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The FTSE MTIRS Indices are designed to accurately move in direct correlation to OTC Interest Rate Swaps market with a total of 45 indices covering the USD curve from 2 years to 30 years including spreads and butterflies. FTSE MTIRS Indices account for changes to both fixed and floating rates and are rebalanced daily.

A fund derivative (see also derivative) is a financial structured product related to a fund, normally using the underlying fund to determine the payoff. This may be a private equity fund, mutual fund or hedge fund. Purchasers obtain exposure to the underlying fund (or funds) whilst improving their risk profile over a direct investment.

Funding liquidity is the availability of credit to finance the purchase of financial assets. The International Monetary Fund (IMF) defines funding liquidity as "the ability of a solvent institution to make agreed-upon payments in a timely fashion". In practice, funding liquidity refers to whether a bank or financial institution can meet its payment obligations at a given point in time.

In mathematical finance, the Greeks are the quantities (known in calculus as partial derivatives; first-order or higher) representing the sensitivity of the price of a derivative instrument, such as an option or future, to changes in one or more underlying parameters on which the value of an instrument or portfolio of financial instruments is dependent. The name is used because the most

A hedge is an investment position intended to offset potential losses or gains that may be incurred by a companion investment. A hedge can be constructed from many types of financial instruments, including stocks, exchange-traded funds, insurance, forward contracts, swaps, options, gambles, many types of over-the-counter and derivative products, and futures contracts.

In finance, a high-yield bond (non-investment-grade bond, speculative-grade bond, or junk bond) is a bond that is rated below investment grade by credit rating agencies. These bonds have a higher risk of default or other adverse credit events but offer higher yields than investment-grade bonds to compensate for the increased risk.

Hybrid securities are a broad group of securities that combine the characteristics of the two broader groups of securities, debt and equity.

In finance, inflation derivative (or inflation-indexed derivatives) refers to an over-the-counter and exchange-traded derivative that is used to transfer inflation risk from one counterparty to another. See Exotic derivative.

An inflation swap is an over-the-counter derivative in which one party pays a fixed inflation rate and the other pays the realised change in a price index such as CPI, RPI or HICP. Markets trade two main structures: the zero-coupon inflation swap, which settles once at maturity, and the year-on-year inflation swap, which pays periodic coupons. Users include pension funds, insurers and ot

An insurance-linked security (ILS) is a type of financial asset whose value is driven by insurance loss events. Those such instruments that are linked to property losses due to natural catastrophes represent a unique asset class, the return from which is uncorrelated with that of other marketable asset classes.

In finance, an interest rate derivative (IRD) is a derivative whose payments are determined through calculation techniques where the underlying benchmark product is an interest rate, or set of different interest rates. There are a multitude of different interest rate indices that can be used in this definition.

An interest rate future is a futures contract (a financial derivative) with an interest-bearing instrument as the underlying asset. It is a particular type of interest rate derivative. Examples include Treasury-bill futures, Treasury-bond futures and Eurodollar futures.

In finance, an interest rate swap (IRS) is an interest rate derivative (IRD). It involves exchange of interest rates between two parties. In particular it is a "linear" IRD and one of the most liquid, benchmark products. It has associations with forward rate agreements (FRAs), and with zero coupon swaps (ZCSs).

In the theory of capital structure, internal financing or self-financing is using its profits or assets of a company or organization as a source of capital to fund a new project or investment. Internal sources of finance contrast with external sources of finance. The main difference between the two is that internal financing refers to the business generating funds from activities and as

In finance, the intrinsic value of an asset or security is its value as calculated with regard to an inherent, objective measure. As a distinction, the asset's price is determined relative to other similar assets.

Investigation of 2025 Czech government Bitcoin scandal comprises a series of political, legal, and media events following the replacement of Pavel Blažek by Eva Decroix as Minister of Justice in June 2025. This personnel change was precipitated by the outbreak of the so-called Bitcoin scandal.

