CISI CMP Securities key terms

The part of the market where newly issued securities are sold for the first time, raising fresh capital for the issuer, typically through an IPO, placing or rights issue.

The market where already-issued securities are bought and sold between investors, providing liquidity and price discovery without raising new money for the issuer.

The first sale of a company's shares to the public, moving it from private to listed status and usually accompanied by a prospectus and admission to a regulated market.

A firm that continuously quotes both buy and sell prices in a security, committing capital to provide liquidity and profiting from the bid-offer spread.

The difference between the highest price buyers will pay and the lowest price sellers will accept, acting as a transaction cost and a gauge of market liquidity.

The ease and speed with which a security can be traded in size without materially moving its price, influenced by trading volumes and the number of participants.

A trading venue where buy and sell orders are matched by an electronic system according to price and time priority, without a designated intermediary quoting prices.

A trading venue where designated dealers publish bid and offer prices at which they will trade, and investors execute against those quotes rather than against each other.

A trading venue, separate from a regulated market, that brings together multiple third-party buying and selling interests in financial instruments on a non-discretionary basis.

An investment firm that executes client orders against its own book on a frequent and systematic basis outside a regulated market or trading venue, subject to transparency rules.

A formal disclosure document published when securities are offered to the public or admitted to trading, describing the issuer, the securities and the associated risks.

The requirements a company must satisfy to have its securities admitted to, and remain on, a stock exchange, covering eligibility, disclosure and continuing obligations.

Precise, non-public information relating to an issuer or its securities that, if made public, would likely significantly affect the price of those securities.

Prohibited conduct including insider dealing, unlawful disclosure of inside information and market manipulation, which undermines the integrity and confidence of financial markets.

Conduct that gives false or misleading signals about the supply, demand or price of a financial instrument, or that distorts the market through artificial transactions.

The process of gathering information about a client's circumstances, objectives, knowledge, experience and risk tolerance before providing investment services or advice.

The requirement to ensure a personal recommendation or discretionary management decision is suitable for the specific client, based on their objectives, circumstances and risk profile.

A narrower test applied to non-advised services, assessing whether a client has the knowledge and experience to understand the risks of a product or service.

Money held by a firm on behalf of clients, which must be segregated from the firm's own assets and protected under client asset rules in the event of insolvency.

The safekeeping and administration of client securities and cash, including settlement, corporate actions and record-keeping, often performed by a specialist custodian.

A legal obligation to act in the best interests of another party, prioritising the client's interests above the firm's own and avoiding or disclosing conflicts.

Situations where a firm's or employee's interests could improperly influence decisions taken on behalf of clients, requiring identification, management and disclosure.

A fee, commission or non-monetary benefit paid or received in connection with an investment service, which may be permitted only if it enhances the service and is disclosed.

The obligation to take all sufficient steps to obtain the best possible result for clients when executing orders, considering price, cost, speed, likelihood of execution and settlement.

The process by which a securities trade is completed, with the buyer paying cash and the seller delivering the securities, typically on a fixed cycle such as T+2.

An ownership stake in a company, giving holders rights to a share of profits through dividends and to vote, but ranking last on winding up.

A debt security through which an investor lends money to an issuer in return for periodic interest and repayment of principal at maturity, ranking ahead of equity.

A distribution of part of a company's profits to shareholders, usually declared per share and paid on set dates, though not guaranteed.

The date from which a share trades without the right to the next declared dividend, so buyers on or after that date do not receive the payment.

The return an investor receives from a security, usually expressed as an annual percentage of its price, reflecting income and, for bonds, the effect of price and maturity.

A measure of a bond's sensitivity to interest rate changes, expressed in years, combining the timing of cash flows and their present values.

An arrangement pooling money from many investors to buy a diversified portfolio of assets, managed by a professional firm and represented by units or shares.

A European-regulated open-ended fund that can be marketed across member states, subject to rules on eligible assets, diversification and investor protection.

Spreading investment across different assets, sectors or regions to reduce the impact of any single holding's poor performance on the overall portfolio.

A client's willingness and financial capacity to accept losses or volatility in pursuit of investment returns, established during the know your client process.

A financial contract whose value is derived from an underlying asset, rate or index, used for hedging or speculation and typically settled at a future date.

A standardised exchange-traded contract obliging both parties to buy or sell an underlying asset at a set price on a future date, usually margined daily.

A contract giving the buyer the right, but not the obligation, to buy or sell an underlying asset at a specified price before or on expiry, in return for a premium.

The framework of controls, including customer due diligence, monitoring and reporting of suspicious activity, designed to prevent criminals disguising the proceeds of crime.