CFD Glossary

CFD Glossary   CFD - Contract For Difference CFD a derivative trading instrument that allows you to trade the price movements when you enter (buy) [...]

POSTED ON May 1, 2008
Traveller’s cheques

A traveller’s cheque is a fixed amount cheque that can be purchased in a variety of amounts and currencies. The cheques are usually signed by [...]

POSTED ON March 18, 2008
Cash passport

A cash passport is a prepaid card designed for use when travelling. The card can be loaded with a range of currencies so that you [...]

POSTED ON March 18, 2008
Early Termination Fee

An early termination fee may be charged by a lender if you refinance or otherwise payout your loan within a specified period, usually limited to [...]

POSTED ON October 26, 2007
Discharge fee

The one-off fee charged on final payout of loan. [...]

POSTED ON September 29, 2005
Annual fee

Ongoing administration fee charged each year on many home, business, personal and reverse mortgage loans, as well as credit cards. Admin fees such as these [...]

POSTED ON September 29, 2005
Minimum age of borrower

Reverse mortgages are only available to senior citizens and subject to minimum age limits, usually 60 0r 65. [...]

POSTED ON September 29, 2005
Equity reduction limit

Also called 'equity cap'. The limit to how far your home equity can be reduced, ie. no more loan funds are advanced once loan liability [...]

POSTED ON September 29, 2005
‘No negative equity’ guarantee

A guarantee that the borrower will never owe more than the value of their property. This is a 'non-recourse' loan. In Australia, only applicable to [...]

POSTED ON September 29, 2005
Non-recourse loan

A 'non recourse loan' means there are no circumstances under which you can be forced out of your home to repay the debt. If you [...]

POSTED ON September 22, 2005
‘Reverse mortgage’

These loans are for retired people who own their own home but have little cash to live on. Such a loan allows the 'cash poor, [...]

POSTED ON September 15, 2005
Exchange-traded options (ETOs)

Exchange-Traded Options (ETOs) are a derivative product issued over existing shares with each option being for a parcel of 1,000 shares in the underlying companies [...]

POSTED ON August 26, 2004
Fixed interest rates

Interest rates on protected equity products are fixed but not necessarily for the full term of the loan. Some products have a rate fixed for [...]

POSTED ON April 15, 2004
Loans for interest

Some protected equity lenders offer a separate, secondary loan to cover the first year's interest payment on a protected equity loan. These loans will have [...]

POSTED ON April 15, 2004
Company search fee

An upfront fee that lenders charge only when loans are being taken out in the name of a company. This fee covers the required search [...]

POSTED ON April 15, 2004
Brokerage fees

The fees charged by brokers for buying and selling shares on the stock exchange on the investor's behalf. In our Online Broking tables it refers [...]

POSTED ON April 15, 2004
Establishment fee protection

Under a protected equity loan arrangement, some lenders include the value of the establishment fee in the capital guaranteed amount. For example, if you borrow [...]

POSTED ON April 15, 2004
Shared upside

Protected equity lenders broadly offer two different ways to reduce the high interest costs of their capital protected loans. 'Shared upside' simply offers the borrower [...]

POSTED ON April 15, 2004
Call option protection

Protected equity lenders broadly offer two different ways to reduce the high interest costs of their capital protected loans. Some protected equity lenders offer investors [...]

POSTED ON April 15, 2004
‘Low doc’ loans

Low-doc or low documentation loans are structured for the self-employed who don't have the documentation required to get traditional home loans. The interest rate is [...]

POSTED ON February 2, 2004
Debentures

Debentures are fixed-interest securities on which the issuer pays interest at a fixed rate and for a specific term. In this way, debentures are similar [...]

POSTED ON October 2, 2003
At call

'At call' refers to savings in accounts that can be accessed at any time and is not locked away for a specified period as with [...]

POSTED ON October 2, 2003
Direct Credit

An electronic payment made directly into a bank or building society account, eg. wage and salary payments. [...]

POSTED ON October 2, 2003
Direct Debit

An electronic payment taken automatically from a customer's bank account by written agreement between the account holder and a goods or service provider. The amounts [...]

