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Regulatorio Financiero

Investment Firm Dictionary (Jargon)

This Investment Firm Jargon is a section of a financial regulatory dictionary. The language of the Financial Regulatory field is complex and an entry barrier to understand its regulation. This work is informative and lacking in scientific character. It is only an approach that facilitates access to a complex subject. This same work and this particular section are available in Spanish.

Contacto No te quedes con la duda, contacta con nosotros. Estaremos encantados de atenderte y ofrecerte soluciones.
ConceptDefinition
DIRECT ELECTRONIC ACCESSAn arrangement where a member or participant or client of a trading venue permits a person to use its trading code so the person can electronically transmit orders relating to a financial instrument directly to the trading venue and includes arrangements which involve the use by a person of the infrastructure of the member or participant or client, or any connecting system provided by the member or participant or client, to transmit the orders (direct market access) and arrangements where such an infrastructure is not used by a person (sponsored access).
ASSETS SAFEGUARDED ADN ADMINISTERED OR ASAThe value of assets that an investment firm safeguards and administers for clients, irrespective of whether assets appear on the investment firm’s own balance sheet or are in third‐party accounts
DEFINED BENEFIT PENSION FUND ASSETSThe assets of a defined pension fund or plan, as applicable, calculated after they have been reduced by the amount of obligations under the same fund or plan;
ASSETS UNDER MANAGEMENT OR AUMThe value of assets that an investment firm manages for its clients under both discretionary portfolio management and nondiscretionary arrangements constituting investment advice of an ongoing nature
INTANGIBLE ASSETSIt has the same meaning as under the applicable accounting framework and includes goodwil
DEFERRED TAX ASSETSIt has the same meaning as under the applicable accounting framework
DEFERRED TAX ASSETS THAT RELY ON FUTURE PROFITABILITYDeferred tax assets the future value of which may be realised only in the event the institution generates taxable profit in the future;
INTEROPERABILITY ARRANGEMENTAn arrangement between two or more CCPs that involves a cross-system execution of transactions
NOMINATED ECAIAn ECAI nominated by an institution
EXTERNAL CREDIT ASSESSMENT INTITUION OR ECAIA credit rating agency that is registered or certified in accordance with Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies or a central bank issuing credit ratings which are exempt from the application of Regulation (EC) No 1060/2009
TIED AGENTA natural or legal person who, under the full and unconditional responsibility of only one investment firm on whose behalf it acts, promotes investment and/or ancillary services to clients or prospective clients, receives and transmits instructions or orders from the client in respect of investment services or financial instruments, places financial instruments and/or provides advice to clients or prospective clients in respect of those financial instruments or services;
APPROVED PUBLICATION ARRANGEMENT or APAA person authorised under this Directive to provide the service of publishing trade reports on behalf of investment firms pursuant to Articles 20 and 21 of Regulation (EU) No 600/2014;
CREDIT RISK ADJUSTMENTThe amount of specific and general loan loss provision for credit risks that has been recognised in the financial statements of the institution in accordance with the applicable accounting framework
SENIOR MANAGEMENTNatural persons who exercise executive functions within an investment firm, a market operator or a data reporting services provider and who are responsible, and accountable to the management body, for the day-to-day management of the entity, including for the implementation of the policies concerning the distribution of services and products to clients by the firm and its personnel;
FINANCIAL ANALYSTA relevant person who produces the substance of investment research
LEVERAGEThe relative size of an institution’s assets, off-balance sheet obligations and contingent obligations to pay or to deliver or to provide collateral, including obligations from received funding, made commitments, derivates or repurchase agreements, but excluding obligations which can only be enforced during the liquidation of an institution, compared to that institution’s own funds
FINANCIAL ADVISER(a) an insurance intermediary which provides insurance advice with regard to IBIPs; (b) an insurance undertaking which provides insurance advice with regard to IBIPs; (c) a credit institution which provides investment advice; (d) an investment firm which provides investment advice; (e) an AIFM which provides investment advice in accordance with point (b)(i) of Article 6(4) of Directive 2011/61/EU; or (f) a UCITS management company which provides investment advice in accordance with point (b)(i) of Article 6(3) of Directive 2009/65/EC
INVESTMENT ADVICE OF AN ONGOING NATUREThe recurring provision of investment advice as well as the continuous or periodic assessment and monitoring or review of a client portfolio of financial instruments, including of the investments undertaken by the client on the basis of a contractual arrangement
INSURANCE ADVICEThe provision of a personal recommendation to a customer, either upon their request or at the initiative
of the insurance distributor, in respect of one or more insurance contracts
INVESTMENT ADVICEThe provision of personal recommendations to a client, either upon its request or at the initiative of the investment firm, in respect of one or more transactions relating to financial instruments.
COMPETENT AUTHORITYA public authority or body officially recognised by national law, which is empowered by national law to supervise institutions as part of the supervisory system in operation in the Member State concerned
RELEVANT COMPETENT AUTHORITYFor a financial instrument the competent authority of the most relevant market in terms of liquidity for that financial instrument
RESOLUTION AUTHORITYAn authority designated by a Member State in accordance with Article 3 of Directiva 2014/59/UE
AUTHORISATIONAn instrument issued in any form by the authorities by which the right to carry out the business is granted
CENTRAL BANKSThe ESCB central banks and the central banks of third countries
ESCB CENTRAL BANKSThe national central banks that are members of the European System of Central Banks (ESCB), and the European Central Bank (ECB)
CONSOLIDATED BASISon the basis of the consolidated situation
SUB-CONSOLIDATED BASISOn the basis of the consolidated situation of a parent institution, financial holding company or mixed financial holding company, excluding a sub-group of entities, or on the basis of the consolidated situation of a parent institution, financial holding company or mixed financial holding company that is not the ultimate parent institution, financial holding company or mixed financial holding company
PROFITHas the same meaning as under the applicable accounting framework
DISCRETIONARY PENSION BENEFITSEnhanced pension benefits granted on a discretionary basis by an institution to an employee as part of that employee’s variable remuneration package, which do not include accrued benefits granted to an employee under the terms of the company pension scheme
RESIDENTIAL PROPERTYA residence which is occupied by the owner or the lessee of the residence, including the right to inhabit an apartment in housing cooperatives located in Sweden;
DISTRIBUTION CHANNELSShall mean a channel through which information is, or is likely to become, publicly available. “Likely to become publicly available information” shall mean information to which a large number of persons have access
CAPITALSubscribed capital within the meaning of Article 22 of Council Directive 86/635/EEC of 8 December 1986 on the annual accounts and consolidated accounts of banks and other financial institutions (27) in so far it has been paid up, plus the related share premium accounts, it fully absorbs losses in going concern situations, and, in the event of bankruptcy or liquidation, it ranks after all other claims
ELIGIBLE CAPITAL

