option to buy a specific amount of shares or bonds at a specified time for a specified price.
The entity or person held responsible under the respective tax legislation for the collection of withholding tax at source of payment.
A US dollar-denominated bond issued by a non-US entity in the US market.