TMA Treasury Markets Certificate key terms

The interbank and client-facing markets where cash, deposits, bonds, FX, and derivatives are traded, providing funding, liquidity, and risk transfer for banks, corporates, and investors.

The market for short-term debt instruments and deposits, typically maturing within one year, used to manage day-to-day funding and surplus cash positions.

The wholesale market in which banks lend to and borrow from one another, typically unsecured or via repo, to balance short-term liquidity and reserve positions.

A sale of securities with a simultaneous agreement to repurchase them at a set price and date, economically functioning as a secured short-term loan of cash.

The mirror of a repo: a purchase of securities with an agreement to resell them later, economically a secured loan of cash to the counterparty.

The percentage discount applied to the market value of collateral when calculating how much cash can be lent against it, protecting the lender from price moves.

Assets pledged by a borrower to secure a loan or exposure, which the lender may seize or liquidate if the borrower defaults or fails to meet margin obligations.

A negotiable short-term debt instrument issued by a bank, promising to pay a fixed interest rate on a specified principal at maturity, usually within one year.

An unsecured short-term promissory note issued by large corporates or financial institutions to raise working capital, typically maturing in days to months.

A graph plotting bond yields against their maturities, showing the term structure of interest rates and signaling market expectations about future rates and growth.

A measure of a bond's price sensitivity to interest rate changes, expressed in years, combining the timing and size of its cash flows.

One hundredth of one percentage point (0.01%), the standard unit for quoting small changes in interest rates, yields, and spreads.

The difference between two quoted rates or prices, such as a credit spread over a benchmark or a bid-ask spread, reflecting risk or transaction cost.

The gap between the highest price a buyer will pay and the lowest price a seller will accept, a key measure of market liquidity and trading cost.

A firm that continuously quotes both buy and sell prices for an instrument, providing liquidity and earning the bid-ask spread while managing inventory risk.

The risk that changes in interest rates reduce the value of assets, liabilities, or future cash flows, affecting both trading books and balance-sheet earnings.

The practice of ensuring sufficient cash and liquid assets are available to meet obligations as they fall due, while deploying surplus funds efficiently.

The coordinated management of a firm's assets and liabilities to control interest rate, liquidity, and currency mismatches and protect net interest income.

A regulatory requirement that banks hold enough high-quality liquid assets to survive a 30-day stress scenario of net cash outflows.

A projection of expected inflows and outflows of cash over future periods, used to plan funding needs and identify surplus balances for investment.

The difference between current assets and current liabilities, representing funds tied up in day-to-day operations such as inventory and receivables.

The risk that the other party to a trade or contract fails to meet its obligations, causing loss of the expected cash flows or replacement cost.

The risk of loss arising from a borrower or issuer failing to repay principal and interest as agreed, or from deterioration in their creditworthiness.

The risk that one side of a transaction delivers its leg but the other side does not, leaving the first party exposed to loss of the full principal.

The risk of loss when an FX trade's two currency legs settle in different time zones, so one leg pays out before the other is confirmed received.

Continuous Linked Settlement: a multilateral system that settles both legs of eligible FX transactions simultaneously, reducing settlement risk across time zones.

A technique that applies severe but plausible scenarios to a portfolio or balance sheet to estimate potential losses and liquidity shortfalls.

The amount and type of risk an institution is willing to accept in pursuit of its objectives, set by senior management and embedded in limits and policies.

A pre-set maximum on a risk exposure, such as a counterparty, tenor, or position size limit, that traders and treasury staff must not exceed.

The framework of rules, responsibilities, and oversight bodies that directs how an institution is managed and held accountable for its decisions.

A set of standards governing professional behavior, ethics, and integrity expected of market participants, covering conflicts of interest, confidentiality, and fair dealing.

Illegal behavior that undermines market integrity, including insider dealing, manipulation of prices or benchmarks, and misleading disclosure to other participants.

Trading or tipping others to trade on material non-public information about an instrument or issuer, in breach of confidence and market rules.

An information barrier within a firm that separates teams with sensitive knowledge from those who could misuse it, preventing conflicts and insider dealing.

A situation where personal or firm interests could improperly influence professional judgment or the fair treatment of clients and counterparties.

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

Attempting to influence a reference rate or index, such as an interest rate benchmark, through false submissions or manipulative trades rather than genuine market activity.

The London Interbank Offered Rate, a former benchmark of interbank lending rates that was discontinued after manipulation scandals and replaced by risk-free rates.

A near-default-free reference rate, such as SOFR or SONIA, based on actual transactions, now used as the main benchmark for pricing loans and derivatives.

A voluntary set of global principles for good practice in the foreign exchange market, covering ethics, execution, information sharing, confirmation, and settlement.

A practice where an FX liquidity provider can reject or reprice a trade after receiving it, which the FX Global Code requires to be transparent and fairly applied.

A firm or indicative price at which a dealer is willing to buy or sell an instrument, usually stated as a bid and an offer with associated size.

The price for immediate delivery of one currency against another, with settlement typically two business days after the trade date.

An agreed exchange rate for a currency transaction settling on a future date, derived from the spot rate plus the interest rate differential between currencies.

A simultaneous spot and forward transaction in opposite directions, used to roll or hedge currency positions and manage short-term funding in two currencies.

The difference between the forward and spot exchange rates, quoted in pips, reflecting the interest rate differential between the two currencies over the period.

The date on which the two legs of a foreign exchange or money market transaction are actually settled and funds become available to the parties.