Glossary - T
T+
Refers to the settlement period that is allowed once a security has been traded. T+ 5 would mean that settlement will occur five business days after the transaction day.
Takeover
The purchase of one company by another. A takeover can be a friendly acquisition bid, where the management would cooperate in negotiating the best price, or it can be an unfriendly bid, where the management tries to use various defensive strategies to repel the bidder.
Talisman
The old stock exchange computerised settlement system. It was replaced by CREST.
Taper relief
Aims to reduce the amount of capital gains tax that you have to pay when you sell shares, to account for the effect of inflation. Taper relief works by reducing the gain by 5% a year for every year it was held regardless of the base cost. This is to be abolished from tax year 2008/09. Also known as indexation relief.
Tax year
See financial year
TechMARK
An index of all listed technology companies on the London Stock Exchange.
Tender offer
An offer where potential investors are asked to stipulate the price per share that they are willing to pay.
Theta
The theta of an option is the rate of change of that option price with respect to time. Theta is a negative, reflecting the fact that the option value decreases over time.
Tightening
Refers to monetary policy. Policy is tightened if the central bank raises interest rates in an attempt to reduce demand and curb inflation.
Time spread
Option strategy whereby an investor buys and sells put options and call options with the same exercise price but different expiry dates.
Time value
The amount by which an option’s premium exceeds its intrinsic value.
Top-down
An investment strategy which first finds the best countries or sectors to invest in and then searches for the best stocks within these (compare bottom-up).
Total return
Annual return on an investment including capital appreciation and interest.
Total return swap (TRS)
The buyer of a TRS receives the economic performance of the reference obligation - i.e. the coupon or interest from the reference obligation together with any capital gains - in return for a predetermined funding cost. The buyer will be required to pay any capital losses.
Touch
The best prices available for a stock on the market, looking at all the market makers.
Tracker funds
Unit trusts which aims to receive the same returns as - i.e. track the performance of - a specific share index by investing in companies according to their market value weighting.
Trade
See bargain.
Trade date
Day on which the security trade actually takes place. Distinct from the settlement date.
Traded option
The right, but not the obligation, to buy or sell something at a fixed price at some time in the future.
Trading hours
The period of time when orders will generally be accepted. Usually Monday to Friday, 8.00am to 4.30pm, excluding bank holidays.
Trail commission
When a broker invests in a fund for you, they may receive remuneration from the fund manager based on your initial investment. They may also receive further remuneration each year thereafter, for as long as you continue to hold the fund investment with them. These payments are known as trail commission. It may also be referred to as continuing commission. It will usually be a percentage of the fund’s annual management charge.
Trailing stop order
An order to buy or sell shares when the share price rises from its lowest price or falls from its future peak price by a specified number of pence.
When buying, a trailing stop order is used to make an investment at a price which is relative to the lowest price of the share, but only when an upward trend has been established.
When selling, a trailing stop order is used to maximise the potential profit of a holding by selling relative to the peak price of the shares.
Transaction
An order to buy or sell a security.
Transfer forms
Forms needed to transfer securities from one owner to another.
Treasuries
Debt obligations of the US government. Used as a risk-free benchmark for the pricing of US dollar dominated securities.
Treasury
The UK Government's finance department.
Trusts
A legal device for preserving and protecting assets.
Two way price
Simultaneous prices in a stock quoted by the market maker. The lower price is the one at which they are willing to buy, while the higher price is the one at which they are willing to sell.
