Page 65 - PRIAA Glossary

over the counter (OTC), contract terms are not negotiated individually between counterparties and investors basically chose from a portfolio of standardised products.
EXCHANGE TRADED FUND (ETF)
A fund that trades on an exchange like a stock. An ETF holds assets such as stocks, commodities or bonds. Most ETFs are specific to a particular index (i.e., it consists of all the securities that the index comprises). It is a tradable
item on the exchange like a stock or commodity. It tracks the index and generally provides returns similar to the index it represents.
EXCHANGE TRADED OPTION
A financial instrument traded and cleared on an organised securities or derivatives exchange. Such options are usually, but not always, standardised by strike, maturity and underlying.
EX-DIVIDEND DATE
The date from which the price of a share is reduced by the upcoming unpaid dividend (henceforth called ex-dividend) announced by the share issuer. If a share is sold between this date and record date, seller instead of the buyer will be entitled for the dividend.
EXECUTING BROKER
The broker or dealer that finalises and processes an order on behalf of a client/prime broker. Orders sent to executing brokers are assessed for appropriateness before execution. If the order is rejected, the customer is notified and the trade is not completed.
EXECUTION ONLY (GIVE-UP AGREEMENT)
1) Over-the-counter: A tri-party agreement that is signed by the executing broker, the clearing broker and the client. This agreement sets out the terms by which the clearing broker will accept business on behalf of the client. 2) Clearing: A tri-party agreement that is signed by the executing broker, the designated clearing member (DCM) and the client. This agreement sets out the terms by which the DCM will accept business on behalf of the client.
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