POSTED ON October 2, 2003
BPay

BPay is an an Australia-wide electronic bill payment service, offered by most financial institutions. It enables consumers to pay bills to a range of businesses [...]

POSTED ON October 2, 2003
Official Cash Rate

The Official Cash Rate is the interest rate set by the Reserve Bank of Australia and used to influence the general level of interest rates [...]

POSTED ON October 2, 2003
Term Deposit

Fixed-term deposits are savings accounts which offer higher rates of interest in return for committing funds for a set period. The longer the term, the [...]

POSTED ON October 2, 2003
Non-conforming loans

So called 'non-conforming' finance refers to loans that cater for those who can't meet the standard income verification and credit history criteria mainstream lenders like [...]

POSTED ON September 25, 2003
Sub-prime lending

'Sub-prime lending', also called 'non-conforming' loans, refers to loans that cater for those who can't meet the standard income verification and credit history criteria mainstream [...]

POSTED ON September 25, 2003
Debit card

A debit card is a method of payment where funds are electronically deducted directly via the EFTPOS system from the cardholder's savings account to pay [...]

POSTED ON September 25, 2003
Charge card

A charge card offers a method of payment where cardholders put purchases on an account which must be fully paid at the end of the [...]

POSTED ON September 25, 2003
EFTPOS

Electronic Funds Transfer at Point Of Sale. Means of payment whereby debit card holders can pay for purchases by electronic debiting their savings account. [...]

POSTED ON September 25, 2003
Online savings account

A new breed of savings account which offers higher rates of interest 'at call' in return for more restricted account access. Usually no over-the-counter or [...]

POSTED ON September 25, 2003
Honeymoon Rates

"Honeymoon" or introductory rates are offered to entice borrowers with a low advertised rate that may be up to 2 percentage points below the standard [...]

POSTED ON September 11, 2003
Interchange fees

Interchange fees are charged between banks for processing transactions made on one another's cards via the open Visa or Mastercard systems. [...]

POSTED ON August 26, 2003
Comparison rate

All lenders must disclose a benchmark comparison rate in their advertising of home loans and personal loans since July 2003. This Comparison Rate is designed [...]

POSTED ON July 23, 2003
Market depth

Shows the number of orders - or bids and offers - on the buy and sell sides of a stock at set price intervals. Market [...]

POSTED ON October 24, 2002
Margin call

A demand by the margin lender for the borrower to provide additional security when the loan-to-valuation ratio limit (or the buffer above it) is exceeded. [...]

POSTED ON October 18, 2002
Negative gearing

Borrowing to an extent where the interest paid is greater than the income received (eg. dividends, franking credits, rent) from an investment. [...]

POSTED ON October 18, 2002
Prepaid interest

The payment of loan interest in advance. This offers tax benefits with deductions possible for interest paid up to a year in advance. [...]

POSTED ON October 18, 2002
Buffer

The amount by which your loan-to-valuation (LVR) can be exceeded (eg. because of share price falls) before the lender initiates a margin call. [...]

POSTED ON October 18, 2002
Gearing

Gearing refers to the strategy of borrowing for the purposes of investment. A 'geared investment' is one using borrowed funds. 'Leverage' is another word for [...]

POSTED ON October 18, 2002
Loan-to-valuation ratio (LVR)

The amount borrowed expressed as a percentage of the current valuation of the securities invested in. [...]

POSTED ON October 18, 2002
Approved securities

Listed shares and unlisted managed funds that a margin lender will lend against. [...]

POSTED ON October 17, 2002
MER

MERs, or management expense ratios, are cost ratios calculated to a standard formula by all fund managers to give investors a comparable standard by which [...]

POSTED ON September 20, 2002
AAPR

The average annual percentage rate (AAPR) wraps up interest payments and fees and expresses all these costs in one rate. It is designed to reflect [...]

POSTED ON August 16, 2002
Manual processing

Manual processing sees your trades go to a human being in the broker's office to be processed first before being submitted to the market - [...]

POSTED ON July 15, 2002
Warrants

A warrant is a 'derivative' security which gives the holder the opportunity to buy or sell shares (or other securities) at a future date for [...]

POSTED ON July 5, 2002
Watch lists

A service offered by online brokers allowing investors to conveniently monitor of a list of share prices. [...]

