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glossary


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Scrip

A certificate exchangeable for cash before a specified date, after which it may have no value. Usually issued for fractions of shares in connection with a stock dividend or split or in a reorganization of a company. For example a 4-for-3 stock dividend would result in many shareholders being entitled to a fraction of a share (1/3 or 2/3) for which scrip would be issued instead of a stock certificate.

Seat

The traditional term for membership on a stock exchange.

SEC

The Securities and Exchange Commission established by the United States Congress, to protect investors in the U.S. The SEC operates nationally in the U.S. In Canada there is no national regulatory authority; instead, securities legislation is provincially administered.

Secondary Distribution or Secondary Offering

The redistribution of a block of stock sometime after it has been sold by the issuing company. Usually a large block of shares are involved (e.g. from the settlement of an estate) and these are offered to the public at a fixed price, set in relationship to the stock's market price.

Secondary-Primary

Trades in previously issued securities for the purpose of distributing such securities to the public where the securities form all or part of, or are derived from the holdings of any person, company or group that holds a sufficient number of the securities of the company to materially affect control of the company.

Securities Acts

Provincial Acts administered by the Securities Commission in each province, which set down the rules under which securities may be issued and traded.

Securities Administrator

A general term referring to the provincial regulatory authority (e.g. Securities Commission or Provincial Registrar) responsible for administering a provincial Securities Act.

Securities Adviser

A person or firm registered with applicable securities commissions to advise the public generally with regard to specific securities, often through publications.

Securitization

Refers in a narrow sense to the process of converting loans of various sorts into marketable securities by packaging the loans into pools. In a broader sense, securitization refers to the development of markets for a variety of debt instruments that permit the ultimate borrower to bypass the banks and other deposit taking institutions and to borrow directly from lenders.

Selling Group

Investment dealers or others who assist a banking group in marketing a new issue of securities without assuming financial liability if the issue is not entirely sold. The use of a selling group widens the distribution of a new issue.

Serial Bond or Debenture

A bond or debenture issue in which a predetermined amount of principal matures each year.

Settlement Date

The date on which a securities buyer must pay for a purchase or a seller must deliver the securities sold. For most securities, settlement must be made on or before the fifth business day following the transaction date.

Shareholder of Record

A shareholder whose name is registered in the records of a company whose shares he holds. (Dividend payments and rights issues are announced as being payable to shareholders of record on a certain date.)

Short Sale

The sale of a security which the seller does not own. This is a speculative practice done in the belief that the price for stock is going to fall and the seller will then be able to cover the sale by buying it back later at a lower price, thereby making a profit on the operation. It is illegal for a seller not to declare a short sale at the time of placing the order.

Short-Term Bond

A bond or debenture maturing within three years.

Short-Term Debt

Company borrowings repayable within one year that appear in the current liabilities section of the corporate balance sheet. The most common short-term debt items are: bank advances or loans, notes payable and the portion of funded debt due within one year.

Sinking Fund

A fund set up to retire most or all of a debt or preferred share issue over a period of time.

Speculator

One who is prepared to accept calculated risks in the marketplace. Objectives are usually short-to-medium-term capital gain, as opposed to regular income and safety of principal, the prime objectives of the conservative investor.

Split

The voting shareholder-approved division of a company's outstanding common shares into a larger number of common shares. A three-for-one split by a company with one million common shares outstanding would result in three million common shares outstanding after the split. Each holder of 100 common shares before the split would own 300 common shares after the split. The common shareholders' proportionate interest in the company remains the same.

Spread

The gap between bid and asked prices in the quotation for a security. Also a term used in Option trading.

SRO

Short for self regulatory organization such as the Investment Dealers Association of Canada and the principal Stock Exchanges.

Statement of Changes in Financial Position

A financial statement which links the company's balance sheets for two successive years and provides a summary of the inward and outward movement of a company's funds for the period. It explains changes in working capital (current assets less current liabilities) from one year to the next.

Statement of Material Facts

A document presenting the relevant facts about a company and compiled in connection with an Underwriting or Secondary Distribution of its shares. It is used only when the shares underwritten or distributed are listed on a recognized stock exchange and takes the place of a prospectus in such cases.

Stock Broker

See Broker.

Stock Dividend

A pro rata payment to common shareholders of additional common stock. Such payment increases the number of shares each holder owns but does not alter a shareholder's proportional ownership of the company.

Stop Buy and Stop Loss Orders

Orders to buy or sell which become Market Orders as soon as the price of a board lot of the stock rises or falls to a specified price. A stop buy order is used to protect against losses in a short sale, whereas a stop loss order may be used to protect a paper profit or to limit a possible loss when shares are already owned. Since such orders become market orders when the stop price is reached, there is no certainty they will be executed at that price.

Street Certificate

A stock certificate registered in the name of an investment dealer or stock broker in order to increase its negotiability, but beneficially owned by someone else.

Street Name

Securities registered in the name of a broker, instead of the real or beneficial owner, are said to be carried in "street name".

Strip Bonds or Zero Coupon Bonds

Usually high quality government bonds originally issued in bearer form, where some or all of the interest coupons have been detached. The bond principal and any remaining coupons (the residue) then trade separately from the strip of detached coupons, both at substantial discounts from par.

Stripped Debentures

Debentures which have been separated from other securities such as warrants and which, together with the debentures, were originally issued together as a Unit (which see).

Subject Bid: Subject Offer

A bid or offer made for a security that indicates the buyer's interest in the case of a bid and the seller's interest in the case of an offer, but does not commit the bidder or offeror to the purchase or sale of the security at that price or time.

Subsidiary

Company which is controlled by another company usually through its ownership of the majority of shares.

Surplus

Two types: contributed surplus:a balance sheet figure which originates from sources other than earnings such as the initial sale of stock above par value and - the more common type - earned surplus: (nowadays called retained earnings) - the amount of accumulated earnings retained in the business after the payment of dividends.

Sweetener

A feature included in the terms of a new issue of debt or preferred shares to make the issue more attractive to initial investors. Examples include warrants and/or common shares sold with the issue as a unit or a convertible or extendible or retractable feature.

Switching

Selling one security and buying another.

Syndicate

A group of investment dealers who together underwrite and distribute a new issue of securities or a large block of an outstanding issue.


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