How can we help you
loading...
An alphabetically indexed explanation of the most frequently used banking terms, to assist you in understanding the 'jargon'.

Glossary of Terms

An alphabetically indexed explanation of the most frequently used banking terms, to assist you in understanding the 'jargon'.

#

32-day Interest Plus Account: This is a special account into which you can deposit funds for a specific period such as 32, 66 or 88 days. Withdrawals can only be made on expiry of the specific notice. The interest rate over the period is guaranteed (i.e. it remains the same even if there is an increase or decrease in rates). The term for this type of deposit is chosen upfront.

A

ADR: American Depository Receipts

ATM: An ATM is an Automatic Teller Machine at which you can draw cash, ask for a balance on your account, or transfer money from one account to another. It is very convenient but you have to know how to use it safely.

Administrator: A person who administers an estate or a trust. The administrator is appointed by a court and is the person who would then have power to deal with the debts and assets of an estate or trust.

Affirmation: When used in the context of a comparison or matching system, affirmation refers to the counterparty's agreement with the terms of the trade as communicated.

Arbitrage: The process of buying and selling similar securities in different markets to take advantage of the price difference.

Assets: Items of commercial value which may be tangible or intangible, but must always represent value to the owner.

Attorney: An alternate word for lawyer. A person who has been trained in the law and who has been certified to give legal advice or to represent others in a court of law.

Authorised Dealer: Institution licensed to deal in gold and/or foreign exchange by the Treasury.

Aval: A guarantee of payment of a bill of exchange at maturity by a bank or another party. Avalisation is usually used where the exporter (drawer) wishes to discount the proceeds of a term bill, or for a guarantee of payment.

B

BCP: Books Closed Period. The period during which the Register of Members is closed for registration of transfers immediately prior to a benefit distribution.

BDA: Broker Deal Accounting system. This is the back-office system used by the brokers of the JSE.

BESA: Bond Exchange of South Africa

BIC: code Abbreviation for Bank Identifier Code. This is the SWIFT identifier code of organisations with a SWIFT address.

Back-to-back link: Is the linking of a receipt to a delivery. A delivery can only be made once a receipt is completed successfully.

Bank Assurance: Insurance products and services that are sold by a banking institution.

Bank Draft: A cheque drawn by one bank on another bank.

Bankers' Acceptance: Also known as a "Time Draft", is an order to pay a specified amount of money to the person who has accepted a trade bill at a specified date in the future. BA's are drawn on, and accepted by, a bank which assumes the responsibility to make payment on the draft on the day it matures. They are bearer form short term non-interest bearing notes sold at a discount, redeemed by accepting banks for full face value at maturity. See also "Bill of Exchange".

Balloon Payment: A fixed value amount or lump sum payment made at a point in time on a financial lease agreement. Normally this payment is made as the last payment on the contract, but it can be a "repeat" payment as well, e.g. N$5 000 paid each December.

Bank: "Bank" is often used in loose terms to mean a Depository Participant, Broker, organisations providing traditional retail banking services, etc. Bank under the context of STRATE shall be referred to as those organisations that service money accounts of business members of STRATE.

Banker: A clearing bank, with settlement facilities at the Bank of Namibia, appointed by a settling participant to pay the funds required to settle a purchase.

Bankserv: South African Bankers Services Company Limited.

Bear: An investor who has sold a security in the hope of buying it back at a lower price.

Bearer Securities: Securities issued so that the holder of the certificate is considered to be the owner of the securities. Income is usually payable upon coupon presentation.

Beneficial Owner: The true owner of the securities, as opposed to the apparent legal owner or the custodian or a nominee through whom the securities may be held and/or in whose name the securities may be registered.

Beneficiary: The beneficiary is the person who receives the benefits of the estate or trust.

Benefit Distribution: A distribution made by companies to holders of their securities in the form of cash or securities, usually in proportion to their holdings. Cash benefits include dividend and interest payments. Securities distributions include rights, bonus and other entitlement issues. Also known as Entitlements and Corporate Actions.

Bill of Exchange: Also referred to as a "bill" or "draft". A bill of exchange is a written demand signed by the seller of the goods (drawer), addressed to the buyer (drawee) instructing the latter to pay a stated sum of money on a defined date to the drawer or his order, or to bearer.

Bill of Lading: A receipt issued by a shipping line for cargo, which is a document of title to the cargo and which details the terms of the contract of carriage.

Board Lot: A parcel of shares of a listed company, containing such number of shares as the JSE may from time to time decide. Presently, trading of shares of a listed company on the JSE is conducted in any multiple of a board lot (100 shares). It is also known as a marketable lot.

Bond: Any interest-bearing government or corporate security that requires that the issuer will pay the holder of the bond a specified sum of money, usually at fixed intervals, and will repay the principal amount of the loan at maturity.

Book Entry System: An accounting or ledger system which facilitates the holding and transfer of securities electronically. This enables the transfer of securities between accounts, without the need for physical movement of share certificates and other documents.

Broker: is a trading party, who trades in the security market either for itself or for its clients. Thus, the Broker is responsible for initiating Settlement instructions into STRATE.

Budget: To budget is to plan how to spend our money. We budget by making sure that our expenses are not more than our income.

Business Banking: Business Banking (N$5m - N$25m) owner managed and single-banked.

Bull: An investor who has bought a security in the hope to make a profit from rising prices.

Business Partner: Any organisation that has a business relation with STRATE. A Business Partner may or may not have a Safe Custody Account with the Depository. Thus, the Depository Participant is also a Business Partner. Transfer Secretaries, Brokers, Clients, and Banks are all Business Partners of STRATE.

Buy-in: The action taken by the buying JSE member firm or the Stock Exchange to acquire on the open market the securities which the selling JSE member firm failed to deliver on time. Buy-ins can happen as early as the end of contractual settlement day, or any time thereafter. Although most markets have established buy-in procedures, some markets invoke them more stringently than others. As a rule, the party at fault must bear all costs, e.g. commissions, fees, penalties and rise in prices, but is not entitled to any price differential in its own favour. Buy-ins usually settle on the cash market, if one exists, with a shorter settlement time frame than normal settlements. A buy-in is a severe consequence of trade failure.

C

CAMS: Corporate Access Management Systems (CAMS) provides you with direct electronic access to the bank's mainframe for a radical improvement in the effectiveness of your financial management.

CM42: (Form) A transfer form deed to be executed by the transferor and to be executed by the transferee if he/she wishes to register the security in his/her (transferee's) name.

CSD: Central Securities Depository

CSD: An account kept by the CSD for a CSD participant, which reflects the nominal number or value of securities of each kind.

CSDP: Central Securities Depository Participant

CSDP: Account Code Safe Custody Account held by the CSDP.

CPB: Capital Project Bill

CPT: Carriage Paid To. Incoterm. The seller delivers the goods to the carrier nominated by the seller. The seller pays the freight for the carriage of the goods to the named place of destination.

CSE: Client Service Executive

CFC: Account Customer Foreign Currency Account is an account, denominated in a foreign currency, held with FNB International Banking These accounts may only be held by business entities (i.e. not individuals).

CFR: Cost and Freight. Incoterm. The seller is responsible for paying the costs and freight to bring the goods to the named port of destination. The buyer bears the risks of loss or damage to the goods, as well as any additional costs after the time of delivery at the port of destination.

CIF: Cost, Insurance and Freight. Incoterm. The seller delivers when the goods pass the ship's rail in the port of shipment.

Capital: The accumulated wealth, including money and property that the business owns.

Card Associations: Visa International and MasterCard International.

Carrier: Owner of the vehicle transporting the goods from the supplier to the importer. "Vehicle" could include any mode of transport - air, sea, rail or road.

