UBS Dictionary of Banking

Fa

facility / Fazilität / facilités / facilitazione di credito
Synonym for credit line.

factoring / Factoring / affacturage / factoring
A form of financing which enables companies to generate liquidity. Factoring involves the sale of short-term trade receivables (usually of 30 days) to a factoring company (factor). The purchase price represents a certain percentage of the face value of the receivables. The remaining balance is returned to the client after deduction of a service charge once the debt is collected. The purchase price paid by the factor is credited to the client after deduction of the factoring fee and the financing charges (depending on the amount of credit drawn).

fair value / Fair Value / juste valeur / fair value
(1) The amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm's length transaction.
(2) The estimated value of all assets and liabilities of an acquired company used to consolidate the financial statements of both companies.
(3) In the futures market, fair value is the equilibrium price for a futures contract. This is equal to the spot price after taking into account compounded interest (and dividends lost because the investor owns the futures contract rather than the physical stocks) over a certain period of time.

falling market
Synonym for bear market.

falsification
Synonym for forgery.

family company / Familienunternehmen / entreprise familiale / società a carattere familiare
Company which is wholly or predominantly owned by one family. If the family company is a limited company, it is known as a family limited company. In contrast to this, ownership of a public limited company or other limited company is more broadly based.

Fannie Mae / Fannie Mae / Fannie Mae / Fannie Mae
Short name for the Federal Mortgage Association, a mortgage institution whose main business is in the securitization of existing loans for the purchase of real estate. According to the US Treasury it is the largest US borrower and acts as a mortgage financing agency. See also Freddie Mac.

FAS
Abbr. for free alongside ship.

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Fb

FBC / EBK / CFB / CFB
Abbr. for Federal Banking Commission.

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Fe

FED
Abbr. for Federal Reserve System.

Federal Banking Commission / Eidgenössische Bankenkommission / Commission fédérale des banques / Commissione federale delle banche
Abbr.: FBC. Also: SFBC. Short form: banking commission. Independent supervisory and regulatory body responsible for overseeing banks and investment funds.

federal funds / Federal Funds / fonds fédéraux / federal funds
A form of money market investment developed in the US which is mainly used by the large commercial banks to balance daily liquidity needs. The surplus reserves of banks are traded through the Federal Reserve System.

Federal Reserve System / Federal Reserve System / Réserve fédérale / Federal Reserve System
Abbr.: FED. The central bank system in the United States, established by the Federal Reserve Act in 1913 and consisting of 12 Federal Reserve Banks, one in each Federal Reserve District.

FER / FER / RPC / RCP
(1) Abbr. for Swiss Foundation for Accounting and Reporting Recommendations (ARR)
(2) Abbr. for Swiss Accounting and Reporting Recommendations.

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Fi

fiduciary transactions / Treuhandgeschäfte / opérations fiduciaires / operazioni fiduciarie
Fiduciary transactions are fundamentally characterized by the fact that a trustee or fiduciary acquires in his own name goods, assets or claims (receivables) at the instructions of the trustor or beneficiary and manages the assets held in trust in the interest of the principal and in accordance with his instructions. The trustee or fiduciary acts in his own name but for the account and at the risk of the trustor or beneficiary. Fiduciary transactions performed by a bank in the form of money market investments or as fiduciary loans are effected or granted in its own name, but in response to a written order, exclusively for the account and at the risk of the customer (fiduciary investments, fiduciary loans). The principal bears the currency, transfer and del credere risks. Fiduciary transactions rank among off-balance-sheet business but are shown by banks under the line. In the wider sense of the word they also include all other transactions entrusted to a fiduciary or trust company.

fill-or-kill order / (1) Accept-Order, Akzeptauftrag (2) Fill-or-kill-Auftrag / (1) ordre accept (2) ordre tout ou rien / (1) accept order (2) ordine «fill or kill»
Stock exchange order that is executed immediately, i.e. matched with all orders within a specific limit. When a fill-or-kill order is issued on the Swiss stock exchange, the order must be executed immediately in full or not at all. If it cannot be executed in full immediately, the part not executed is cancelled and eliminated from the order book.