(a)for the purposes of Title III of Part Two of Regulation EU 575/2013 it   the sum of the following:

(i) Tier 1 capital as referred to in Article 25, without applying the deduction in Article 36(1)(k)(i);
(ii)Tier 2 capital as referred to in Article 71 that is equal to or less than one third of Tier 1 capital as calculated pursuant to point (i) of this point;

(b)for the purposes of Article 97 Regulation EU 575/2013 it   the sum of the following:

(i) Tier 1 capital as referred to in Article 25;
(ii) Tier 2 capital as referred to in Article 71 that is equal to or less than one third of Tier 1 capital;

INITIAL CAPITALThe capital which is required for the purposes of authorisation as an investment firm, the amount and type of which are specified in Articles 9 and 11 of Directive 2019/2034
TRADING BOOK All positions in financial instruments and commodities held by an institution either with trading intent, or in order to hedge positions held with trading intent
CLASS OF DERIVATIVESA subset of derivatives sharing common and essential characteristics including at least the relationship with the underlying asset, the type of underlying asset, and currency of notional amount. Derivatives belonging to the same class may have different maturities
TRADING VENUEA regulated market, an MTF or an OTF;
CERTIFICATESThose securities which are negotiable on the capital market and which in case of a repayment of investment by the issuer are ranked above shares but below unsecured bond instruments and other similar instruments
DEPOSITARY RECEIPTSTthose securities which are negotiable on the capital market and which represent ownership of the securities of a non-domiciled issuer while being able to be admitted to trading on a regulated market and traded independently of the securities of the non-domiciled issuer;
CLIENT

 1. An undertaking with a contractual relationship with a clearing member of a CCP which enables that undertaking to clear its transactions with that CCP

2. Any natural or legal person to whom an investment firm provides investment or ancillary services

RETAIL CLIENTA client who is not a professional client;
PROFESSIONAL CLIENTE

A client meeting the criteria laid down in Annex II of MiFID II. (1)

1)Entities which are required to be authorised or regulated to operate in the financial markets. The list below shall be understood as including all authorised entities carrying out the characteristic activities of the entities mentioned: entities authorised by a Member State under a Directive, entities authorised or regulated by a Member State without reference to a Directive, and entities authorised or regulated by a third country:

(a)Credit institutions;
(b)Investment firms;
(c)Other authorised or regulated financial institutions;
(d)Insurance companies;
(e)Collective investment schemes and management companies of such schemes;
(f)Pension funds and management companies of such funds;
(g)Commodity and commodity derivatives dealers;
(h)Locals;
(i)Other institutional investors;

(2)Large undertakings meeting two of the following size requirements on a company basis:
—   balance sheet total: EUR 20 000 000
—   net turnover: EUR 40 000 000
—   own funds: EUR 2 000 000

(3)National and regional governments, including public bodies that manage public debt at national or regional level, Central Banks, international and supranational institutions such as the World Bank, the IMF, the ECB, the EIB and other similar international organisations.