Capital Balance :The capital balance on an instalment credit agreement is the value of the original cost price still to be paid at a point in time on an agreement. The total financed value of the goods is the capital balance at the beginning of the agreement. A portion of each payment made is deducted from the original financed amount over the period of the agreement so as to reduce it to zero be the end of the agreement period.

Capital Gains Tax: A tax on profits realised from buying a security at one price and selling it (or holding it to redemption and then redeeming it) at another.

Capital Sum: The initial sum of money invested/deposited before interest.

Capitalisation Issue: The process whereby money from a company's reserves is converted into capital and then distributed to shareholders as new shares, in proportion to their original holdings, also known as bonus or scrip issue.

Cash Flow: Cash flow refers to the sums of money received (and amounts paid out) over a period of time. For example, monthly cash flow is the net of the value of moneys (cash) received and paid out for the month.

Central Bank: Major regulatory bank in a nation's monetary system, generally government controlled. Its role normally includes control of the credit system, note issuance, supervision of commercial banks, management of exchange reserves and the national currency's value, as well as acting as the government's banker.

Central Securities: Depository An institution established to hold equities, debt or both and to effect transfers between accounts, typically by book-entry. Most securities depositories operate net clearing systems among their participants and have some means to move cash in parallel with the securities. A depository may also provide pre-settlement, matching, affirmation and confirmation systems, and often distributes income and entitlements. In registered markets, the depository generally serves as a central common nominee. In bearer markets, it is the largest (or sole) holder of securities.

Central Securities: Depository Participant A depository institution admitted by the CSD as a participant in terms of the Act, the CSD Rules and the CSD entry criteria, which holds securities in the CSD in its own name, and can electronically deliver securities to other CSD participants in settlement of securities transactions, either for its own account or on behalf of clients.

Certificate: A paper document, also known as physical scrip, attesting to the holder's ownership of an issuer's stock or debt obligation. It is required for settlement and often also for collection of income. A certificate may be bearer or registered. Depending on the country, a certificate may indicate the name of the issuer, specific type of the share/debt, serial number, interest rate (if debt), quantity (number of shares or par value of debt), name and address of shareholder, paying agent, and tax-related information such as country of domicile of beneficial owner. Coupons, if any, are normally attached to the certificate but may also be issued separately.

Certified Cheque: A cheque which is guaranteed for payment by a bank.

Certified Scrip: The marking of a transfer deed by the transfer secretary of a company to show that the relevant share certificate is in their possession.

Chaining: A method used in certain transfer systems (mostly for securities) for processing instructions. It involves the manipulation of the sequence in which transfer instructions are processed to increase the number or value of transfers that may be settled with available funds and/or securities balances (or available credit or securities lending lines).

Charges/Banking Charges: A fee that the bank charges the customer for services rendered, e.g. cheque payment, debit orders, stop orders. Some bank charges include government duty service fee, VAT, debit interest, and cash deposit fee.

Clearing: The process, in conjunction with settlement, of determining accountability for the exchange of money and securities between counter parties to a transaction. Clearing creates binding statements of obligation for securities and/or funds due.

Clearing and Settlement System: The system which collects, processes and transmits the information which enables settlement. This includes information on trades, scrip holdings, released scrip, funds commitment, CSD transfers and SA Reserve Bank settlement account entries.

Clearing Agent: Arranges for customs clearance of imported goods.

Client: Client is a third party, individual or organisation, who through a broker and/or depository participant, participates in the security market for trading and clearing and settlement.

Codicils: Amendments made to an existing will. It does not mean that the will is totally changed but just to the extent of the codicil.

Commitment: The CSDP accepts the obligation of settling a transaction on behalf of its client.

Code 02: This is an electronic reason code for an error which is: insufficient funds.

Collect-IT: This is designed to enhance the current debit order collections against FNB bank accounts and improve the management around the debit order collection processes.

Commodities: Something useful that can be turned to commercial or other advantage. An article of trade or commerce, especially an agricultural or mining product that can be processed and resold.

Comparison (Matching:) The process by which details of bargain or trade are matched between counterparties.

Comprehensive Vehicle Insurance: Insurance which covers the vehicle financed up to its current market value. The cover will ensure that the vehicle is repaired in the event of accident or fire. It will also cover the insured party for loss due to theft or hijacking. Cover extends to the vehicle in question and any damage caused to other (third party) vehicles or property as a result of an accident.

Confirmation: An electronic confirmation by a banker or a CSD Participant that: It has an instruction from its client to deliver either cash or securities in settlement of a trade; in the case of a purchase, that the client has sufficient cash and/or facilities at its disposal to settle the amount due, and that the Banker will make the amount available for settlement; and In the case of a sale, that the client has sufficient securities of the type sold immobilised in the CSD through the CSD Participant, or sufficient scrip-borrowing facilities available, and that the CSD Participant will make the securities available from its CSD account for settlement.

Consideration: The money value of a transaction (number of shares multiplied by the price), before adding commission, stamp duty, etc.

Contractual Settlement: The market convention embodied in the rules of the JSE whereby a client has a contractual obligation to cause a trade to be settled on settlement day.

Convertible Securities: Securities issued in one form with provisions allowing them to be converted into securities in another form. For example, debt instruments that can be converted into common or preferred stock, subject to specified circumstances.

Corporate Actions: Any action by an issuer of investments, or by another party in relation to the issuer, affecting an investor's entitlement to investments or benefits related to those investments. This includes, but is not restricted to, takeovers, capital restructuring and related activities, rights issues, stock conversions, scrip dividends and redemptions. Also known as Entitlements and Benefit Distributions.

Counterpart: The other party to a trade. Usually one party to a trade refers to its trading partner as a "counterpart".

Counterparty: One party to a trade. A trade can take place between two or more counterparties. Usually one party to a trade refers to its trading partners as counterparties.

Coupon: A small document attached to a bearer bond or share certificate which, when detached and presented to the issuer of a security or his/her agent(s), entitles the holder to exercise the right embodied in the coupon (interest, dividend payment or subscription right).

Credit Lines: Guarantee of an amount of credit which a bank or other group is prepared to advance to its clients or investor.

Credit Risk: The risk that a counterparty to a transaction will fail to perform according to the terms and conditions of the contract, thus causing the holder of the claim to suffer a loss.

Cross Border Trading: Trading which takes place between persons or entities from different countries.

Currencies: The term to refer to the money used by different countries, e.g. the currency of South Africa is the Rand.

Current Assets: Those assets which are consumed or converted into cash during a financial year.

Current Liabilities: Financial obligations that must be met during a financial year.

Custody: This means the charge and control of a child and, where this includes guardianship, the right to make all major decisions such as education, religious upbringing, training, health and welfare. Custody, without qualification, usually refers to a combination of physical custody and legal custody.

Custodian: A depository institution, such as a central depository, bank, or JSE member firm which holds securities in safe custody on behalf of its participants, members or clients.

D

D/A: Documents against Acceptance. Used in Documentary Collections to note payment terms. Documents Against Acceptance means that documents of title are released to the drawee (usually the importer) against acceptance of a bill of exchange payable at a future date.

DAF: Delivered at Frontier. Incoterm. The seller is responsible for making the goods available to the buyer not unloaded at a named point and place at the frontier, but before the customs border of the adjoining country.

DDP: Delivered Duty Paid. Incoterm. The seller is responsible for making the goods available to the buyer not unloaded at the named place of destination in the country of importation and cleared for import.

DDU: Delivered Duty Unpaid. Incoterm. The seller is responsible for making the goods available to the buyer not unloaded at the named place of destination in the country of importation and not cleared for importation.