final dividend / Schlussdividende / dividende final / dividendo finale
Dividend paid out by a corporation at the end of the year (annual dividend) after quarterly, semi-annual or other interim dividends have already been distributed in the course of the year.

final settlement value / Final Settlement Value / final settlement value / final settlement value
Settlement value specified at the end of the last trading day of a financial contract.

finance bill / Finanzwechsel / effet financier / cambiale finanziaria
Bill of exchange not directly connected with an actual business transaction. Frequently takes the form of a promissory note. Finance bills include Treasury notes, bills issued by public authorities and banker's acceptances.

financial analysis / Finanzanalyse / analyse financière / analisi finanziaria
Also: investment research. Analysis of political and economic conditions, the state of the financial markets, specific industries and companies with a view to developing an investment policy, an asset allocation and individual share recommendations. See also basic analysis, technical analysis.

financial centre / (1) Börsenplatz (2) Finanzplatz / (1) place boursière (2) place financière / (1) piazza borsistica (2) piazza finanziaria
1) Also: trading centre. City where there are one or more active stock exchanges.
2) Collective term for the interface between national and international financial systems in the broadest sense (banks, financial markets, insurance and other financial service companies). A financial centre may be national (Switzerland), regional (Ticino) or a hub location with a strong banking presence and close ties to the international financial community (Zurich).

financial engineering / Financial engineering / ingénierie financière / ingegneria finanziaria
Also: structured finance. A field of corporate finance, financial engineering refers to the application of various mathematical, statistical and computational techniques to solve practical problems in finance. Such problems include the valuation of derivatives instruments such as options, futures and swaps, the trading of securities, risk management and regulation of financial markets. In a broader sense the term generally means qualified financial consulting services (e.g. solving capital and asset management problems, selecting financing strategies and instruments, drawing up financial and cash plans, assessing and evaluating investment projects).

financial future / Financial Future; Finanz-Future; Finanzterminkontrakt / financial future / financial future
Also: futures contract. A futures contract based on a financial instrument. Depending on the type of underlying a distinction is made between interest futures, currency futures, index futures and precious metal futures. See also commodity futures contract.

financial innovations / Finanzinnovationen / innovations financières / innovazioni finanziarie
Financial market instruments embodying novel conditions.

financial loan; medium term financing / Finanzkredit / crédit financier / credito finanziario
A bank loan for a fixed amount and term the use of which is not tied to a commercial transaction. See also export finance credit.

financial market instrument / Finanzmarktinstrument / instrument du marché financier / strumento finanziario
Collective term for any form of standard, tradable financial products such as securities, foreign exchange instruments, precious metals, options, financial futures, etc.

financial statement / Abschluss / bouclement / chiusura
Also: accounts, annual accounts. The balance sheet and profit and loss account/income statement of a company prepared at the end of an accounting period.

Financials / Finanzwesen / Finance / Finanza
Equity sector incorporating shares of companies offering services in banking, insurance, or real estate. The respective MSCI Sector index acts as a benchmark for shares of companies belonging to this sector.

financing / Finanzierung / financement / finanziamento
Obtaining or supplying money for specific projects.

fineness / Feinheit / titre / titolo
Ratio of weight of pure precious metal to gross weight of alloyed metal. Expressed in parts per thousand.

FIPS
Abbreviation for Foreign Interest Payment Securities. Foreign-issued bonds denominated in Swiss francs where the interest payment is expressed in US dollars. See also dual currency bond.

firm underwriting / Festübernahme / prise ferme / assunzione a fermo
Also: direct underwriting. Undertaking by a bank or syndicate to assume the risk of buying a new issue of securities and to offer them for public subscription at its own risk.

first mortgage / erste Hypothek; erstrangige Hypothek; Hypothek im ersten Rang
Mortgage that has precedence over all other mortgages. Usually granted for up to two-thirds of the property's market value. See also second mortgage.

