| ECP |
See
Commercial
Paper. |
| EDC |
See
Electronic Data
Capture. |
| EDSP |
Exchange
Delivery Settlement Price, the price at which futures contracts are
settled upon
delivery. The EDSP is determined by the exchange, and is often an average of
traded prices over a set period. |
| EGM |
See
Extraordinary General
Meeting. |
| ETS |
Energy Trading
System; the screen trading system used on the
International Petroleum
Exchange. |
| Earnings |
Often a general
phrase, meaning ‘profits’. It does however have a very specific
definition in the context of
Earnings Per
Share. Here, it is defined as profit after tax,
minority
interests, extraordinary items and preference
dividends. The objective of the calculation is to arrive at an earnings figure
which is attributable to equity shareholders. As a result, all charges which
rank prior to the equity shareholders are deducted in the
calculation. |
| Earnings Per
Share |
A measure of a
company’s profitability from the point of view of equity shareholders. It
is defined as earnings attributable to equity shareholders divided by the
number of equity shares in issue over the year. See also
Earnings. |
| Earnings
Yield |
An accounting
ratio defined as net earnings per share multiplied by
100/80 and divided by the share price. The net earnings are
multiplied by 100/80 to give an earnings yield which is calculated
on the same basis as dividend yield. Broadly speaking, the lower the earnings
yield, the higher the company’s share price and the more highly rated the
company is. |
| Efficient
Portfolio Management (EPM) |
The EPM
regulations set out the ways in which certain types of
unit trust may
use derivatives.
EPM requires that all derivatives positions of the trust are
covered. |
| Electronic
Data Capture |
This is the
input into CREST
of the details of a stock deposit. See
Stock
Deposit. |
Enterprise
Investment Scheme
back to top |
A tax subsidy
to encourage investment in small risky companies. Where a company qualifies for
the scheme, any investment in equity shares in the company qualifies for income
tax relief at a rate of 20%, up to a maximum investment of #150,000 in the
fiscal year in question. This means that if an investor invests #100,000 in EIS
companies, he can claim an income tax rebate for the year of #20,000. In
addition to this, if the investor holds the shares for five years, any capital
gain which he makes on disposing of the shares is capital gains tax free. Any
capital loss suffered on the shares is eligible as a deduction from other
taxable capital gains.Although the tax reliefs are
generous, there are a number of restrictions to prevent the scheme being used
merely as a means of artificial tax avoidance. |
| Equity |
See
Shareholders’
Funds. |
| Equity
Market Makers |
See
Market
Makers. |
| Equity
Shares |
Also referred
to as ordinary shares or (in the USA) common stock. Shares which represent the
right to participate in the residual assets of a business and which usually
have voting rights. They will usually receive a
dividend, the
level of which depends on how successful the company is. If the company is
wound up, they
will be entitled to any assets left over after all other investors
have been paid off. Equity shareholders will have limited liability, which
means that their liability to contribute money to the company is limited to the
nominal value
of the share which they hold. If a share is fully paid as to its nominal value,
then the holder of the share has no further liability to pay money to the
company in any circumstances. |
| Escrow
Account |
In takeover
situations this is a CREST facility which permits
dematerialised
stock to be transferred on behalf of accepting shareholders into this
special account. The stock remains in the name of the holder, but under the
control of the receiving agent (Escrow). |
| Eurobond |
A
bond issued
outside of the country in whose currency it is denominated. For example, a
Eurobond
denominated in US dollars is issued outside of the USA. |
Euroclear
back to top |
One of the two
Eurobond
clearing and settlement agencies. The other is
CEDEL. It can
also be used for settlement of German, French and UK government
debt. |
| European
Currency Unit (ECU) |
A composite
European currency comprised of a basket of European currencies. Its regulatory
significance relates to the initial capital test for
Investment Services
Directive Firms and to the need for the identification for
money
laundering purposes of executing transactions of 15,000 ECU or
more. |
| European
Economic Area (EEA) |
Economic
grouping incorporating all European Union states plus Iceland,
Liechtenstein and Norway. The
Investment Services
Directive passport applies to the EEA. |
| European
Style Option |
An
option where
the holder has the right to exercise the option only on its
expiry date.
Contrast to an American style option, where the holder
can exercise up to and including the expiry date. |
| European
Union (EU) |
Political and
economic grouping of European member states. |
| Ex Dividend/
Ex Coupon |
The trading
status of a bond
or share such that the seller of the bond or share retains the right to receive
the next interest or dividend payment. The alternative is
cum dividend or
cum interest, when the purchaser has the right to receive the next interest or
dividend payment. |
Exceptional
Items
back to top |
Part of a
company’s profit and
loss account. Items which are material, derived from events or
transactions within a company’s ordinary activities and which need to be
disclosed separately to ensure that the company’s accounts give a true and
fair view. Contrast with an
Extraordinary
Item. |
| Exchange (of
Future) for Physical |
The exchange
between two customers of a physical and futures position, which is agreed
directly between the two parties outside of the exchange on which the futures
are dealt. EFPs are reported to the exchange, and documentary evidence of a
physical transfer of goods may be required by the exchange. Also known as
Against Actuals
on the LIFFE
Commodity market. |
| Execution
Only |
The
relationship between a firm and client under which the client merely instructs
the firm to buy or sell. No advice is provided by the firm and consequently the
suitability rules do not
apply. |
| Exempt
Legacies and Transfers |
Gifts during an
individual’s life or death (i.e. by means of a will) which, by virtue of
the nature of the gift or the recipient, are automatically exempt from
inheritance tax. Examples include transfers between spouses, gifts to charities
and gifts to political parties. The charity and the political party must be
recognised as such by the Inland Revenue. |
| Exercise |
The process by
which an option
holder takes up his right to buy (call) or sell (put) the
asset
underlying the option contract. |
Exercise
Price
back to top |
The price at
which an option
holder has the right to buy (call) or sell (put) the asset underlying the option
contract. The contract specification will set out the exercise price intervals,
e.g. 10p intervals. Also known as Strike Price and Strike. |
| Exercise
Style |
Defines the
date(s) that an option holder has the right to exercise his option. See
American Style
Option and European Style Option. |
| Expert
Customer |
An experienced,
knowledgeable and frequent individual investor who consents to being treated as
a non-private customer and consequently to reduced protections. Consent is not
required for overseas individuals nor from employees of
SFA
firms. |
| Expiry
(Date) |
The date after
which an option
can no longer be either exercised or traded. This date will be specified in the
contract specification for the product in question. |
| Extraordinary
General Meeting |
Ad hoc
shareholders’ meetings held by a company for a specific purpose, such as
to approve a major transaction. Fourteen days notice must be given of such a
meeting, if only ordinary resolutions are to be discussed. If a special
resolution is to be discussed, 21 days notice is required. The notice period
may only be shortened if at least 95% of shareholders agree. |
| Extraordinary
Item |
Part of a
company’s profit and
loss account. Items which are material, possess a high degree of
abnormality, are not expected to recur and are derived from events or
transactions outside of the ordinary activities of a company. Note that,
because the definition of ordinary activities is extremely wide, it is
extremely unlikely that a company will show an extraordinary item in its
accounts in any one year. |