DEQ: Delivered ex Quay. Incoterm. The seller is responsible for making the goods available to the buyer on the quay (wharf) at the named port of destination, not cleared for importation.

DES: Delivered ex Ship. Incoterm. The seller is responsible for making the goods available to the buyer on board the ship uncleared for import at the named port of destination.

DP: Depository Participant

DVP: Delivery versus Payment

Debenture: A certificate of indebtedness, an instrument in which a corporation or a company acknowledges indebtedness for a specified sum on which interest is due until the principal is paid back.

Deceased: A person who has passed away (died).

Default: When one party to trade fails to consummate the terms of its agreement.

Delivery versus Payment: The good delivery of securities in exchange for the simultaneous, final and irrevocable payment of money.

Del-Pay client: A client is referred to as a Del-Pay client when they trade through a broking firm and settle the trade via another depository participant.

Dematerialisation: The elimination of physical certificates or documents of title which represent the ownership of securities so that the securities exist only as electronic records.

Deposit: A deposit is a varied amount paid by the borrower, to reduce the finance or loan amount required. Non-tax based individuals are required to provide minimum deposits on certain asset purchases, e.g. 10% for motor vehicles.

Deposit (security): A deposit of securities for safe custody.

Depository Participant: Same as CSDP

Depreciation: The periodic reduction in the value of an asset.

Derivatives: A contract whose value is dependent on the performance of some underlining asset or market indicator. This includes exchange traded and over-the-counter futures and options, as well as more complex instruments such as caps, floors, collars, down and outs and swaptions.

Direct Market Participant: A broker or broker/dealer; also any member of an exchange.

Disputed Settlement: Settlement instruction that is not confirmed by the delivering DP or Paying Bank or rejected by any of the settling business members.

Dividend :That part of a company's earning which is distributed in cash or in specie to shareholders.

Dividend (2): A proportionate distribution of profits made in the form of money payment to shareholders by a for-profit company. Dividends are declared by a company's board of directors.

Draft: A cheque drawn by one bank on another bank.

E

EBA: Euro Banking Association

EC: European Commission

ECB: European Central Bank

ECBS: European Committee for Banking Standards

ECIC: Export Credit Insurance Corporation

EMV: Europay, MasterCard and Visa. The introduction of EMV has turned credit and debit cards into highly secure cards, with the aim of ensuring that the card presented for payment is genuine and not counterfeit.

ECH: Equities Clearing House, which is the clearing house operated by the JSE to facilitate the clearing and settlement of JSE trades.

ECU: European Currency Unit

EDP: Electronic Data Processing

EXW: Ex Works. Incoterm. The seller fulfills his obligation to deliver where he has made goods available, at his premises or another named place, to the buyer. The buyer bears all costs and risks for moving the goods from the seller's premises to their destination.

EFT: Electronic Funds Transfer

EMI: European Monetary Institute

EMS: European Monetary System

EMU: Economic and Monetary Union

ESCB: European System of Central Banks

ESR: Electronic Scrip Register

eForex: Electronic solution provided by FNB International Banking which allows customers to do foreign exchange dealing and payment online.

Electronic Banking: A means of banking other than making use of a physical branch, including using the Internet, telephone, cellphone, or ATM.

Electronic Funds Transfer: The transfer or movements of funds by electronic means.

Electronic Scrip Register: The electronic record which evidences the rights of owners to securities in a dematerialised market.

Emigrant: A South African resident who is in the process or has formalised emigration with the South African Reserve Bank.

Entitlement :See "Benefit Distribution" and "Corporate Actions".

Equity: The value of the business after liabilities have been deducted from assets. This is the amount of money that would be distributed to the owners of the business if the business entity was dissolved.

Equity Swap: A swap which involves an exchange of return on a recognised stock index or a specified basket of individual stocks for a fixed or floating interest rate.

Estate: This is property (financial or physical) that is owned by a person while alive. It is to be appropriated to beneficiaries at the event of death.

Estate Duty: This is tax levied on the deceased person's estate.

Estate Law: That part of the law which regulates wills and other subjects related to the distribution of a deceased person's estate.

EUR: ISO code for the euro.

Euro: The euro is the currency used by the following European countries: Austria, Belgium, Denmark, Greece, Italy, Netherlands, Portugal, Spain, Sweden, The United Kingdom and Ireland. Although the United Kingdom, Greece, Denmark and Sweden form part of the European Union, they are not part of the initial eleven countries using the euro currency.

Executor Dative: A person specifically appointed by the Master or the High Court to administer an estate.

Exchange Control: Controls put in place by the Bank of Namibia to monitor and control the flow of funds into and out of Namibia.

Exchange Control Rulings: Defines the authority given to certain authorised dealers in Namibia permitting them to engage in or authorise foreign exchange dealings or related transactions otherwise prohibited in terms of the Exchange Control Regulations.

Exchange Rate: The price of one currency expressed in terms of another currency. For example, a US$/ZAR rate of 6.5000 means that one United States Dollar is equal to R6.50 (Six Rands and fifty cents).

Executor: Testamentary A person specifically appointed by a testator to administer the estate ensuring that the final wishes are respected; that is, that the terms of a will are properly carried out.

F

FACS: Financial Activity Control System. This is an electronic cash flow management and reconciliation system.

FAS: Free Alongside Ship. Incoterm. The seller fulfills his obligations to deliver when the goods have been placed alongside the vessel in the quay or in lighters (flat bottomed boat used to transport freight) at the named port of shipment.

FCA: Foreign Currency Accounts. It is an investment account in a foreign currency, for example US Dollars and Euros. FCA's are only available to individuals.

FEC: Foreign Exchange Contract. It is an agreement to exchange one currency for another at a fixed rate on a specified date in the future.

FTO: FNB TradeOnline. This internet system provided by FNB International Banking allows customers to transact their import documentary credits online.

FSB: Financial Services Board. The statutory body charged with the regulation of financial services, excluding bankers.

FOB: Free on Board. Incoterm. Without charge to the purchaser for delivery on board or into a carrier at a specified point or location.

Factoring: This is a sophisticated, financial tool which enables credit sales to be converted into working capital by allowing a third party to purchase your outstanding book of debts, against which an amount is advanced and the balance paid to you once it has been collected from your customers. The third party controls and maintains your debtors' ledger.

Failed Settlement Instruction: A securities transaction that fails to settle on time, i.e. the securities and cash are not exchanged as agreed on the settlement date.

Failed Trade: Any securities transaction that does not settle on contracted settlement date because one of the settlement parties does not meet the settlement conditions. A failed trade may have negative consequences for the party at fault, including buy-ins and penalties.

Fiduciary: A person who inherits the enjoyment of an asset but not the ownership of an asset. The ownership of the asset is given to another.

Final Settlement: The completion of a transaction when delivery of all components to a trade has been accomplished.

FirstTrade: Electronic system provided by FNB International Banking that allows customers to transact documentary credits and guarantees from their desktops.

Fixed Interest Rate: The interest rate on the agreement is fixed for the full period of the agreement. The interest rate does not change as market rates change.

Fluctuating Payments: Fluctuating payments are caused by the use of a variable (fluctuating) interest rate. As the interest rate changes the payments are recalculated using the new interest rate. See Variable Interest Rate.

Foreign National: A Foreign National is a natural person who is a temporary resident in South Africa or the Common Monetary Area with a work or study permit, (it excludes those purely on holiday and on business visits).

Foreign Investment Restrictions: Regulations designed to control foreign investment activity in a particular country. Restrictions are used to maintain and protect a country's financial system. Restrictions include: Foreign exchange controls - to maintain and protect the value of its currency; Foreign investment regulations - to control foreign investments' entry and exit from the country; Foreign investment restrictions - used to protect strategic industries such as defence and telecommunications; and Declaration of holdings - to control foreign ownership of domestic companies.