(4)Other institutional investors whose main activity is to invest in financial instruments, including entities dedicated to the securitisation of assets or other financing transactions.

UNFUNDED CREDIT PROTECTIONA technique of credit risk mitigation where the reduction of the credit risk on the exposure of an institution derives from the obligation of a third party to pay an amount in the event of the default of the borrower or the occurrence of other specified credit events;
FUNDED CREDIT PROTECTIONA technique of credit risk mitigation where the reduction of the credit risk on the exposure of an institution derives from the right of that institution, in the event of the default of the counterparty or on the occurrence of other specified credit events relating to the counterparty, to liquidate, or to obtain transfer or appropriation of, or to retain certain assets or amounts, or to reduce the amount of the exposure to, or to replace it with, the amount of the difference between the amount of the exposure and the amount of a claim on the institution
INTERNAL HEDGEA position that materially offsets the component risk elements between a trading book position and one or more non-trading book positions or between two trading desks
CLEARINGThe process of establishing positions, including the calculation of net obligations, and ensuring that financial instruments, cash, or both, are available to secure the exposures arising from those positions
PORTFOLIO COMRPESSIONA risk reduction service in which two or more counterparties wholly or partially terminate some or all of the derivatives submitted by those counterparties for inclusion in the portfolio compression and replace the terminated derivatives with another derivative whose combined notional value is less than the combined notional value of the terminated derivatives
FINANCIAL COUNTERPARTY

(a)an investment firm authorised in accordance with Directive 2014/65/EU of the European Parliament and of the Council ;

(b)a credit institution authorised in accordance with Directive 2013/36/EU of the European Parliament and of the Council  or with Regulation (EU) No 1024/2013;

(c)an insurance undertaking or a reinsurance undertaking authorised in accordance with Directive 2009/138/EC of the European Parliament and of the Council ;

(d)a UCITS and, where relevant, its management company, authorised in accordance with Directive 2009/65/EC;

(e)an AIF managed by AIFMs authorised or registered in accordance with Directive 2011/61/EU;

(f)an institution for occupational retirement provision authorised or registered in accordance with Directive 2003/41/EC of the European Parliament and of the Council ;

