Glossary



A

ASSET SERVICES

Services provided by Clearstream, e.g. implementation of corporate actions, dividend payments and tax services.

B

BLOCKCHAIN

Public transfer protocol originally developed to trade the digital currency Bitcoin. It basically consists of an electronic, decentralised and fully disclosed ledger of all transactions, i.e. “blocks” which are continually validated and relayed. The blockchain is formed as blocks are continuously added with each new set of recordings.

C

C7

New IT infrastructure for Eurex Clearing that carries out the settlement of listed and OTC products (both for derivatives and for cash) on a uniform architecture. Customers are supported at the time of clearing by various transaction and EMIR-compliant segregation models, based on configurable account structures. C7® is part of 7 Market Technology®.

CCP

Central counterparty; also: clearing house. Institution that acts as a legal intermediary between the trading partners as a buyer or seller after a transaction has been completed, facilitating netting, minimising the default risk of a contracting party (margining and collateralisation), and carrying out all process steps necessary for clearing.

CEINEX

China Europe International Exchange. Sino-German joint venture of the Shanghai Stock Exchange, Deutsche Börse und China Financial Futures Exchange, founded in 2015. The new market venue is the first and only authorised trading platform outside of China for financial instruments in Renminbi (RMB).

CLEARING

The netting (offsetting of buy and sell positions over a given period of time) of receivables and liabilities arising from securities and derivatives transactions; determination of the bilateral net debt of buyers and sellers.

COMMERCIAL PAPER

A debt security traded on the money market with a short or medium term (mostly less than one year) and issued by issuers with a high credit rating to finance their short-term capital requirements. Issuers benefit from the commercial paper’s flexibility and customisability; buyers are able to obtain attractive conditions for short-term investments.

CSD

Central securities depository. Clearstream Banking AG acts as the officially recognised German bank for the central depository of securities under the Depotgesetz (German Securities Deposit Act). In this function, it offers a wide range of post-trade services relating to securities issued in Germany and other countries, both as a CSD for securities eligible for collective safe custody and as a custodian for other securities.

CSD-R

Central Securities Depository Regulation. Harmonisation of securities settlement systems and supervisory rules for CSDs in Europe, planned by the European Commission. The new rules are likely to come into effect from March 2017.

CUSTODY

The safekeeping and administration of securities for others. A custody account (similar to an account for money transactions) is established for each customer. The account information includes details of the types, nominal values or quantities, volumes etc. of the securities held, as well as the name and address of the account holder.

D

DERIVATIVE

Highly liquid standardised financial instrument derived from another instrument, the underlying (e.g. an equity, an index, a currency, or a commodity).

Banks or financial service providers that furnish binding bid and ask quotes for a particular security in the order book, either upon request or at their own initiative. Designated Sponsors enhance the liquidity of the securities they support.

E

EMIR

European Market Infrastructure Regulation. EMIR regulates OTC derivatives, central counter parties (CCPs) and trade repositories; it aims to improve security and integrity within the OTC derivatives market by promoting transparency and reducing risk. Among other things, this is to be achieved by introducing a clearing obligation for eligible OTC derivatives and measures to reduce counterparty credit risk and operational risk for OTC derivatives not cleared via CCPs, as well as disclosure requirements for all derivatives. EMIR also establishes general requirements for CCPs and trade repositories.

ESG-CRITERIA

ESG = environment, social, governance. The composition of ESG indices such as the STOXX® ESG Global Leaders Index reflects these three selection criteria.

ETF

Exchange-traded fund. Mutual fund with indefinite maturity whose shares can be bought or sold in continuous trading on the exchange. It tracks the performance of the index on which it is based.

F

FINTECH

Compound of the term “financial technology”, describes novel solutions for application systems constituting of innovations or developments to make financial services more efficient.

FX

Foreign exchange. Receivables in foreign currencies consisting of assets or cheques in said currencies.

G

GLOBAL LIQUIDITY HUB

Integrated risk and liquidity management solution in Deutsche Börse Group’s GSF business field at Clearstream. It offers integrated financing services, including securities lending and collateral management services for a range of major asset classes including fixed-income securities and equities. Through the Global Liquidity Hub, customers can, for example, fulfil their margin obligations towards central clearing houses (CCPs) and cover their global exposures.

GRI

Global Reporting Initiative. Independent not-for-profit organisation that publishes guidelines for creating sustainability reports in cooperation with the United Nations Environment Programme (UNEP). Transparency is the basis of reporting in accordance with the GRI, which aims to ensure that sustainability reports are standardised and comparable.

GSF

Global Securities Financing. Business area within Deutsche Börse Group’s Clearstream segment that comprises automated securities lending services and collateral management.