Forward Exchange Contract: An agreement to exchange one currency for another currency at a fixed rate on a specified date in the future. This agreement fixes the price of foreign currency payments or receipts expected to materialise at a future date and eliminates adverse currency movements beyond the agreed forward rate.

Form CM42: A transfer form deed to be executed by the transferor and to be executed by the transferee if he/she wishes to register the security in his/her (transferee's) name.

Franchise: An agreement under which a party is licensed by another to use a name, product, service or business system usually within a defined territory, in return for a fee.

Franchisee: A person or business that has been granted a franchise.

Franchisor: A person or business who grants a franchise to another person.

Franked dividend: A dividend paid out of income already taxed to the issuer, so that the dividend is tax-free to the shareholder. The dividend may be fully franked (entirely tax-free) or partially franked (and thus partially taxable).

Freight Forwarde: Duties usually entail arranging transport and preparing documentation for the supplier, providing specialised services with regards to customs clearance, taking out insurance, arranging packing / unpacking of goods and assisting seller in choosing best transport for product.

Fungible Securities: Securities which are equivalent, being of the same class and issued by the same issuer, and are therefore substitutable and interchangeable.

G

G30: The Group of Thirty, a private group of prominent financial industry participants which in 1989 proposed nine standards for improving the world securities industry's efficiency and reducing settlement risks. The G30 standards have been adopted as goals by financial market regulators worldwide.

Gilts: A debt issued through the Treasury, public entities and municipalities, with the principal and interest guaranteed by the government. Also referred to as gilt-edged security or gilt-edged stock.

Good Value: Refers to scrip deposited in the CSD which are "good" for settlement of trades carried out on the Stock Exchange or otherwise.

Goodwill: An intangible asset which includes business reputation, an established trading level, favourable location, licensing or exclusive trading rights.

Gross Profit: The excess of sales over the cost of goods sold.

Gross Settlement: The settlement of transactions on a trade-by-trade basis, without aggregation or netting.

Guarantee: A written undertaking by an institution ("the guarantor"), on behalf of a party ("the principal") for the payment of money on presentation of a written demand by another party ("the beneficiary") stating that the principal has defaulted in terms of the contract between them. Types of guarantees include: tender guarantees, bid bonds, advance payment guarantees, payment guarantees, facility guarantees and customs guarantees.

Guarantee Fund: A fund maintained by an exchange to recompense investors when a member firm fails to meet its obligations.

Guaranteed Minimum Future: Value Where a bank provides a guaranteed minimum future value on a rental or lease agreement, the bank undertakes to ensure that not less than this amount will be obtained when the goods are sold at the end of the agreement. The GMFV amount is used to reduce the original cost of the goods, thereby affording the customer lower repayments. The bank will take the risk of obtaining the GMFV upon return of the goods.

H

HOCAS: HYPHEN Online Credit Card Authorisation System

Harmonised System Product Code (HS Code): International Standard for classification of products for customs purposes.

Hedge: Action taken to cover oneself against risk.

Heir/s: Person/s who benefit from an estate

High Court: Formerly known as the Supreme Court, this is the highest court in the land.

High Obsolescence: Equipment or goods which are constantly improved and/or replaced with more advanced models, are said to have high obsolescence. This means that the existing equipment quickly becomes a "dinosaur" (outdated) because it has been replaced with a model which does more at a lower price increase. Computers are a good example of high obsolescence goods.

Homecomer: South African that has been living outside the Common Monetary Area for an unspecified period of time. A Homecomer intends to return or has returned to South Africa.

I

ICC: International Chamber of Commerce

ITF: Import Trade Finance

ISIN: International Securities Identification Number; A coding system developed by the ISO for identifying securities. ISINs are designed to create one unique number for any security, on a worldwide basis.

ISO: International Standards Organisation. The international federation of standardisation bodies for various industries, which seeks to set common international standards in a variety of fields.

Illiquid: Of or relating to an asset that is difficult to buy or sell in a short period of time without its price being affected. For example, a large block of stock or a small amount of an infrequently traded stock is likely to be difficult to sell without a reduced price being offered to potential buyers.

Immigrant: A natural person who has changed residency from a country outside Namibia or the Common Monetary Area and has taken up permanent residency in Namibia or the Common Monetary Area.

Immobilisation: Immobilisation is the central storage of share certificates or documents of title in the vault of a CSD. Each depositor (participant) is entitled to a share of the depository's entire holding of each class of security in the proportion of his/her deposit to the aggregate holding, and these records are maintained electronically. Transfers between participants are recorded electronically, without the need for any physical movement of the certificates or documents, unless they are withdrawn from the depository.

Importer: Buyer or purchaser of goods.

Inheritance:A benefit given by the person who is deceased.

inContact: inContact, FNB's innovative messaging service allows you to stay in touch with your financial transactions as they occur, at no extra charge.

Incoterm: A set of international rules for the interpretation of the most commonly used trade terms in international trade. The trade terms advise the parties what to do in terms of transportation, export and import clearance and the sharing of costs and risks between the parties.

Institutional: Investors Also sometimes called Professional Investors. These market participants include banks, mutual funds, pension funds, and other entities, which participate in the market only on behalf of the members/ participants of their particular organisation.

International Chamber of Commerce: An international body that has defined worldwide standards for the operation of international trade.

Invoice Discounting: Invoice discounting is a non-disclosed facility, which is designed to afford cash flow acceleration against the security of your debtors' book. This working capital finance solution converts your credit sales into cash.

Inside the Act: Individuals whose circumstances are such that they are not specifically identified and excluded under the Credit Agreements Act. Also credit agreements which have terms that are not excluded from the Credit Agreements Act and/or the Usury Act.

Instalment Sale: An instalment sale agreement is an agreement between a buyer and a seller, used to purchase goods or equipment (e.g. a motor car). The finance agreement sets out the terms and conditions of the agreement between the buyer and seller. Normally, the seller agrees to sell goods to the buyer and be repaid for those goods over a period of time. In such cases, the seller is allowed to charge interest on the amount of the original price still to be paid. Instalment sale agreements are also controlled by the Credit Agreements Act, which basically states what the buyer and seller can and may not do. A business entering into an Instalment sale agreement can claim the interest paid as an expense to the business. It can also claim the Wear and Tear Tax Allowance (depreciation) on the goods, i.e. the interest paid and the depreciation are tax deductible items.

Institutional Investors: Also sometimes called Professional Investors. These market participants include banks, mutual funds, pension funds, and other entities, which participate in the market only on behalf of the members/participants of their particular organisation.

Instrument: A global term for securities encompassing a range of financial debt from negotiable deposits to bonds.

Intangible Assets: Assets with no easily identifiable physical form such as goodwill.

Inter Vivos Trusts: An inter vivos trust is one which the settlor sets up to take effect while he or she is still alive. It can be contrasted with the testamentary trust, which is to take effect only upon the settlor's death.

Interest: Interest is the price for using someone else's money. So if you deposit money into an account with a bank, the bank pays you interest for using your money. Similarly if you are a borrower, you pay interest for using the bank's money.

Interest Rates: The interest rate in a financial sense, is the method of stating the charge or fee for the use of money which has been borrowed. A 5% interest charge means that an amount equal to 5% of the amount borrowed will be charged each year by the lender as a lending fee. It is normally stated as a percentage annual amount, compounded monthly. The finance agreement must state which type of interest rate is being used, i.e. fixed or variable (linked), compounding interest percentage or simple interest percentage. If the interest rate is a compounding rate, the basis on which it compounds must be stated, e.g. monthly, quarterly, etc. A compounding rate is normally stated as an abbreviation, e.g. a monthly compounding rate would be stated as NACM (nominal annual interest rate compounded monthly).

