A decentralized market, without a central physical location, where market participants trade with one another through various communication modes such as the telephone, email and proprietary electronic trading systems. An over-the-counter (OTC) market and an exchange market are the two basic ways of organizing financial markets. In an OTC market, dealers act as market makers by quoting prices at which they will buy and sell a security or currency. A trade can be executed between two participants in an OTC market without others being aware of the price at which the transaction was effected. In general, OTC markets are therefore less transparent than exchanges and are also subject to fewer regulations. It is typical for OTC transactions that all contract specifications (eg duration, volume, etc.) can be determined individually by the parties involved.

over the counter trading

indicates a period which starts on trading day and ends on the following bank dayexample: on Tuesday the 15.03. O/N indicates the period from 15.03. to 16.03.

An interest rate swap involving the overnight rate being exchanged for a fixed interest rate. This short-term swap is used in the money market. Unlike normal IRS the variable part is not paid at every fixing but at the end of the period with compound interest. Different OIS: EUR: EONIA Swap, USD: Fed Funds Swap, GBP: SONIA Swap, CHF: TOIS.

maximum extent of a risk position which a trader is permitted to hold from one day to the next day (overnight) opposite: intraday limit

abbr. PnL or P&L (Profit&Loss)

abbr. price earnings ratio

Price Earnings Ratio

Papers of identity are a mix of bearer and order documents. In case of papers of identity the debtor is not obliged to pay to the bearer.

Price of a security which corresponds to the nominal value. i.e. 100%.

A stock with the indication of a particular denomination, which refers to a particular interest in the share capital of the company. Contrary non par value share

v. Cross Currency Swap

A security which represents a right to a variable share of the net profit of the company in addition to the fixed interest rate. This variable interest rate is linked to the dividend and shall enter into force in case a defined level of the dividend is achieved.

(PS) participation certificates are bearer instruments through which the investor takes a holding in the assets of a company and his return is additionally linked to the commercial success of the company. They are very similar to the preferred shares, as not all, but some of the rights of the shareholder are also entitled to the holder of a participation certificate.

The participation right entitles to a certain share of the net profit and / or the proceeds of liquidation of a company. The enjoyment right is guaranteed in the so-called participation certificate and does not include a right to vote nor any other rights in the company.

Securities which have an intermediate position between stocks and bonds. It certifies the holder rights of various kinds towards the company. Usually it involves a share of the net income and / or the proceeds of liquidation, but never a partnership in the company. Therefore, the owner has no right to vote at the annual general meeting.

Shares, which were only partly paid.

corresponds to a call option on an interest rate swap,The purchaser of the payer swaption has got the right but not the obligation to buy an exact specified interest rate swap at the strike price on the expiry date, i.e. he concludes a swap in which he pays a fixed interest rate in exchange of a variable one (e.g. EURIBOR). A payer swaption can be used for hedging against raising interest rates.v. swaption

abbr. Propability of Default

Funds that invest primarily or exclusively in fixed income securities.