POSTED ON July 5, 2002
Portfolio valuation

Calcualtion of the value of a trader's combined share holdings, performed either 'live' or end of day. [...]

POSTED ON July 4, 2002
Price alert

Service offered by online brokers, either by email or phone, to notify investors when a share reaches a pre-specified price level. [...]

POSTED ON July 4, 2002
Research reports

Market news, commentary, information services and perhaps stock or managed fund research to help traders with their investment decisions. [...]

POSTED ON July 4, 2002
Subscription fees

Periodical fee for access to an online broker's service. The subscription typically provides the investor/trader with greater access to the broker's 'live' information, research or [...]

POSTED ON July 4, 2002
Trading credits

Most brokers will allow trades to be made on the top 150 stocks up without cleared funds in the trading account. But these 'trading credits' [...]

POSTED ON July 4, 2002
Options

Options give the holder the right, but not the obligation, to buy or sell the underlying security, often shares, by a specified date. [...]

POSTED ON June 14, 2002
Phone trading

Placing of buy and sell stock orders over the phone. It's a good idea to have an online broker that offers phone trading as a [...]

POSTED ON June 14, 2002
Margin trading

Buying shares with a combination of cash and borrowed funds. Depending upon the underlying share portfolio, margin lending institutions will lend up to 80% of [...]

POSTED ON June 14, 2002
Market commentary

Daily summary of movements in stocks and sectors of the sharemarket. [...]

POSTED ON June 14, 2002
Minimum balance

Lowest cash balance allowed in a trading account at any one time. [...]

POSTED ON June 14, 2002
Minimum initial deposit

Minimum amount of cleared funds to be deposited into a transaction account before trading can commence. May also take the form of shares in some [...]

POSTED ON June 14, 2002
Online trading

Placing of buy and sell stock orders over the internet via a website. [...]

POSTED ON June 14, 2002
Cash settlement account

Each broker requires investors nominate a bank account, or establish an account specified by the broker, into which you must deposit funds before being able [...]

POSTED ON June 13, 2002
Charting tools

Displays pricing history of shares and indices in graph form. [...]

POSTED ON June 13, 2002
End-of-day

Usually refers to share price and market data update frequency being after the conclusion of the day’s trading. Faster are Dynamic data and Real-time data [...]

POSTED ON June 13, 2002
Real-time data

Up-to-the-minute price and trading data. However, users must refresh their web page to see these prices. Dynamic prices are automatically updated on your screen as [...]

POSTED ON June 13, 2002
Course of trades

A history of your trading activity. [...]

POSTED ON June 13, 2002
Dynamic data

Prices automatically updated on your screen as changes occur in the market. Real time prices are only updated by refreshing each page. or delivered with [...]

POSTED ON June 13, 2002
Frequent-trader discounts

Discounted brokerage fees for those who trade often. Where an investor exceeds a specified volume of trades within a given time period, they may be [...]

POSTED ON June 13, 2002
Profiles

Financials, service information and performance indicators on companies, funds and brokers themselves [...]

POSTED ON June 13, 2002
International shares

Usually means US shares on the NASDAQ and NYSE markets, however, some brokers now allow you to trade on European and Asian exchanges. [...]

POSTED ON June 13, 2002
Managed funds

An alternative to direct investment, managed funds offer exposure to a broad range of shares, both domestic and international. Investors make a single investment in [...]

POSTED ON June 13, 2002
Broker recommendations

Brokers opinions - buy/hold/sell - on particular stocks. Treat with caution. [...]

POSTED ON June 12, 2002
Stop-loss orders

A sell order to be triggered automatically once a preset price level is reached. [...]

POSTED ON June 12, 2002
Adviser access

While some full service brokers offer an online service at a discount, if you're looking for advice on which stocks to buy or sell you [...]

POSTED ON June 12, 2002
Floats

New listings of companies, called Initial Public Offerings (IPOs). Some discount brokers may receive allocations for floats for distribution amongst their trading clients. [...]

POSTED ON June 12, 2002
Account statements

Cash settlement account statement showing deposit and receipt of funds to / from your broker for trades conducted. [...]

POSTED ON June 12, 2002
Alternate security

Traders may deposit shares and other securities instead of cash into a cash settlement account to cover the value of purchases. [...]