Intermediary: A collective term for professional securities industry participants who act as go-betweens. An intermediary typically stands between issuers and investors. Intermediaries include JSE member firms, financial institutions, banks and custodians.

Intestate: Dying without having drawn up a valid will.

Investment: Investing money is similar to saving it, but usually for a longer period. We put money into a bank or other enterprise in the hope of seeing it gp. We expect a return on our money through the profit made by the enterprise or the interest paid by the bank.

J

JET: Johannesburg Equities Trading system. It is the trading system run by the JSE to match buy and sell orders of JSE member firms automatically.

JSE: Johannesburg Stock Exchange

JSE Member Firm: A member firm of the JSE who may trade either as an agent or a principal in any transaction. Corporate limited liability membership with ownership by non-stockbrokers was introduced by the JSE on 8 November 1995, supplementing the present membership of sole traders, partnerships or unlimited liability corporate members. The member firm is the trading entity and not the individual. Foreigners may also own member firms subject to complying with conditions set out in the JSE Rules. Every member firm must appoint an officer who has passed the compliance officer examination. It is that officer's prime responsibility to ensure the member firm's compliance with the provisions of the Stock Exchanges Control Act (SECA), the JSE Rules and the JSE Committee directives and decisions.

Jumbo Certificates: These are high denomination certificates issued to replace and consolidate a number of smaller denomination certificates registered in the same name, typically used by a centralised depository. The advantages of these certificates are the reduction of physical storage space required and easier administration.

L

LDR: Last Date of Registration with respect to Corporate Event election or dividend entitlements.

Large Corporate: Large Corporates (R200m+).

Lease: A lease agreement is an agreement between a seller (lessor) and a customer (lessee) where the customer is given use of the goods. For example, a motor vehicle in a business, where there is an agreed rent for the use of the goods over a fixed period of time. The customer must keep the goods for the full period and must pay the seller all the rentals which are due over that period. The customer normally has the right to terminate the agreement early, by buying the goods from the seller. At the end of the agreed period the customer must either buy the goods or extend the lease period. A business or tax operated individual (derives income from the use of the goods) entering into a lease agreement may claim the lease payments as a business expense.

Legal (Lawful): All the rules of conduct that have been approved by the government and which are in force over a certain territory and which must be obeyed by all persons on that territory. Violation of these rules could lead to government action such as imprisonment, fine or both, or private action such as legal judgement against the offender obtained by the person injured by the action prohibited by law.

Letter of Allocation: A letter issued by a company at the time of a Rights Issue, indicating the rights of the shareholder to be allotted additional securities, based on his/her current shareholding.

Liabilities: Any legal obligation, either due now or at some time in the future. It could be a debt or a promise to do something. To say a person is liable for a debt or wrongful act is to indicate that they are the person responsible for paying the debt or compensating the wrongful act.

Life Cover: In the event of death or permanent disability of the insured person, this cover provides for the full amount of the debt outstanding (or a fixed amount) to be paid to the beneficiary (usually the bank or debtors estate). This enables the bank or the executor of the debtor's estate to settle any amounts owing and to take ownership in the goods.

Listed Company: A public company whose shares are listed on the JSE.

Loan: A loan agreement is an agreement between a lender (bank) and a customer (debtor) where the lender lends an agreed amount of money for an agreed period. The customer is required to repay the money over the period and also to pay interest on the amount of the loan outstanding. Interest is normally charged monthly at an agreed rate. A business entering into a loan agreement may claim interest paid as a business expense.

Lodgement Date: Last date by which the securities should be lodged with the Transfer Secretary, to be entitled to a corporate action, for example, rights, bonuses and dividends.

M

MST: Marketable Securities Tax, a tax payable on market trades in terms of the Income Tax Act.

Market Capitalisation: The total valuation of all securities listed on a stock exchange or the total value of particular types of securities.

Market Value or Market Price: The market value is the selling value in money of an item of goods or equipment at a point in time. The value is set by the value of similar goods available from sellers. The market value of a vehicle, for example, is set by its condition and by what buyers are prepared to pay for similar vehicles. It includes any profit the seller may add to the price they paid for the goods.

Marketable Lot: See Board Lot.

Matching: The process used by market participants before settlement to ensure that they agree with respect to the terms of the transaction.

Merchant: This is a business trading with goods or services.

Minimum Balance: A certain amount of money that must be maintained in the account at all times.

Modus operandi: The arrangement of, or mode of expressing, the terms of a contract or conveyance.

Money Transfer: The sending (or movement) of funds or securities or of a right relating to funds or securities from one participant to another by (a) conveyance of physical instruments/money; (b) accounting entries on the books of a financial intermediary; or (c) accounting entries processed through a fund and/or securities transfer system.

N

Namswitch: If you cannot locate an FNB ATM, you can use a Namswitch ATM at an additional service cost.

NCB: National Central Bank

NCS: Network Custody and Clearing System

NEP: New Economic Policy

NCSD: National Central Securities Depositories

NPS: National Payment System. Payments made through the NPS will result in final irrevocable transfer of funds. The system is operated by the Bank of Namibia.

Net profit: The excess of revenues over expenses over a financial period.

Net settlement: The settlement of scrip or funds, or both, based on the arithmetic sum of trades in the same class of securities for settlement on the same day by the same person.

Netting: A process of summing trades to arrive at a Net Settlement position. This means settlement of cash or securities balances by summing all credits and countervailing debits for a given day or session, then moving cash or securities only in the amount of the net total. Netting schemes immediately satisfy the obligations incurred from any specific settlement without eliminating payment risk since the participants remain exposed to each other until the end-of-period clearance of the net remainder.

Nominee: A company formed for the specific purpose of registering securities in its own name on behalf of other persons, and administering those holdings. The nominee maintains a record of beneficial owners. In registered markets, the issuer as a supra-nominee generally uses a central depository.

Non Current Assets: Assets whose value will be consumed on a long-term basis for the purpose of earning revenue (not within current financial year), such as buildings or equipment.

Non Tax-Based Customers: These are individuals who do not qualify to deduct expenses generated in the production of income as a tax deduction. These individuals typically are employed by an organisation and receive their monthly salary less PAYE. Non-Tax Based Individuals are required to pay a minimum deposit on all assets financed. The deposit amount will vary according to the asset financed. Non-tax Based Customers may only finance vehicles over a maximum period of 54 months. Other assets may have longer loan periods.

Non-Negotiable: Refers to scrip which is not in a form in which it can constitute good delivery.

Non-Regular Payments: These are payments which are not paid at regular intervals, e.g. monthly, or differ in amount each time they are due. Typically, these payments are arranged for customers who have non regular income, such as farmers.

Non Resident: An individual whose normal place of residence, domicile or registration is outside the Common Monetary Area. These individuals enter South Africa purely for visiting or business purposes and would not be the holders of a valid work or study permit in their foreign passport.

Nostro Account: A bank's account in a foreign currency at a bank of the corresponding nationality.

Notice Deposit Account: This is a special account into which you can deposit funds for a specific period such as 32, 66 or 88 days. Withdrawals can only be made on expiry of the specific notice. The interest rate over the period is guaranteed (i.e. it remains the same even if there is an increase or decrease in rates). The term for this type of deposit is chosen upfront.

O

Odd Lots: Securities in a quantity other than in Board Lot or a multiple thereof. They often arise as a result of a bonus or right issue.