In finance an iron butterfly, also known as the ironfly, is the name of an advanced, neutral-outlook, options trading strategy that involves buying and holding four different options at three different strike prices. It is a limited-risk, limited-profit trading strategy that is structured for a larger probability of earning smaller limited profit when the underlying stock is perceived to

The iron condor is an options trading strategy utilizing two vertical spreads – a put spread and a call spread with the same expiration and four different strikes. A long iron condor is essentially selling both sides of the underlying instrument by simultaneously shorting the same number of calls and puts, then covering each position with the purchase of further out of the money call(s)

A jelly roll, or simply a roll, is an options trading strategy that captures the cost of carry of the underlying asset while remaining otherwise neutral. It is often used to take a position on dividends or interest rates, or to profit from mispriced calendar spreads.

Know your customer or know your client (KYC) laws, regulations and guidelines in financial services require regulated businesses and professionals to verify the identity of a customer, and the suitability and risks involved with maintaining a business relationship with them. These procedures fit within the broader scope of anti-money laundering (AML) and counter terrorism financing (CTF)

In finance, a ladder, also known as a Christmas tree, is a combination of three options of the same type (all calls or all puts) at three different strike prices. A long ladder is used by traders who expect low volatility, while a short ladder is used by traders who expect high volatility. Ladders are in some ways similar to strangles, vertical spreads, condors, or ratio spreads.

In quantitative finance, a lattice model is a numerical approach to the valuation of derivatives in situations requiring a discrete time model. For dividend paying equity options, a typical application would correspond to the pricing of an American-style option, where a decision to exercise is allowed at the closing of any calendar day up to the maturity. A continuous model, on the othe

Legal risk as a subset of operational risk that comprises the uncertainty associated with a business becoming a subjects of legal liability and obligations as a result of its operation.

A letter of credit (LC), also known as a documentary credit or bankers commercial credit, or letter of undertaking (LoU), is a payment mechanism used in international trade to provide an economic guarantee from a creditworthy bank to an exporter of goods. Letters of credit are used extensively in the financing of international trade, when the reliability of contracting parties cannot be

Lewis S. Ranieri (; born 1947) is a former bond trader, and founding partner and current chairman of Ranieri Partners, a real estate firm.

Liquidity at risk (LaR) is a financial risk measure that estimates the potential net cash outflows an institution may face over a specified time horizon and confidence level. It is designed to quantify the risk that a bank, investment fund, or corporation will be unable to meet its short-term obligations due to unexpected demands on liquidity. The concept is closely related to Value at R

In finance, a loan is the tender of money by one party to another with an agreement to pay it back. The recipient, or borrower, incurs a debt and is usually required to pay interest for the use of the money.

The loan-to-value (LTV) ratio is a financial concept used by lenders to express the ratio of a loan to the value of an asset purchased.

A local volatility model, in mathematical finance and financial engineering, is an option pricing model that treats volatility as a function of both the current asset level

In finance, a long position in a financial instrument means the holder of the position owns a positive amount of the instrument. The holder of the position has the expectation that the financial instrument will increase in value. This is known as a bullish position. The term "long position" is often used in context of buying options contracts.

Lookback options, in the terminology of finance, are a type of exotic option with path dependency, among many other kind of options. The payoff depends on the optimal (maximum or minimum) underlying asset's price occurring over the life of the option. The option allows the holder to "look back" over time to determine the payoff. There exist two kinds of lookback options: with floating st

Lottery bonds are a type of government bond in which some randomly selected bonds within the issue are redeemed at a higher value than the face value of the bond. Lottery bonds have been issued by public authorities in Belgium, Ireland, Pakistan, Sweden, New Zealand, the UK and other nations.

In finance, margin is the collateral that a holder of a financial instrument has to deposit with a counterparty (most often a broker or an exchange) to cover some or all of the credit risk the holder poses for the counterparty. This risk can arise if the holder has done any of the following:

In mathematical finance, Margrabe's formula is an option pricing formula applicable to an option to exchange one risky asset for another risky asset at maturity. It was derived by William Margrabe in 1978. Margrabe's paper has been cited by over 2000 subsequent articles.

In finance, model risk is the risk of loss resulting from using insufficiently accurate models to make decisions, originally and frequently in the context of valuing financial securities.

The money market is a component of the economy that provides short-term funds. The money market deals in short-term loans, generally for a period of a year or less.

