Some terms and definitions frequently used on Armenia Securities Exchange and Central Depository of Armenia
financial Instrument-Financial instruments are assets that can be traded, or they can also be seen as packages of capital that may be traded. Most types of financial instruments provide efficient flow and transfer of capital all throughout the world's investors. These assets can be cash, a contractual right to deliver or receive cash or another type of financial instrument, or evidence of one's ownership of an entity.
security-The term "security" is a fungible, negotiable financial instrument that holds some type of monetary value. It represents an ownership position in a publicly-traded corporation—via stock—a creditor relationship with a governmental body or a corporation—represented by owning that entity's bond—or rights to ownership as represented by an option.
bond-A bond is a fixed income instrument that represents a loan made by an investor to a borrower (typically corporate or governmental).
stock-Common stock is a security that represents ownership in a corporation. Holders of common stock exercise control by electing a board of directors and voting on corporate policy. Common stockholders are at the bottom of the priority ladder in terms of ownership structure; in the event of liquidation, common shareholders have rights to a company's assets only after bondholders, preferred shareholders and other debtholders are paid in full.
share-Shares are units of ownership interest in a corporation or financial asset that provide for an equal distribution in any profits, if any are declared, in the form of dividends. The two main types of shares are common shares and preferred shares. Physical paper stock certificates have been replaced with electronic recording of stock shares, just as mutual fund shares are recorded electronically.
dividend-A dividend is the distribution of reward from a portion of company's earnings and is paid to a class of its shareholders. Dividends are decided and managed by the company’s board of directors, though they must be approved by the shareholders through their voting rights.
nominal value-Nominal value of a security, often referred to as face or par value, is its redemption price and is normally stated on the front of that security.
repo-A repurchase agreement (repo) is a form of short-term borrowing for dealers in government securities. In the case of a repo, a dealer sells government securities to investors, usually on an overnight basis, and buys them back the following day.
assets- Investments in a company that will benefit the company for many years.
derivative instruments-A derivative is a financial security with a value that is reliant upon or derived from, an underlying asset or group of assets—a benchmark. The derivative itself is a contract between two or more parties, and the derivative derives its price from fluctuations in the underlying asset.
prospectus-A prospectus is a formal document that is required by and filed with the Securities and Exchange Commission (SEC) that provides details about an investment offering for sale to the public.
issue-An issue is the process of offering securities in order to raise funds from investors. Companies may issue bonds or stocks to investors as a method of financing the business. The term "issue" also refers to a series of stocks or bonds that have been offered to the public and typically relates to the set of instruments that were released under one offering.
placement/allocation of securities-A placement is the sale of securities to a small number of private investors that is exempt from registration with the Securities and Exchange Commission under Regulation D, as are fixed annuities.
listing-listing refers to the company's shares being on the list (or board) of stock that are officially traded on a stock exchange. Some stock exchanges allow shares of a foreign company to be listed and may allow dual listing, subject to conditions.
IPO(Initial Public Offering)- The process of offering shares of a private corporation to the public for the first time is called an initial public offering (IPO). Growing companies that need capital will frequently use IPOs to raise money.
secondary market-the secondary market is where investors buy and sell securities they already own. It is what most people typically think of as the "stock market," though stocks are also sold on the primary market when they are first issued.
stock Exchange-An exchange is a marketplace where securities, commodities, derivatives and other financial instruments are traded. The core function of an exchange is to ensure fair and orderly trading and the efficient dissemination of price information for any securities trading on that exchange. Exchanges give companies, governments, and other groups a platform from which to sell securities to the investing public.
depository-A depository is a facility such as a building, office, or warehouse in which something is deposited for storage or safeguarding. It can refer to an organization, bank, or institution that holds securities and assists in the trading of securities.
account Operator- account operator is a bank, a fund manager, a stockbroking firm or other type of investment firm that is a intermediary between you and the stock exchange or the depository.
securities Custody-A service in which a brokerage or other financial institution holds securities on behalf of the client. This reduces the risk of the client losing his/her assets or having them stolen.
clearing-Clearing is the procedure by which financial trades settle - that is, the correct and timely transfer of funds to the seller and securities to the buyer. Often with clearing, a specialized organization acts as intermediary and assumes the role of tacit buyer and seller in a transaction, to reconcile orders between transacting parties.
settlement-Settlement of securities is a business process whereby securities or interests in securities are delivered, usually against (in simultaneous exchange for) payment of money, to fulfill contractual obligations, such as those arising under securities trades.
registry keeping -securities information is recorded, saved and given when applicable.