fixed advance / fester Vorschuss; Festkredit / avance à terme fixe / anticipazione fissa
Fixed-rate commercial loan of a specific amount repayable on an agreed due date or subject to a period of notice.

fixed assets / Anlagevermögen / capital fixe / immobilizzazioni
Assets acquired by a company that are not intended for immediate consumption, e.g. land, machinery, tools, equipment, furniture, etc. Also includes certain immaterial values (patents, licenses, processes) and permanent participations. Opposite: current assets.

fixed exchange rate / fester Wechselkurs / taux de change fixe / cambio fisso
Official exchange rate of a currency fixed by central banks. The rate is kept within the permitted fluctuation margin in trading on the foreign exchange markets, if necessary by central bank intervention through purchasing or selling the relevant currency. Opposite: floating. See also intervention point.

fixed mortgage
Synonym for fixed-rate mortgage.

fixed-date bill / Datowechsel / effet à un certain délai de vue / cambiale a certo tempo data
Bill of exchange which becomes due and payable at a stipulated date after the issue date. Fixed-date bills are common in overseas trade.

fixed income / festverzinsliche Werte / revenu fixe / titoli a reddito fisso
Asset class for investments in the securities category bond.

fixed-income fund /Fixed-Income-Fund /fonds à revenu fixe / fondo fixed income
Investment fund that invests in fixed-income securities. See also bond fund.

fixed-income security
Synonym for fixed-interest security.

fixed-interest mortgage
Synonym for fixed-rate mortgage.

fixed-interest security / festverzinslicher Wert / valeur à revenu fixe / valore a reddito fisso
Security on which the borrower must pay interest at a set rate for their entire maturity (such as bonds, notes, medium-term notes, debentures, etc). Opposite: share, floating rate bond.

fixed-rate loan
Synonym for fixed advance.

fixed-rate mortgage / Festzinshypothek / hypothèque à taux fixe / ipoteca a tasso fisso
Also: fixed mortgage, fixed-interest mortgage. Mortgage with a fixed, unchangeable interest rate running for a period agreed on between the bank and the borrower, usually between two and ten years.

fixing / Fixing / fixing / fixing
The setting of firm reference prices, e.g. for silver, gold and platinum. Prices are re-set at the same time each day. Reflecting the prevailing market conditions at the time it is set, the fixed price remains valid for all trader transactions until next determined.

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Fl

flat / flat / tel quel / flat
Indicates
(1) a net interest rate, in other words one without further additions, or
(2) in the purchase or sale of fixed-income securities, trading without accrued interest (only applies to bonds in default).

flight capital / Fluchtgeld; Fluchtkapital /capitaux en fuite / fuga di denaro
Also: hot money. Capital transferred by the owner to another country in violation of capital export or exchange control laws. See also Agreement on the Swiss banks' code of conduct with regard to the exercise of due diligence.

floating / Floating / flottement / fluttuazione
Central bank policy which involves allowing exchange rates to be dictated by supply and demand on the foreign currency market. See also dirty floating.

floating exchange rate / flexibler Wechselkurs / taux de change flottant / cambio flessibile
An exchange rate which is allowed to move freely, finding its level as a function of supply and demand on the foreign currency market, and is subject to only limited intervention by the central bank. Opposite: fixed exchange rate.

floating rate bond; floating rate note (FRN) / Anleihe mit variablem Zinssatz / obligation à taux d'intérêt variable / obbligazione a tasso d'interesse variabile
Abbreviation: FRB. Synonym for floating rate note.

floating rate note / Floating-Rate-Note / Floating Rate Note / floating rate note
Abbreviation: FRN. Also: floating rate bond. Bond with a variable interest rate based on a reference interest rate, plus or minus a further component as risk premium.

floor / Floor / floor / floor
(1) Financial instrument guaranteeing a contractually agreed minimum rate of interest. Opposite: cap.
(2) Area of a stock exchange in which trading is conducted.

floor trader / Floor-Trader / négociateur individuel de parquet / floor trader
Also: local. Exchange trader who executes trades strictly for his own account.