In finance, moneyness is the relative position of the current price (or future price) of an underlying asset (e.g., a stock) with respect to the strike price of a derivative, most commonly a call option or a put option. Moneyness is firstly a three-fold classification:

In mathematical finance, a Monte Carlo option model uses Monte Carlo methods to calculate the value of an option with multiple sources of uncertainty or with complicated features. The first application to option pricing was by Phelim Boyle in 1977 (for European options). In 1996, M. Broadie and P. Glasserman showed how to price Asian options by Monte Carlo. An important development was

In economics, a moral hazard is a situation where an economic actor has an incentive to increase its exposure to risk because it will not bear the full costs associated with that risk. For example, when a corporation is insured, it may take on higher risk knowing that its insurance will pay the associated costs. A moral hazard may occur where the actions of the risk-taking party change t

A naked option or uncovered option is an options strategy where the options contract writer (i.e., the seller) does not hold the underlying asset to cover the contract in case of assignment (like in a covered option). Nor does the seller hold any option of the same class on the same underlying asset that could protect against potential losses (like in an options spread). A naked option i

The uniform net capital rule is a rule created by the U.S. Securities and Exchange Commission ("SEC") in 1975 to regulate directly the ability of broker-dealers to meet their financial obligations to customers and other creditors. Broker-dealers are companies that trade securities for customers (i.e., brokers) and for their own accounts (i.e., dealers).

Net volatility refers to the volatility implied by the price of an option spread trade involving two or more options. Essentially, it is the volatility at which the theoretical value of the spread trade matches the price quoted in the market, or, in other words, the implied volatility of the spread.

The Office of Financial Research (OFR) is an independent bureau reporting to the United States Department of the Treasury. Created in the aftermath of the 2008 financial crisis, the OFR monitors and collects data to identify risks across the financial system.

In finance, an option is a contract which conveys to its owner, the holder, the right, but not the obligation, to buy or sell a specific quantity of an underlying asset or instrument at a specified strike price on or before a specified date, depending on the style of the option.

In financial markets, an option naming convention is a method of identifying which of many possible options is being quoted or traded.

In finance, the style or family of an option is the class into which the option falls, usually defined by the dates on which the option may be exercised. The vast majority of options are either European or American (style) options. These options—as well as others where the payoff is calculated similarly—are referred to as "vanilla options". Options where the payoff is calculated differe

In finance, the time value (TV) (extrinsic or instrumental value) of an option is the premium a rational investor would pay over its current exercise value (intrinsic value), based on the probability it will increase in value before expiry. For an American option this value is always greater than zero in a fair market, thus an option is always worth more than its current exercise value.

Option-adjusted spread (OAS) is the yield spread which has to be added to a benchmark yield curve to discount a security's payments to match its market price, using a dynamic pricing model that accounts for embedded options. OAS is hence model-dependent. This concept can be applied to a mortgage-backed security (MBS), or another bond with embedded options, or any other interest rate deri

Option strategies are the simultaneous, and often mixed, buying or selling of one or more options that differ in one or more of the options' variables. Call options, simply known as Calls, give the buyer a right to buy a particular stock at that option's strike price. Opposite to that are Put options, simply known as Puts, which give the buyer the right to sell a particular stock at the

An overnight indexed swap (OIS) is an interest rate swap (IRS) over some given term, e.g. 10Y, where the periodic fixed payments are tied to a given fixed rate while the periodic floating payments are tied to a floating rate calculated from a daily compounded overnight rate over the floating coupon period. The OIS term is not overnight; it is the underlying reference rate that is an over

The overnight market is the component of the money market involving the shortest term loan. The overnight market is primarily used by banks and other financial institutions. Lenders agree to lend borrowers funds only "overnight", i.e., the borrower must repay the borrowed funds plus interest at the start of business the next day. Given the short period of the loan, the interest rate cha

A payment is the tender of something of value, such as money or its equivalent, by one party (such as a person or company) to another in exchange for goods or services provided by them, or to fulfill a legal obligation or philanthropy desire. The party making the payment is commonly called the payer, while the payee is the party receiving the payment. Whilst payments are often made volun

