Page 99 - PRIAA Glossary

KNOCK-IN EVENT
An addition of a knock-in event to an option will result
in the option not being active unless a certain price
(the knock-in price) is reached on the underlying asset.
This will have the effect of reducing the option premium. See also “barrier option”.
KNOCK-OUT EVENT
An addition of a knock-out event to an option will result in the option being terminated if a certain price (knock-out price) is reached on the underlying asset. This will have the effect of reducing the option premium. See also “barrier option”.
KNOW YOUR CUSTOMER (KYC)
A set of due diligence activities that financial institutions are required to complete before doing business with an entity. These regulations help to identify if the entity is involved in financial fraud or other illegal activities. KYC is a constant process of updating data, activities and information in order to gain a better understanding of the customer.
KYC DOCUMENTATION
The documentation required to be produced by a trading counterparty to ensure that Know Your Customer (KYC) or anti-money laundering (AML) requirements are adequately fulfilled. In order to comply with relevant legal and regulatory requirements, a firm will typically have to obtain and review the counterparty’s constitutional documents, evidence of due incorporation and good standing, financial statements, details of significant shareholders and proof of identity of the directors.
KYOTO PROTOCOL
An international agreement committing signatories to greenhouse gas reduction targets under the United Nations Framework Convention on Climate Change.
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