Off Balance Sheet: Financing Money is borrowed or assets are purchased in such a way that it is not reflected on the balance sheet. The methods of doing this are controlled either by the Companies Act or by standardised accounting practices as set out by the organisation which controls auditing practices. It occurs because the risk and reward in the finance agreement substantially lies with the lessor (bank).

Off-Market Transfer: A transfer of securities from one party to another, not arising from a trade on the NSX.

Offshore Banking Unit: A foreign Bank usually handling foreign exchange and domestic money market transactions in a centre where the capital market is free and enjoys advantages in terms of tax and/or reserve requirements.

Offshore Funds: Funds based outside the tax system of the country in which intended investors reside.

Offshore Trade: Cross border trade. This is an off-market trade between entities in Namibia) and another country or between two entities outside Namibia).

Omnibus Account: An account held in the name of an entity or person which may be used for placing and clearing the trades of one or more undisclosed customers of the account holder.

On Balance Sheet Financing: This is the more common way of financing assets or incurring debts. All loans, funds borrowed and/or assets purchased, are recorded in the company's books and are reflected on the company's balance sheet.

On-Line: An ATM is on-line when it is functional. It is off-line when it is not.

Online Banking: Is an Internet-based, electronic banking solution that makes use of the latest technology and allows secure and controlled access to your FNB accounts with flexible security measures.

On-Line Processing: Data processing in which all operations are processed immediately by equipment directly under the control of a central processor.

On-Market Trades: Trades which are conducted on the JSE and are subject to its rules.

On-Shore Trade: Off-market trade between two entities in South Africa but not through JET.

Option: An instrument to hedge foreign currency exchange risk. A buyer (seller) requires the right, but not the obligation, to purchase (sell) a fixed quantity of the underlying asset at a specified rate at a specified date.

Open Account Payment: Arrangement between a buyer and a seller in terms of which goods are supplied against payment at an agreed future date with the documents of title forwarded by the seller directly to the buyer, thus unconditionally releasing the goods to the buyer.

Order: An offer to sell, or a bid to buy, an agreed quantity of securities at a fixed or determinable price.

Out Country EU: Member State not participating to EMU.

Out Currency: Currency of an EU Member State which has not converted to the euro.

Outside the Act: Individuals who are specifically excluded from the Credit Agreements Act because of their circumstances or activities. Also Credit agreements which have terms which have been excluded from the Credit Agreements Act and/or the Usury Act.

Outsourcing: Outsourcing is the delegation of one or more business processes to an external provider, who in turn, administers and manages the selected process based on defined and measurable performances.

Overdraft: An overdraft is a form of a loan. The overdraft loan is made for a short period, normally one month, and interest is charged on the amount loaned. The loan can be renewed each month by the lender. This form of lending can continue indefinitely provided that the lender is happy that the customer will be able to pay back the loan and the interest when asked to do so, normally by virtue of tangible security.

P

PACS: Payments and Collections Service is a fully automated windows-based system for high volume electronic fund transfers and collections. PACS has a range of specialised capabilities.

PIN: Personal Identification Number. Your secret code to access your account using the bank card.

Participation Mortgage Bond: An interest given on a piece of land, in writing, to guarantee the payment of a debt or the execution of some action thereof. It automatically becomes void when the debt is paid or the action is executed. The person borrowing the money and giving the mortgage is called the mortgagee (borrower); the persons who lend the money (as security upon their property) are called mortgagors (investors). In this type of bond there is more than one lender/investor who then 'participates' in lending.

Partly Paid: Bonds or equities on which the holder has paid only part of the face value at the time of issue and is due to pay the balance in one or more instalments, usually but not always at set dates and in set amounts.

Partshipments: More than one shipment under the same contract. Specific rules and interpretations apply to documentary credits.

Password Reminder Phrase: A sentence that gives you a hint of what your password is.

Payments System: The system used to achieve settlement of cash (funds) in a securities transaction.

Pledge: The use of securities as collateral in a financial transaction. Securities may be pledged electronically within a central depository, or physically outside of a central depository.

Prescribed Date: The last day, indicated in the notice by the JSE, on which prescribed securities may be traded on the stock market without such securities having been deposited with the CSD.

Prescribed Period: A period ending on the Prescribed Date, during which time the CSD participants ensure that they have sufficient scrip registered in the CSD for electronic settlement.

Prescribed Securities: Securities prescribed by STRATE to be deposited with the CSD.

Prime Rate: Most banks have a range of interest rates which they will use when lending money to their customers. Prime rate is the minimum lending rate which a bank will charge to its most valued customers, either by virtue of undoubted track record or security offered.

Principle Account: The account of a JSE member firm, in its own records, which is used to hold its own securities.

Profit: The difference between sales revenue and expenses. It is either retained in the business and/or distributed to owners/shareholders of the business.

Pre Sale: A pre sale is the sale of a unit off plan or before the unit has been built.

Pro-forma Invoice: Invitation to buy goods, which is sent to a potential buyer.

Proxy: Written authority to act or speak for an absent shareholder at shareholder meetings. Depending on the regulations of the market, the party acting on behalf of the shareholder may be a nominee, custodian, lawyer, JSE member firm or local representative.

Proxy Voting: Acting or speaking for an absent shareholder on issues surrounding the management of the company at shareholders' meetings. Depending on the regulations of the market, the party acting on behalf of the shareholder may be a nominee, custodian, lawyer, JSE member firm or local representative.

Purchase Price: The total negotiated price including VAT and extras.

R

ROD: Record of Depositors

ROM: Register of Members

RMB: Rand Merchant Bank

RTGS: Real-Time Gross Settlement system

Real Time: A term which refers to computer output in an immediate time frame. In other words, up-to-date information is available without delay.

Receivable Securities: Securities which are receivable by a depositor arising from a purchase transaction by him/her for settlement at a future date.

Reclamation or Reclaim: The process by which a non-resident investor obtains a refund of taxes previously withheld from income when the taxes were withheld in error, or the investor is qualified for local tax reduction under the provisions of a double taxation treaty. Some tax authorities require individual reclamation filing for each dividend and after each payment, while others allow for yearly filing for the aggregate reclamation amount. Some markets do not allow for reclamations. These markets make the benefits of double taxation agreements available only by reduced withholding, which must be requested prior to the income payment.

Record of Depositors: A record showing the holdings of all participants who hold securities in the CSD, in a particular issue and class of security on a specified date.

Redemption: Partial or full return of the debt or shares to the issuer in exchange for a cash value.

Refinancing: This is where the goods which were obtained through a financing agreement are sold back to the seller (bank) by the customer. The seller pays the customer the agreed price (refinances) and then resells it back to the customer under a new finance agreement.

Register of Members: A register maintained by the company's Transfer Secretary, which contains the identity and shareholdings of those in whose names the securities have been issued. It is also known as the Register of Shareholders.

Registered Owner: The party registered as the owner in the Register of Members. This may be the true owner, a fund, unit trust or nominee.

Registration: The recording of legal title to securities in the books of the issuing company by its Transfer Secretary. Securities held in the CSD are registered in the Register of Members in the name of the CSD Nominee. Transfers within the CSD arising from transaction settlements or otherwise require no entry in the Register of Members, since the title change is recorded electronically in the CSD participant's records.

Registration Time: The time it takes to list the ownership of securities in the records of the issuer or its transfer secretary/registrar.

Reinvest: Once an investment period has lapsed, the customer can invest his money again for a fixed period.

Rematerialisation: The issuance of certificates to permit the physical withdrawal of previously dematerialised securities positions held at the central depository. In most depository markets, the position must be realigned into depository holding for resale. In some countries, rematerialisation is permitted only to satisfy a cross-border transaction where physical certificates are required.