Peer-to-peer investing (P2PI) is the practice of investing money in notes issued by borrowers who are requesting a loan without going through a traditional financial intermediary and who are unknown to the investor. P2PI is not to be confused with Peer-to-peer lending (P2PL) which deals with the borrower's part. Investing takes place online via a peer-to-peer lending/investing company. T

Peer-to-peer lending (P2P lending) is the practice of lending money to individuals or businesses through online services that match lenders with borrowers. Peer-to-peer lending companies often offer their services online, and attempt to operate with lower overhead and provide their services more cheaply than traditional financial institutions. As a result, lenders can earn higher returns

A perpetual bond, also known colloquially as a perpetual or perp, is a bond with no maturity date, therefore allowing it to be treated as equity, not as debt. Issuers pay coupons on perpetual bonds forever, and they do not have to redeem the principal. Perpetual bond cash flows are, therefore, those of a perpetuity.

In finance, perpetual futures, also known as perpetual swaps or colloquially as perps, are contract agreements to non-optionally buy or sell an asset at an unspecified point in the future. Perpetual futures are cash-settled, and they differ from regular futures in that they lack a pre-specified delivery date and can thus be held indefinitely without the need to roll over contracts as the

The Pfandbrief (plural: Pfandbriefe), a mostly triple-A rated German bank debenture, has become the blueprint of many covered bond models in Europe and beyond. The Pfandbrief is collateralized by long-term assets such as property mortgages or public sector loans as stipulated in the Pfandbrief Act. Total volume outstanding in Pfandbriefe was EUR 806 billion as at end-2008. Pfandbrief bon

Pin risk occurs when the market price of the underlier of an option contract at the time of the contract's expiration is close to the option's strike price. In this situation, the underlier is said to have pinned. The risk to the writer (seller) of the option is that they cannot predict with certainty whether the option will be exercised or not. So the writer cannot hedge their position

In finance, a position is the amount of a particular security, commodity or currency held or owned by a person or entity.

A dual-currency note (DC) pays coupons in the investor's domestic currency with the notional in the issuer's domestic currency. A reverse dual-currency note (RDC) is a note which pays a foreign interest rate in the investor's domestic currency. A power reverse dual-currency note (PRDC) is a structured product where an investor is seeking a better return and a borrower a lower rate by tak

Private credit is an aspect of the shadow banking system involving assets defined by non-bank lending where the debt is not issued or traded on the public markets. "Private credit" can also be referred to as "direct lending" or "private lending". It is a subset of "alternative credit". Estimations of the global private credit industry's size vary; as of April 2024, the International Mone

In finance, the Private Equity Secondary Market (also often called Private Equity Secondaries or Secondaries) refers to the buying and selling of pre-existing investor commitments to private equity and other alternative investment funds or the underlying private equity assets (e.g., credit secondaries). Unlike public markets, private-equity interests lack an established trading exchange,

Probability of default (PD) is a financial term describing the likelihood of a default over a particular time horizon. It provides an estimate of the likelihood that a borrower will be unable to meet its debt obligations.

In economics, the profit motive is the motivation of firms that operate so as to maximize their profits. Mainstream microeconomic theory posits that the ultimate goal of a business is "to make money" - not in the sense of increasing the firm's stock of means of payment (which is usually kept to a necessary minimum because means of payment incur costs, i.e. interest or foregone yields), b

A property derivative is a financial derivative whose value is derived from the value of an underlying real estate asset. In practice, because individual real estate assets fall victim to market inefficiencies and are hard to accurately price, property derivative contracts are typically written based on a real estate property index. In turn, the real estate property index attempts to a

In finance, a put or put option is a derivative instrument in financial markets that gives the holder (i.e. the purchaser of the put option) the right to sell an asset (the underlying), at a specified price (the strike), by (or on) a specified date (the expiry or maturity) to the writer (i.e. seller) of the put. The purchase of a put option is interpreted as a negative sentiment about th

In financial mathematics, the put–call parity defines a relationship between the price of a European call option and European put option, both with the identical strike price and expiry, namely that a portfolio of a long call option and a short put option is equivalent to (and hence has the same value as) a single forward contract at this strike price and expiry. This is because if the p

Puttable bond (put bond, putable or retractable bond) is a bond with an embedded put option. The holder of the puttable bond has the right, but not the obligation, to demand early repayment of the principal. The put option is exercisable on one or more specified dates.

