| Back End Fee |
Fee paid on completion of a service. |
| Back Office |
The departments of a financial institution dealing with recording, settlement and administration. As opposed to a ‘front office’ dealing/trading area. |
| Back-To-Back Credit |
The Bank’s customer, acting as ‘middleman’, has a documentary credit opened in his favour by the foreign buyer of the goods involved in the deal. On the strength of this credit, the bank agrees to open a credit for the benefit of the original supplier of the goods. The two credits are put ‘back-to-back’; one being issued on the security of the other. See also Bills of Exchange and Letters of Credit. |
| Back-To-Back Loan |
Devised to avoid exchange risks, e.g. Dutch company needs Sterling for a UK deal, a UK company needs Euros for a similar deal in Holland. Each company funds the others enterprise in his own country. |
| Bargain |
The term defines each transaction a broker deals for a client. |
| Base Rate |
The lowest rate of interest at which an individual bank will lend funds. |
| Basis |
The difference between the futures price for a given commodity and the comparable cash or spot price for a commodity. Normally quoted as cash price minus futures price, i.e. a positive number indicates a futures discount; a negative number indicates a futures premium. |
| Bear |
An investor who has sold a security in the hope of buying it back at a lower price as he thinks the market will go down. |
| Bearish |
The belief that the market price will fall. |
| Bear Market |
A falling market in which bears would prosper. |
| Bearer Bonds |
A bond which is payable to the bearer. The bondholders right to receive interest or dividend is established by a series of tear off coupons that must be submitted at appropriate times. |
| Bearer Exchange Rate Option |
A negotiable bearer document giving the holder the right (but not the obligation) to buy or sell predetermined amounts of currency at a predetermined rate within a predetermined period. |
| Bed and Breakfast Deal |
Selling shares one day and buying them back the next for direct tax purposes at the end of the financial year. |
| Beneficial Owner |
A person entitled absolutely to the benefits of a security, irrespective of the name in which it is legally registered (eg Trustees, Nominee Companies). |
| Best Execution |
Brokers are advised to take reasonable care to find out the price which is the best available for their customers. |
| Bid |
(a) The price at which the market maker will buy shares. (b) An approach made by one company wishing to buy the majority of another company’s shares. |
| Big Bang |
The term for the changes introduced on 27 October 1986, which swept away floor trading at the London Stock Exchange and replaced it with direct broker/dealer trading via the new automated price quotation system (SEAQ). |
| Bill of Exchange |
An unconditional order in writing, addressed by one person to another. It requires the person to whom it is addressed to pay on demand, or at a fixed future time, a certain sum of money, to a specified person or to the bearer. |
| Blue Chip |
Term for the most highly regarded companies. Originally an American term, from the highest value poker chip. |
| Bond |
A debt instrument issued for a period of more than one year with the purpose of raising capital by borrowing. Generally, a bond is a promise to repay the principal along with interest (coupons) on a specified date (maturity). |
| Bonus Issue |
See Capitalisation Issue |
| British Bankers’ Association (BBA) |
A trade association in the banking and financial services industry representing banks and other financial services firms operating in the UK. It has over 200 members, as well as many associate members, which fund its not-for-profit activities. |
| British Venture Capital Association (BVCA) |
A trade association representing private equity and venture capital in the UK. |
| Broker/Dealer |
A London Stock Exchange member firm, which provides advice and dealing services to the public and which can deal on its own account. |
| Bull |
An investor who has bought a security in the hope of selling it at a higher price as he thinks the market will go up. |
| Bullish |
The belief that a market price is going to rise. |
| Bull Market |
A rising market in which bulls would prosper. |
| Bulldog Bond |
A bond denominated in Sterling, but issued by a foreign institution or government. |