Rental: A rental agreement is similar in many respects to a lease agreement. A rental agreement does not have a fixed period. Instead it has a period of notice to end the agreement which must be given by the customer to the seller. When the agreement has ended the goods are returned to the seller. The customer has no automatic choice of ownership and must then buy the goods from the seller if there is a wish to keep the goods. A business entering into a rental agreement can claim the rentals paid as a business expense.

Repatriation: The specific act of bringing capital sent to a foreign location or income earned from that investment back into the investor's home country.

Repayment Terms: These refer to the amount of borrowed repayments, interest rates and dates that payments (instalments) are due.

Repossessions: These are goods which are subject to a credit agreement and have been "repossessed" from the customer by the lender due to non payment of the agreed payments or other non-compliance with the credit agreement. Procedures for repossession of goods are regulated by the Credit Agreements Act and by the common law.

Repurchase Agreement: Two simultaneous transactions: the purchase of securities (the collateral) by an investor from a bank or dealer; and the commitment by the bank or dealer to repurchase the securities at the same price at an agreed future date and rate.

Resale Value: The resale value is the amount for which the customer can sell goods owned by him to a dealer of used goods or to another person. The resale value is normally lower than the market price if the buyer is a dealer as he will restore the goods and sell them at a profit.

Residual Value: The term is only applied to a rental agreement. The residual value is normally related to the resale value. The residual amount is deducted from the cost when calculating the rentals to be paid. The seller would then recover the residual value at the end of the rental agreement by selling or re-renting of the goods. (See also Guaranteed Minimum Future Value).

Restructuring: Generally, any event where the equity, debt or capital structure of a company is changed.

Retail Investor: Individual investors who generally deal in smaller amounts than the professional or institutional investors.

Rights Issues: Rights to buy additional securities through an issue granted to existing holders of the original securities.

Rolling Settlement: A settlement environment in which transactions (securities and funds) become due for settlement a set number of business days after trade date.

Root: Root is the first transaction on the chain of back-to-back linked transactions.

Royalty Fee: An ongoing fee paid by the franchisee, who benefits from the use of the franchise system, to the franchisor. This is typically set as a percentage of turnover/sales.

S

SOCS: Stop Order Collection System which facilitates the electronic collection, reconciliation and allocation of funds collected from payroll offices on behalf of corporate clients.

SSL: SSL (Secure Sockets Layer)

SSV: Same Day Soonest Value service allows for payments and collections to be transmitted Monday to Friday by 11h00 and Saturdays by 10h00 on action date.

SFIDVP: Simultaneous, Final, Irrevocable Delivery Versus Payment

SI: Settlement Instruction

SAFIRES: Southern African Financial Instruments Real Time Electronic Settlement System

STP: Straight Through Processing

STRATE: Share Transactions Totally Electronic

SAMOS: South African Multiple Options System, the national payments system of SARB.

SATSA: South African Transfer Secretaries Association

SECOM: The electronic clearing, settlement and custody system which offers multi-product capacity as it handles bonds, future, derivatives, money market instruments and forex, equities, automated securities lending, corporate actions, risk management, multi-currency settlement and cross border settlement.

Safe Custody: The safe keeping of the deposited securities by a custodian.

Same-Day Funds: The term used to describe a cash payment of which the receiver has constructive use on the day of receipt, for example, funds that can be used immediately to fund a payment to a third party.

Savings Account: Money that is left in a bank account that earns interest, but withdrawals and deposits can be made at any time, unlike investments, where notice has to be given to withdraw.

Scrip (or Share Certificate): Documents embodying or confirming the issuance of securities. The paper that represents bonds or shares.

Scripless Trading: A trading system where the settlement is carried out by book entries rather than by the movement of share certificates.

Securities: Any instrument which is traded on a stock exchange.

Securities Code: Alphanumeric or numeric set of digits used to identify securities issued (see ISIN).

Securities Lending: Involves the temporary exchange of securities, generally for cash of other securities of at least an equivalent value, with an obligation to redeliver a like quantity of the same securities on a future date. Most securities lending is structured to give the lender legal title to the securities for the life of the transaction. The loan fee is generally agreed in advance and the lender has contractual rights similar to beneficial ownership of the securities, with rights to receive the equivalent of all interest payments or dividends and to have equivalent securities returned.

Segregated Account: An account that separately identifies an investor's securities and does not depend entirely on records maintained by the investor's custodian or service providers.

Settlement: The completion of a transaction, whereby securities and corresponding funds are delivered and received, into the appropriate accounts of clients.

Settlement Date: Date on which securities and payment are exchanged and credited to proper accounts. If securities are debited from the seller's account on one or more days prior to being credited to the buyer's account, or if securities and cash move at different times, the date on which securities are received by the buyer, which in most cases is also the value date of the payment, is commonly perceived as the settlement date. In general, the term refers to the contracted settlement date. The actual settlement date, as opposed to the contracted settlement date, may be delayed in the settlement process.

Settlement Instruction: (SI) Instruction, arising out of a trade, which might have taken place either in a formal trade market (i.e. stock exchange) or at open market (i.e. off-market). This would be submitted to the clearing house (STRATE in this case) for clearing and settlement.

Settlement Shortfall / Shortfall: In the event of a vehicle being totally written-off (scrapped) as a result of an accident, theft, fire or hijacking, the insurance company will normally pay out the current market value of the vehicle. This may differ from the amount still owing to the bank, because of finance and interest rate charges, etc. A shortfall, thus, occurs and needs to be settled by the customer.

Settling Party: The party to a trade which has the obligation to settle. This is a JSE member firm in the case of a member trading for his/her own account, or the member's client in the case of an agency trade. Either party may use a CSD participant who is not the banker (as regards scrip), and his/her own banker (not the bank of the broker) to effect settlement.

Settlor: The person who actually creates a trust by donating property to be managed and administered by a trustee but from which all profits would go to a beneficiary. Sometimes referred to as donor.

Smartcard: This is a plastic card which has a microchip built into it to store any choice of information about the account holder, e.g. customer name and balance could be stored here. This card facilitates access to banking facilities.

SmartBOX :SmartBOX is a cash-acquiring device placed at clients' premises, which is used to count cash at speed, aid in the authentication of notes, confirm receipt from a spread of depositors, and transmit value, with appropriate referencing, to a designated bank account.

SpeedPoint: Electronic card acceptance device.

Spot: Foreign exchange transactions that take place at current market prices, with settlement being within two business days of the deal being contracted.

Spot Rate: The Spot Rate that serves as the foundation on which other rates are calculated, is the rate quoted for the exchange of currencies in 2 business days time. For example, a spot transaction on Wednesday will result in currencies being exchanged on Friday (provided it is a business day in both currency centres).

Stamp Duty: A tax paid by the transferee on registration of shares in his/her name. No stamp duty is payable if MST has been paid.

Standard Settlement Instruction: Any Settlement Instruction with the settlement date = Trade date + 5. All Settlement Instructions with the settlement dates other than T+5 will be referred to as Non-standard settlement instruction.

Stepped Payments: These are payment terms under an agreement where the payment value is increased or decreased by a specific amount over a period of time (e.g. payments will increase by 10% per annum).

Stock Exchange: Organised electronic trading floor where the buying and selling of stock and share transactions takes place.

Stock Exchange Index: A measurement of the movement of stock exchange securities. Indices can be average or combined of dissimilar component series.

Stock Lending: Collateralised loan of securities for a limited period of time. This involves the transfer of securities to the borrower with an agreement for the borrower to replace them in due course with identical securities. Normally the borrower will deposit collateral with the lender to cover the value of the borrowed stock, and will pay the lender a fee. The lender retains the benefits and risks of price movements on the stock.

Stockbroker: A member of the South African Institute of Stockbrokers.