H

HYBRID BOND

Subordinated corporate bond with both equity- and debt-like features, very long or unlimited maturity and high interest rates.

I

ICSD

International CSD

IPO

Initial public offering. An IPO marks the time when a company first offers its shares for sale to the general public and launches them on the equity market.

L

LIQUIDITY

Market situation in which a security can be bought or sold, even in larger quantities, without substantially affecting its price. Important criterion for assessing the quality of a securities market in securities trading, and thus a decisive factor in the competition between marketplaces.

LISTING

Quotation of a security or issuer on the exchange. Issuers at the Frankfurt Stock Exchange can choose from four transparency standards for their listing: Prime Standard, General Standard, Entry Standard and Open Market.

M

MAD

Market Abuse Directive. EU directive on combating market abuse. The revised MAD obliges all member states to adopt a uniform approach to insider dealing and market manipulation and to establish criminal sanctions that may be no less than four years and two years, respectively.

MAR

Market Abuse Regulation. EU regulation on combating market abuse. The new MAR will help improve market integrity and strengthen investor protection. The existing rules are being extended to new trading centres, financial instruments and trading strategies and will also apply to transactions taking place outside regulated markets (OTC). Deutsche Börse Group has reliable procedures for monitoring trading activity and therefore welcomes the Europe-wide move to create uniform rules on combating market abuse and insider dealing. The new rules will come into effect from July 2016.

MIFID

Markets in Financial Instruments Directive. The EU directive establishes a regulatory framework for the provision of investment services in financial instruments (such as brokerage, advice, dealing, portfolio management, underwriting) by banks and investment firms and for the operation of regulated markets by market operators (stock exchanges among others). The objective is to promote the integration, competitiveness and efficiency of EU financial markets.

MIFID II

Refers to the revision of the Markets in Financial Instruments Directive (MiFID). The revised Directive was introduced in June 2014 and is expected to become applicable as of January 2018. The overarching goal of the legislation is to make financial markets more efficient, more resilient and more transparent, and to strengthen investor protection. The Directive contains guidelines for the activities of investment firms and regulated trading venues, precautionary measures regarding the specification and supervision of position limits for commodities derivatives as well as regulation for data reporting services.

MIFIR

Markets in Financial Instruments Regulation. A supplementary EU regulation to MiFID II that is likely to come into effect from January 2018, it will see the introduction of comprehensive reporting obligations to increase transparency in the stock, bond and derivatives markets and close existing loopholes in off-exchange transactions. The introduction of mandatory on-venue trading for shares and derivatives ensures that a larger number of transactions will be executed on regulated trading venues. The new regulations also cover the accessibility of central counterparties, trading venues and benchmarks. It also contains guidelines for so-called market makers (liquidity providers) and participants in algorithmic trading.

O

OTC

Over the counter, off-exchange. Describes transactions between two or more trading parties that are not conducted on a regulated market.

P

PEOPLE PRINCIPLES

Five principles that enhance Deutsche Börse Group’s corporate values at the level of personal conduct and describe the expectations for collegial and professional cooperation within the Group: respect, teamwork, recognition, results orientation and customer focus.

PRE-IPO

Young high-growth companies’ preparatory phase before going public.

Q

QE

Quantitative easing. In March 2015, the ECB launched a purchasing programme for sovereign bonds and other securities. The aim is to further boost market liquidity and to fend off deflation due to an increase of the money supply. The ECB’s QE measures are currently planned to remain in place until March 2017. Central banks use QE as a tool to avert crisis situations worldwide – as done by the Federal Reserve, the Bank of England and the Bank of Japan.

S

SECURITIES LENDING

Transfer of securities by a lender for a fee and on condition that the borrower returns securities of the same kind, quality and amount to the lender at the end of a fixed term. With GSF, Clearstream offers a service for securitites lending.

SETTLEMENT

The completion of an exchange transaction, i.e. the transfer of money and traded securities from the seller to the buyer and vice versa. Within Deutsche Börse Group, Clearstream is responsible for this post-trading function.

T

T2S

TARGET2-Securities. Initiative to create a single platform for transmitting securities within the euro zone. The objective of this platform is to reduce the cost of cross-border securities settlement within the euro zone. It will be operated by the ECB. “TARGET” is short for “Trans-European Automated Real-Time Gross Settlement Express Transfer System”.

T7

IT architecture used for the trading systems of Deutsche Börse Group’s futures exchanges Eurex and International Securities Exchange. It is also utilised at Bombay Securities Exchange. T7® is based on a high-performance messaging architecture that combines minimal latency with maximum reliability. T7 is part of 7 Market Technology®.

V

VOLATILITY

Measure of the extent to which the price of a security or an index fluctuates around a mean value during a certain period of time.