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Fo

FOB
Abbreviation for Free on Board. Contract clause common in international trade. Denotes that the transport, insurance and loading costs incurred until the merchandise is loaded on board the ship are included in the price of the goods.

for deposit only / nur zur Verrechnung / à porter en compte / da accreditare
Endorsement on the face of a check indicating that the amount must be credited to an account and cannot be paid out in cash.

forced sale of collateral / Exekution / exécution / realizzazione forzata
The forced sale of the assets pledged as security to the bank for a loan if the credit utilization exceeds the lending value of the pledged collaterals or if the customer is in default regarding repayment of principal or payment of interest.

forced saving / Zwangssparen / épargne forcée / risparmio forzato
Compulsory saving on a large scale by a state-imposed limitation of consumer spending, engineered in such a way that the money «saved» is directed into investments, pension fund financing etc.

foreign assets / Auslandaktiven / créances sur l'étranger / attività sull'estero
Credit balances or claims, for example in the form of loans, granted to customers abroad. Opposite: foreign liabilities.

foreign bond issue / Auslandanleihe / emprunt étranger / prestito estero
Bond issue placed outside the country of domicile of its issuer in the currency of the country where it is offered for subscription. Opposite: domestic bond.

foreign currency account / Fremdwährungskonto / compte en monnaie étrangère / conto in moneta estera
An account not denominated in local currency but in the currency of another country.

foreign currency clause / Valutaklausel; Währungsklausel / clause monétaire / clausola valutaria
A clause aimed at removing the risk (with regard to a particular claim) of a devaluation of one's own currency, by designating a fixed ratio or exchange rate between this currency and the foreign currency.

foreign currency market; currency market; exchange market / Devisenmarkt / marché des changes / mercato dei cambi
Market on which currency is offered and purchased.

foreign exchange / Devisen / devises / divise
Instruments used to make payments between countries, especially in the form of checks, bills of exchange, debits and credits, etc.

foreign exchange controls / Devisenkontrolle / contrôle des changes / controllo dei cambi
State measures to regulate inflows and outflows of domestic and foreign currency.

foreign exchange trading / Devisenhandel / opérations sur devises / negoziazione di divise
Also: foreign exchange. Business activity which consists of the purchase and sale of currencies, holding currency positions, currency arbitrage and speculation on the currency markets. See also banknote trading.

foreign liabilities / Auslandpassiven / engagements envers l'étranger / passività verso l'estero
Financial obligations towards foreign creditors, for example in the form of balances due to banks located abroad. Opposite: foreign assets.

foreign trade balance / Aussenhandelsbilanz
Synonym for balance of trade.

forex
Abbreviation for foreign exchange.

forfaiting / Forfaitierung / financement à forfait / forfetizzazione
A method of purchasing medium term claims whereby the purchaser waives any entitlement to enforce the claim against its original owner. Forfaiting is normally used as a method of export financing, with an exporter selling a claim for receivables against an importer to a third party, thereby converting a sale on deferred payment terms (between 1 and 5 years) into a sale against cash payment.

forfeiture of shares / Kaduzierung / déclaration de déchéance / dichiarazione di decadenza
Cancellation of participation rights in a public limited company, limited liability company or cooperative due to the shareholder, partner or member's failure to pay the subscription price of new shares or failure to pay a call duly made on them.

forgery / Falsifikat / fausse monnaie / falsificazione
Also: falsification. Term for forged bank notes, coins, securities and stamps.

forward contract / Forward-Kontrakt / contrat à livraison différée / contratto forward
Agreement between two parties to buy or sell a specific quantity of a commodity subject to conditions agreed beforehand, with delivery and payment taking place at a later date. Unlike standardized futures contracts, forward contracts are traded over the counter, rather than on a stock exchange. See forward transaction.

forward rate / Terminkurs / cours à terme / corso a termine
The price paid for a future transaction or on the futures markets. Opposite: spot rate.