POSTED ON June 12, 2002
ASX announcement

Companies are required to make announcements regarding price-sensitive developments to the ASX. Some brokers may provide a service whereby ASX anouncements are placed upon the [...]

POSTED ON June 12, 2002
CHESS

CHESS stands for Clearing House Electronic Sub-register System; it is the Australian Stock Exchange's computer-based share transaction and settlement system. It provides a central book-entry [...]

POSTED ON June 6, 2002
Sponsorship

All shareholdings on CHESS (Clearing House Electronic Sub-register System) have a sponsor. The sponsor will be a broker or an issuer (listed company). Your shares [...]

POSTED ON June 6, 2002
‘At market’ orders

Buy or sell orders executed as soon as the order is placed. ‘At limit’ orders, on the other hand, involve placing an order to buy [...]

POSTED ON June 6, 2002
‘At limit’ orders

Involve placing an order to buy or sell shares at a specified price. ‘At limit’ orders can be effective for say two to three weeks [...]

POSTED ON June 6, 2002
Straight-through processing

Fully automated processing of transactions so that trades are placed directly into the market. Straight-through processing places the responsibility of inputting the order with the [...]

POSTED ON June 6, 2002
Accidental Damage Policy

This type of policy covers accidental damage and loss – most policies are not of this type. The policyholder’s cover is not limited to a [...]

POSTED ON January 30, 2002
Defined Events Policy

A Defined Events policy covers you for loss and damage caused by a list of specific events. Some of the most common events usually covered [...]

POSTED ON January 30, 2002
Switching Fee

The lender may impose a switching fee where an existing borrower wishes to change from one loan type to another e.g. Variable Rate Loan to [...]

POSTED ON January 17, 2002
Uniform Consumer Credit Code (UCCC)

The Uniform Consumer Credit Code is legislation to ensure uniformity amongst all credit providers across all Australian states. For example, all loan contracts must now [...]

POSTED ON January 17, 2002
Valuation fee, revaluation fee

Fee which may be charged if the lender seeks to cover the cost of valuing the property taken as security for the loan. Under a [...]

POSTED ON January 17, 2002
Service Fee

Usually a monthly fee levied to cover bank cost of administering & maintaining the loan account i.e. fixed and variable costs such as staff, IT [...]

POSTED ON January 16, 2002
Standard Variable Rate

The rate which lenders apply to their ‘premium’ home loan product. Carries features such as a redraw facility, portability, salary account and mortgage offset. [...]

POSTED ON January 16, 2002
Portable Loans/Portability

A portable loan allows you to sell your house and move to a new one without having to refinance. This saves application and legal fees. [...]

POSTED ON January 15, 2002
Redraw Facility

A redraw facility allows you to make additional repayments on your mortgage, and then have access to the additional repayments if you need to. Make [...]

POSTED ON January 15, 2002
Basic Rate

Applied to loans commonly called ‘No Frills Loans’ which are generally cheaper than Standard Variable Rate Loans but do not have features such as a [...]

POSTED ON January 14, 2002
Break Costs

Relates to the penalty fees charged when a borrower terminates a fixed-rate loan contract before the expiry of the fixed-rate period. [...]

POSTED ON January 14, 2002
DSR – Debt Service Ratio

Maximum of the applicants weekly, fortnightly or monthly wage which will support loan repayments over the agreed loan term. Usually expressed as a percentage – [...]

POSTED ON January 14, 2002
Establishment Fee

Also called Application Fee. Fee which covers basic costs in setting up loan from initial interview to loan drawdown. Some lenders choose to absorb this [...]

POSTED ON January 14, 2002
Exit Fee

Fee imposed by some lenders when paying out a loan. [...]

POSTED ON January 14, 2002
Home Equity Loan

A home equity account gives you a revolving line of credit secured by the value of your house. This allows you to use the funds [...]

POSTED ON January 14, 2002
Legal Fee

May be charged where an outside party is used to prepare bank documentation. [...]

POSTED ON January 14, 2002
LVR

Loan to Value Ratio. Refers to the maximum amount lenders will approve against the value of any property taken as security for your home loan. [...]

POSTED ON January 14, 2002