In finance, a Rainbow option is a derivative whose payoff depends on multiple underlying risky assets. Each underlying asset is referred to as a color of the rainbow. It contrasts with a simple option that is exposed to one source of uncertainty, such as the price of underlying asset.

A ratio spread or frontspread is a multi-leg options position. Like a vertical, the ratio spread involves buying and selling options on the same underlying security with different strike prices and the same expiration date. In this spread, the number of option contracts sold is not equal to a number of contracts bought. An unequal number of options contracts gives this spread certain u

A real estate derivative is a financial instrument whose value is based on the price of real estate. The core uses for real estate derivatives are: hedging positions, pre-investing assets and re-allocating a portfolio. The major products within real estate derivatives are: swaps, futures contracts, options (calls and puts) and structured products. Each of these products can use a differ

A real estate mortgage investment conduit (REMIC) is a business entity that issues investment securities representing interests in a portfolio of mortgages. Under U.S. Federal income tax law a REMIC can qualify for treatment as a partnership, with tax payable by investors rather than the entity. REMICs are used for the pooling of mortgage loans and issuance of mortgage-backed securities

Real options valuation, also often termed real options analysis, (ROV or ROA) applies option valuation techniques to capital budgeting decisions. A real option itself, is the right—but not the obligation—to undertake certain business initiatives, such as deferring, abandoning, expanding, staging, or contracting a capital investment project. For example, real options valuation could exami

In finance, recovery swaps, recovery locks, or recovery default swaps (RDS) are derivative contracts related to credit default swaps, and reference a bond issuance as its underlying. They are designed to provide a hedge against the uncertainty of recovery in default.

A repurchase agreement, also known as a repo, RP, or sale and repurchase agreement, is a form of secured short-term borrowing, usually, though not always, using government securities as collateral. A contracting party sells a security to a lender and, by agreement between the two parties, repurchases the security back shortly afterwards, at a slightly higher contracted price. The differe

Residential mortgage-backed security (RMBS) are a type of mortgage-backed security backed by residential real estate mortgages.

A reverse convertible security is a type of convertible security where a bond or short-term note can be converted to cash, debt or equity at a set date by the issuer based on an underlying stock. In effect it is a type of option on the maturity date where the bond can be converted to shares or cash. For the investor they get the advantage of a steady stream of income due to the payment o

In finance, risk reversal (also known as a conversion when an investment strategy) can refer to a measure of the volatility skew or to a trading strategy.

A risk-free bond is a theoretical bond that repays interest and principal with absolute certainty. The rate of return would be the risk-free interest rate. It is primary security, which pays off 1 unit no matter state of economy is realized at time

The risk-free rate of return, usually shortened to the risk-free rate, is the rate of return of a hypothetical investment with scheduled payments over a fixed period of time that is assumed to meet all payment obligations.

Securities market participants in the United States include corporations and governments issuing securities, persons and corporations buying and selling a security, the broker-dealers and exchanges which facilitate such trading, banks which safe keep assets, and regulators who monitor the markets' activities. Investors buy and sell through broker-dealers and have their assets retained b

Securitization is the financial practice of pooling contractual debt obligations (such as residential mortgages, commercial mortgages, auto loans, or credit card debt) and selling their associated cash flows to investors. The financial instruments sold in such transactions are known as securities, types of which include bonds, pass-through securities, and collateralized debt obligations

A security is a tradable financial asset. The term commonly refers to any form of financial instrument, but its legal definition varies by jurisdiction. In some countries and languages people commonly use the term "security" to refer to any form of financial instrument, even though the underlying legal and regulatory regime may not have such a broad definition. In some jurisdictions the

In law and finance, a security interest is a legal right that a secured party has over secured assets. Security interests most often arise where a debtor grants an interest over collateral to a creditor to secure the loan, such that the creditor will have enforceable rights in the event of the debtor's default or non-performance.