Street Name: In its contemporary meaning, status of securities endorsed by the previous owner (which could be anyone 'in the street') but not re-registered in the new owner's name. As far as the issuer's register is concerned, the previous owner remains the titular owner and may be entitled to dividends, interest, bonus issues, rights, voting privileges and other benefits. In certain instances, securities in street name may not be considered good delivery.

Sub-Register: A company' record of its shareholders and their holdings which is maintained by the depository participant.

Subsidiary: A company that is owned by, or under the control of, a parent company.

Suspended Securities: Securities which are restricted from being transferred, withdrawn or used for settlement of trade. Securities may be suspended as a whole or at account level. Suspension could also be for a part of the holding in an account.

Suspensive Sale: A Suspensive Sale is similar in all respects to an Instalment Sale except that it is not subject to the control of the Credit Agreements Act or the Usury Act. Typically the ownership in the goods will only pass to the buyer once the "suspensive condition" of full repayment, for example, has been made. A business entering into a suspensive sale agreement may claim the interest paid as a business expense.

SWIFT: Society for Worldwide Inter-bank Financial Telecommunication

Swift Code: A swift code is a method of payment used overseas. This is mostly used by our card members who have no access to an American Express office overseas and, therefore, can make payment from overseas at any bank into the American Express card by using the swift code. Please be advised, should you require the swift code, this can be obtained by phoning our teleconsultants on (011) 710-4747 and also remember that the American Express Card number must always be present.

T

T and T: Test and Training network of SWIFT.

TARGET: Trans-European Automated Real-time Gross settlement Express Transfer system

TATA: See TCS

TCS: Tata Consulting Services - CSSD has contracted with TCS to customise and install the NCS system.

TB: Treasury Bill. Short term government security issued in domestic currency with maturities not exceeding one year and therefore considered to be a money market instrument. Treasury bills are sold at a discount from par and do not bear a coupon. The investor's return is measured by the difference from the par value at maturity and the discount price paid.

Transshipment: Movement of goods from one means of transport to another means of transport. Specific rules and interpretations apply to documentary credits.

Tainted Scrip: Scrip which has been tampered with, thus misrepresenting genuine proof of ownership.

Tangible Assets: Physical assets such as buildings and stock.

Tax Treaty: An agreement or treaty between two countries intended to avoid double taxation of income, under the terms of which an investor with tax liabilities in both countries can either apply for a reduction of taxes imposed by one country or credit taxes paid in that country against tax liabilities in the other.

Tax-Based Customers: A tax-based customer is an entity (business or self-employed-person) who is allowed under the Income Tax Act to claim expenses made in the course of their business or activities, as a deduction against income received in the course of that business or activity. Certain individuals who receive vehicle allowances and then use their own cars to conduct business on behalf of their employers may be classified as tax based customers by the Receiver of Revenue. Tax-based individuals are not legally required to pay a minimum deposit on purchase of motor vehicles, but a finance house may still require a deposit, depending on affordability criteria. Tax-based individuals may finance all assets up to a period of 60 months.

Territory: The geographical area assigned to a franchise outlet, defined as the area that will provide the outlet's business and which no other franchise in the chain will be granted.

Testamentary Trust: A trust which is to take effect only upon the death of the settlor and is commonly found as part of a will. Trusts which take effect during the life of the settlor are called inter vivos trusts.

Testator: A person who executes a valid will.

Third Party Payment: Account payment to other merchants via your account, e.g. Games, Edgars.

Tiered Interest: The higher the balance in the account, the higher the interest rate paid by FNB.

Trade: A match of buy and sell records.

Trade Matching: Matching by JET of buy and sell orders entered by JSE member firms.

Trading Method: The means by which trading takes place can be electronic, open outcry or an auction-based environment.

Transfer Secretaries: An individual or organisation that maintains the Register of Members on behalf of the issuer of securities, and issues certificates on behalf of the issuer. Transfer Secretaries also handle corporate Actions.

Transfers: Funds that are transferred between your own accounts or accounts nominated by yourself, e.g. from your cheque account to your savings account.

Transmission Account: This is similar to a cheque/current account which allows for debit orders, stop orders and account payments, but does not have a cheque book facility.

Trust: A type of legal arrangement which can be used by a business. Assets are held and managed by a trustee for the benefit of others (the beneficiaries).

Trustee: A person who holds assets for beneficiaries under a trust and who administers a trust and performs certain duties on behalf of the beneficiaries. A company can also be authorised to act as a trustee.

Turnover: The total value from sales of stocks and shares by the exchange.

U

UCP500: (Uniform Customs and Practice for Documentary Credits) Standards published by the International Chamber of Commerce that set out the rules and regulations for the operation of documentary credits. This publication is not a force of law but is binding on the parties who subscribe to it. FNB International Banking is a member of the International Chamber of Commerce.

URC522: (Uniform Rules for Collections) Standards published by the International Chamber of Commerce that set out the rules and regulations for the operation of documentary collections. This publication is not a force of law but is binding on the parties who subscribe to it. FNB International Banking is a member of the International Chamber of Commerce.

URL: Uniform Resource Locator, the global address of documents and other resources on the World Wide Web.

V

Variable Interest Rate: A variable interest rate is an interest rate which has been linked to either another market rate or an event. For example, an interest rate of Prime Interest Rate plus 3% means that the interest rate used will the bank's current prime interest rate plus 3%. Banks publish their prime rates regularly. Prime rates are affected by market forces and can change. The interest rate on the agreement will thus vary from time to time depending on what happens to the prime rate. The linked amount, e.g. 3% will however never change.

Vault: A secure site where securities are held in physical certificate form.

Value Date: Settlement date of a foreign exchange transaction.

Vostro Account: A foreign bank's account maintained in the domestic currency.

W

Warranty / Motor Vehicle Warranty: This provides for payment of the costs to mechanical parts/ breakdown repairs, which are not covered by any other warranties (e.g. manufacturer or motor dealers). These warranties are normally taken as an extension of the manufacturers/dealers warranties to ensure that the owner (debtor) will not be faced with heavy expenses from unexpected costs arising from such problems as engine failure, etc.

Wear and Tear Tax Allowance: The Income Tax Act allows businesses or persons who use "equipment" in the course of their business to depreciate the equipment on an annual basis by a set percentage (e.g. 20% per annum for motor cars). The percentage level is set by the Receiver of Revenue. The amount of the depreciation is allowed to be claimed as a business expense even though no actual money has been spent. The value of the goods is depreciated by that value each year in the books of the business until it reaches a zero value. It will then no longer be shown on the balance sheet of the business as an asset. If it remains in use after it reaches a zero value, no further deductions are allowed. The asset then becomes a hidden asset (i.e. even though it has a market value, it is no longer on the balance sheet of the business).

Will: A will is a written instrument containing directions for how the property of the person making the will (the "testator") shall pass on his or her death. The will must usually be executed in accordance with the laws of the country where the testator resides. These laws generally require that the will be signed by the testator and by at least two witnesses who have no interest in the property passing under it. The testator must state in the presence of the witnesses that the instrument is his or her will. He or she must also be "competent" (not insane, senile or mentally disabled) and not acting under duress or under the controlling influence of any person. A signed instrument purporting to be someone's will is not officially recognised until the court having jurisdiction over the instrument declares it to be a valid will after examining it and the circumstances surrounding its execution.

Withdrawals: This means to take out money from an account at a bank, provided there are sufficient funds in the account.

Withholding Tax: Tax on share dividends, coupon payments or bank deposits which is deducted at source from payments to investors.

Working capital: The capital or assets required to fund the daily operation of the business. It is calculated by deducting current liabilities from current assets.