| Haircut |
Another name
for the discounting of collateral given to theLondon Clearing House(LCH) to cover
initial margin payments. This means that the value given to the collateral by
LCH will be less than its current market value, the difference between the two
sums being the haircut. This protects the clearing house by taking into account
the lesser value that it is likely to get in the event of a forced sale of the
collateral to meet losses caused by a clearing member default.
|
| Hang
Seng |
The major Hong
Kong share index, consisting of 33 shares.
|
| Headroom |
This equates to
the difference between aCREST member’s cap (seeCap), i.e. the credit
they have available and the net CMA balance (seeCMA), i.e. the cash movements from that
day’s activities. |
| Hedge |
Afuturesoroptionstransaction
motivated by the wish to reduce risk. |
| Hedger |
A person who
uses the markets to reduce the risk of his underlying position by undertaking
ahedge. For
example, a wheat farmer may sell wheatfuturesto guarantee him a fixed selling
price for his wheat. |
High
Yielding Bond
back to top |
Also known as a
junk bond. Anybondwhich is not ofinvestment grade. |
| Higher Rate
of Tax |
The higher rate
of tax is 40% in the fiscal year 1998/99 and is applied to taxable income in
excess of #27,100. See alsoLower Rate of Tax,Basic Rate of TaxandTaxable Income.
|
| Historic
Volatility |
Thevolatilityof the
price of anassetduring a past period. This can be used
by a trader to forecast future volatility of the price. |
| Holder |
The buyer of
anoption. |
| Holding
Company |
A company which
controls one or more subsidiary companies in which it owns shares. See alsoSubsidiary
Company. |
| Home/Host |
Under theISD, firms are
bound by the rules of their domesticauthorisingbody (home) for all aspects of
their ISD business with the exception of conduct of business rules. Home
conduct of business rules apply for all business undertaken in the authorising
state, however, the conduct of business of the host state apply when services
are provided in that state. |
| Horizontal
Spread |
Anoptionspreadwhere one
option is purchased and a different option is sold. The sold option has the
samestrike
pricebut a differentexpiry datefrom the purchased option. The
spread will be constructed with either allcallsor allputson the same underlying asset. This
spread is sometimes known as aTime Spreador aCalendar Spread. |
| House |
An account or
transaction designated for the firm’s own purposes, rather than for those
of itssegregatedcustomers known also as a
principal account or transaction. |