Settlement is the "final step in the transfer of ownership involving the physical exchange of securities or payment". After settlement, the obligations of all the parties have been discharged and the transaction is considered complete.

The shadow banking system is the collection of non-bank financial intermediaries (NBFIs), or nondepository financial institutions (NDFIs) that legally provide services similar to traditional commercial banks but outside normal banking regulations. S&P Global estimates that, at end-2022, shadow banking held about $63 trillion in financial assets in major jurisdictions around the world, re

A share (sometimes referred to as stock or equity) is a unit of equity ownership in the capital stock of a corporation. It can refer to units of mutual funds, limited partnerships, and real estate investment trusts. Share capital refers to all of the shares of an enterprise. The owner of shares in a company is a shareholder (or stockholder) of the corporation. A share expresses the owner

Short-term European paper (STEP) is a short-term financing instrument and investment tool, and also a tool for the European Union to align the market standards and practices to promote the integration of the European market. The EU has accepted the STEP market as a non-regulated market due to collateral purposes; meanwhile, this will not influence the existing national and European legis

Single-price auctions are a pricing method in securities auctions that give all purchasers of an issue the same purchase price. They can be perceived as modified Dutch auctions. This method has been used since 1992 when it debuted as an experiment of the U.S. Treasury for all auctions of 2-year and 5-year notes. There is only one main difference between the multiple-price system and the

In finance, a single-stock future (SSF) is a type of futures contract between two parties to exchange a specified number of stocks in a company for a price agreed today (the futures price or the strike price) with delivery occurring at a specified future date, the delivery date. The contracts can be later traded on a futures exchange.

In finance and the stock market, slippage is the difference between the execution price expected by the trader (usually the one indicated by the trading software) and the one at which the transaction actually happens. Market impact, liquidity, and frictional costs may contribute to slippage.

Social trading is a form of investing that allows investors to observe the trading behavior of their peers and expert traders. The primary objective is to follow their investment strategies using copy trading or mirror trading. Social trading requires little or no knowledge about financial markets.

In finance, a spot contract, spot transaction, or simply spot, is a contract of buying or selling a commodity, security or currency for immediate settlement (payment and delivery) on the spot date, which is normally two business days after the trade date. The settlement price (or rate) is called spot price (or spot rate). A spot contract is in contrast with a forward contract or futures

In finance, a spread option is a type of option where the payoff is based on the difference in price between two underlying assets. For example, the two assets could be crude oil and heating oil; trading such an option might be of interest to oil refineries, whose profits are a function of the difference between these two prices. Spread options are generally traded over the counter, rath

In statistics, stochastic volatility models are those in which the variance of a stochastic process is itself randomly distributed. They are used in the field of mathematical finance to evaluate derivative securities, such as options. The name derives from the models' treatment of the underlying security's volatility as a random process, governed by state variables such as the price leve

In finance, a stock market index future is a cash-settled futures contract on the value of a particular stock market index. The turnover for the global market in exchange-traded equity index futures is notionally valued, for 2008, by the Bank for International Settlements at US$130 trillion.

In finance, a straddle strategy involves two transactions in options on the same underlying, with opposite positions. One holds long risk, the other short. As a result, it involves the purchase or sale of particular option derivatives that allow the holder to profit based on how much the price of the underlying security moves, regardless of the direction of price movement.

In finance, a strangle is an options strategy involving the purchase or sale of two options, allowing the holder to profit based on how much the price of the underlying security moves, with a neutral exposure to the direction of price movement. A strangle consists of one call and one put with the same expiry and underlying but different strike prices. Typically the call has a higher stri

In finance, the strike price (or exercise price) of an option is a fixed price at which the owner of the option can buy (in the case of a call), or sell (in the case of a put), the underlying security or commodity. The strike price may be set by reference to the spot price, which is the market price of the underlying security or commodity on the day an option is taken out. Alternatively,

In finance, a swap is a derivative in which two parties agree to exchange one stream of cash flows for another, based on some agreed formula. An example is a floating-for-fixed interest rate swap, which calls for (a) payments by one party based on the product of a floating interest rate and a fixed amount, called the notional, in exchange for (b) payments by the counterparty based on the