forward rate agreement /Forward-Rate-Agreement / Forward Rate Agreement / forward rate agreement
Abbreviation: FRA. A forward transaction between banks and industrial firms whereby the two parties agree on an interest rate for a future period and no initial margin payment is required at the time the contract is concluded. Unlike financial futures, FRAs are not standardized and are not traded on interbank markets. They are used to hedge the risk of a change in interest rates by locking in the current interest rate for future payments.

forward transaction / Termingeschäft; Zeitgeschäft / opération à terme / operazione a termine
Transaction (purchase or sale), whereby the contractual obligations (e.g. delivery of and payment for currency, goods or securities) are not performed immediately but instead at a later date and at a price either fixed in advance or determined on the basis of market developments. A distinction is drawn between unconditional forward transactions (futures, forwards) and conditional forward transactions (options). Opposite: spot transaction.

forwarder's receipt / Spediteurempfangsschein / récépissé du transporteur / ricevuta dello spedizioniere
Forwarding agent's written declaration confirming receipt of goods for shipment. Not a security, but often necessary for the execution of a documentary credit. See also documentary credit.

founder's share / Gründeranteilschein / part de fondateur / parte di fondatore
Shares issued to founders of a company as compensation for previously unpaid services. They grant certain preferential rights, e.g. to a part of the net profit or the liquidation proceeds. Known in the United Kingdom as deferred shares.

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Fr

FRA
Abbreviation for forward rate agreement.

fraction / Fraktion / fraction / spezzatura
(1) Also: odd lot. In share trading, a number of share units which is smaller than the number of units usually traded, as distinguished from the round lot, which is a multiple of the trading unit.
(2) In bond and rights trading: fractional item.

fractional rights / Spitze / rompus / spezzatura
Term used in the securities business for subscription rights which are not sufficient to subscribe to a whole new share. The shareholder can either purchase additional rights on the market to buy whole new shares or can sell their fractional rights at the prevailing market price.

franchising / Franchising / franchisage / franchising
System under which a licence is granted to manufacture or market a product or service for which the equipment or supplies are manufactured and furnished by the franchisor. The franchisee makes an initial payment and/or pays a royalty on the product or service to the franchisor. Franchises are often granted for a particular territory and for a particular period. The franchisor usually performs certain managerial functions and assumes specific investment and operating costs, while the franchisee operates for his own account.

FRB
Abbreviation for floating rate bond.

Freddie Mac
Short name for the Federal Loan Mortgage Corporation, a mortgage institution whose main business is in the securitization of existing loans for the purchase of real estate. See also Fannie Mae.

free alongside ship / Free Alongside Ship / free alongside ship / free alongside ship
Abbreviation: FAS. A contract clause commonly used in foreign trade which stipulates that the price of the goods includes transport and insurance costs until the goods are delivered to the quay at the port of lading.

free cash flow / Free Cash-Flow / free cash-flow / free Cash-Flow
Total liquid funds not required to finance operations or for capital expenditure on replacement. These free funds are available for distribution to shareholders, for new investment or for the repayment of debt capital.

free float / Free Float / flottant / flottante
The part of a company's shares which is not held as a long-term investment by the founder, management, etc. and can therefore be traded on a stock exchange at any time, making it available to the investing public.

freight collect / Freight Collect / port dû / porto assegnato
Term used in commercial contracts stating that the purchaser must pay the freight charges for a consignment of goods on delivery. See also freight prepaid.

freight prepaid / Freigth Prepaid; franko / franco; port payé; franc de port / franco; porto affrancato
Term used in commercial contracts indicating that the seller has paid the costs of freight beyond a named point to a second named point. Title to the shipment passes to the buyer at the first named point. See also freight collect.

friendly takeover / freundliche Übernahme / rachat amical / scalata amichevole
Takeover welcomed and supported by the management of the company which is the subject of the takeover. Opposite: hostile takeover.

FRN
Abbreviation for floating rate note.

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Ft

FTSE-100 / FTSE-100 / indice FTSE 100 / FTSE 100
UK share price index compiled by FTSE, a company owned by the Financial Times and the London Stock Exchange. This index comprises the 100 most highly capitalised blue chip companies, representing approximately 80% of the UK market.

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Fu

full convertibilty / Vollkonvertibilität / convertibilité totale / piena convertibilità
Full convertibility means a currency can be exchanged into other currencies with virtually no restrictions. See also partial convertibility, convertibility.

full legal tender coin / Kurantmünze / pièce courante / moneta corrente
(1) Original meaning: coins which by law must be accepted as legal tender without restrictions. See also divisional coin.
(2) In Switzerland, gold coins that have been in circulation since 1850 but have not been minted for a long time, e.g. the «Goldvreneli».

full set / Full Set / jeu complet / full set
Term commonly used in documentary credit transactions denoting the complete set of bills of lading (i.e. the full set of original documents).

full-service bank / Universalbank / banque universelle / banca universale
A bank operating in all banking sectors and for all types of clients. Banks combining investment banking, commercial banking, and other activities are now also possible in America, via a holding company structure.

fully diluted earnings
Earnings per share of a company calculated by dividing the net profit by the number of outstanding shares and those shares which could potentially come into existence through the exercise of rights attached to convertible bonds or other securities conferring entitlement to purchase the company's shares.

fund / Fonds / fonds / fondo
Short for investment fund.

fund management company / Fondsleitung / direction du fonds / direzione del fondo
Independent company which manages investment funds for the account of investors and in its own name. The fund management company decides which investments to acquire and sell, in the same way as it decides on distributions and the issuing of units.

fund of funds / Fund-of-Funds; Dachfonds / fonds de fonds / fondo di fondi
An investment fund which invests in a number of other funds with a variety of investment strategies. See also umbrella fund.

fund regulations / Fondsreglement / règlement du fonds / regolamento del fondo
A document forming the basis for the business activities of an investment fund and governing the rights and responsibilities of the contracting parties (fund management company, custodian, investors).

fund unit / Fondsanteil / part de fonds / quota di fondo
Unit of ownership in an investment fund. Embodies the investor's right, enforceable against the management company, to a share in the assets and income of the investment fund.

fundamental analysis
Synonym for basic analysis.

fundamentals
Key figures which relate directly to a company and are not dependent on the market. They include sales or revenues, cash flow and profits. Basic analysis uses such data to determine the theoretical value of a share, which may indicate that the share is undervalued, overvalued or fairly valued on the market. The term is also used to denote the important economic numbers (growth, inflation, current account balance, government finances) which can influence the financial markets.

funded system / Kapitaldeckungsverfahren / financement par un capital de couverture / sistema della capitalizzazione
Also: funded pension scheme, funded pension system. Method of financing employed by insurance companies and pension funds. The contributions of the insured parties are accumulated to form the capital required for the payment of insurance benefits. Opposite: pay-as-you-go system.

fungible / fungibel / fongible / fungibile
Freely exchangeable.

fungible items / fungible Sachen / biens fongibles / beni fungibili
In general, any good, product or instrument in which every unit is so similar to or identical with every other unit that they can be exchanged for one another without legal consequences, e.g. bearer shares, commodities, etc.

future
Synonym for futures contract.

futures contract / Futures-Kontrakt; Terminkontrakt / contrat à terme de gré à gré / contratto a termine
Also: future. Standardized contract traded on an exchange by which the seller undertakes to sell or buy a specified quantity of a commodity of a defined quality (commodity future) or a specified amount of a financial instrument (financial future) on a specified due date and for a specified price.

futures exchange / Terminbörse / Bourse à terme / borsa a termine
Exchange on which certain futures market products are offered. Eurex is an example of a futures exchange.

futures market / Terminmarkt / marché à terme / mercato a termine
Commodity exchange on which futures contracts are traded. Opposite: spot market.

futures trading / Terminhandel / négoce à terme / commercio a termine
See forward transaction.

futures transaction / Termingeschäft / opération à terme / operazione a termine
The buying and selling of commodities, foreign exchange or securities under contracts providing for the delivery of specific amounts, at a particular price and at some specified future date. Opposite: spot transactions.

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Fx

FX
Abbreviation for foreign exchange.

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