NON-FINANCIAL COUNTERPARTYAn undertaking established in the Union or in a third country other than the entities referred to as financial counterparty
C6 ENERGY DERIVATIVE CONTRACTSOptions, futures, swaps, and any other derivative contracts mentioned in Section C.6 of Annex I of MiFID II relating to coal or oil that are traded on an OTF and must be physically settled
PRE-FUNDED CONTRIBUTION TO THE DEFAULT FUND OF A CCPA contribution to the default fund of a CCP that is paid in by an institution
CONTROLControl as defined in Article 1 of Directive 83/349/EEC
MARKET MAKERA person who holds himself out on the financial markets on a continuous basis as being willing to deal on own account by buying and selling financial instruments against his proprietary capital at prices defined by him;
OFFICIAL SUPPORTED EXPORT CREDITSLoans or credits to finance the export of goods and services for which an official export credit agency provides guarantees, insurance or direct financing
SHARE PREMIUM ACCOUNTIt has the same meaning as under the applicable accounting framework
SEGREGATED ACCOUNTSAccounts with entities where client money held by an investment firm is deposited in accordance with Article 4 of Commission Delegated Directive (EU) 2017/593 (23) and, where applicable, where national law provides that, in the event of insolvency or entry into resolution or administration of the investment firm, the client money cannot be used to satisfy claims in relation to the investment firm other than claims by the client
COMPLIANCE WITH THE GROUP CAPITAL TEST Compliance by a parent undertaking in an investment firm group with the requirements of Article 8 of Regulation (EU) 2019/2033
STRUCTURED DEPOSITA deposit as defined in point (c) of Article 2(1) of Directive 2014/49/EU of the European Parliament and of the Council which is fully repayable at maturity on terms under which interest or a premium will be paid or is at risk, according to a formula involving factors such as: (a)an index or combination of indices, excluding variable rate deposits whose return is directly linked to an interest rate index such as Euribor or Libor; (b) a financial instrument or combination of financial instruments; c) a commodity or combination of commodities or other physical or non-physical non-fungible assets; or (d) a foreign exchange rate or combination of foreign exchange rates;
OTC DERIVATIVEA derivative contract the execution of which does not take place on a regulated market or on a third-country market considered as equivalent to a regulated market in accordance with Article 19(6) of Directive 2004/39/EC
EXCHANGE-TRADED DERIVATIVEA derivative that is traded on a regulated market or on a third-country market considered to be equivalent to a regulated market in accordance with Article 28 of this Regulation, and as such does not fall within the definition of an OTC derivative
DERIVATIVESThose other financial instruments giving the right to acquire or sell any such transferable securities or giving rise to a cash settlement determined by reference to transferable securities, currencies, interest rates or yields, commodities or other indices or measures; and referred to in Annex I, Section C (4) to (10) of Directive 2014/65/EU
COMMODITY DERIVATIVESThose financial instruments defined in point (44)(c) of Article 4(1) of Directive 2014/65/EU; which relate to a commodity or an underlying referred to in Section C(10) of Annex I to Directive 2014/65/EU; or in points (5), (6), (7) and (10) of Section C of Annex I thereto
AGRICULTURAL COMMODITY DERIVATIVESDerivative contracts relating to products listed in Article 1 of, and Annex I, Parts I to XX and XXIV/1, to, Regulation (EU) No 1308/2013 of the European Parliament and of the Council
SOVEREIGN DEBTA debt instrument issued by a sovereign issuer;
TEMPORARY DIFFERENCESIt has the same meaning as under the applicable accounting framework;
DISTRIBUTIONSThe payment of dividends or interest in any form
EXECUTION OF ORDERS ON BEHALF OF CLIENTSThe provision of personal recommendations to a client, either upon its request or at the initiative of the investment firm, in respect of one or more transactions relating to financial instruments;
BOARDAdministrative or supervisory board, or both, in accordance with national company law
ADDITIONAL TIER 1 OWN-FUND INSURANCE ITEMSBasic own-fund items of undertakings subject to the requirements of Directive 2009/138/EC where those items are classified in Tier 1 within the meaning of Directive 2009/138/EC in accordance with Article 94(1) of that Directive and the inclusion of those items is limited by the delegated acts adopted in accordance with Article 99 of that Directive
TIER 1 OWN-FUND INSURANCE ITEMSBasic own-fund items of undertakings subject to the requirements of Directive 2009/138/EC where those items are classified in Tier 1 within the meaning of Directive 2009/138/EC in accordance with Article 94(1) of that Directive
TIER 2 OWN-FUND INSURANCE ITEMSBasic own-fund items of undertakings subject to the requirements of Directive 2009/138/EC where those items are classified in Tier 2 within the meaning of Directive 2009/138/EC in accordance with Article 94(2) of that Directive
TIER 3 OWN-FUND INSURANCE ITEMSBasic own-fund insurance items of undertakings subject to the requirements of Directive 2009/138/EC where those items are classified in Tier 3 within the meaning of Directive 2009/138/EC in accordance with Article 94(3) of that Directive
ISSUERAn entity which issues transferable securities and, where appropriate, other financial instruments
COMMUNITY ISSUERAn issuer which has its registered office in the Community
THIRD COUNTRY ISSUERAn issuer established in a third country
SOVEREIGN ISSUER

Any of the following that issues debt instruments:

(i)the Union;

(ii)a Member State, including a government department, an agency, or a special purpose vehicle of the Member State;

(iii)in the case of a federal Member State, a member of the federation;

(iv)a special purpose vehicle for several Member States;

(v)an international financial institution established by two or more Member States which has the purpose of mobilising funding and provide financial assistance to the benefit of its members that are experiencing or threatened by severe financing problems; or

(vi)the European Investment Bank

EU PARENT INVESTMENT FIRMAn EU parent institution that is an investment firm
PARENT INVESTMENT FIRM IN A MEMBER STATEA parent institution in a Member State that is an investment firm;
INSURANCE UNDERTAKINGA direct life or non-life insurance undertaking which has received authorisation in accordance with Article 14 of Directive 2009/138/CE
THIRD-COUNTRY INSURANCE UNDERTAKINGAn undertaking which would require authorisation as an insurance undertaking in accordance with Article  14 of Directive 2009/138/CE if its head office were situated in the Community;
ANCILLARY SERVICES UNDERTAKINGAn undertaking the principal activity of which consists of owning or managing property, managing data-processing services, or a similar activity which is ancillary to the principal activity of one or more institutions
INVESTMENT FIRM

Any legal person whose regular occupation or business is the provision of one or more investment services to third parties and/or the performance of one or more investment activities on a professional basis.  Member States may include in the definition of investment firms undertakings which are not legal persons, provided that:

(a)their legal status ensures a level of protection for third parties’ interests equivalent to that afforded by legal persons; and
(b)they are subject to equivalent prudential supervision appropriate to their legal form.

However, where a natural person provides services involving the holding of third party funds or transferable securities, that person may be considered to be an investment firm for the purposes of this Directive and of Regulation (EU) No 600/2014 only if, without prejudice to the other requirements imposed in this Directive, in Regulation (EU) No 600/2014, and in Directive 2013/36/EU, that person complies with the following conditions:

(a)the ownership rights of third parties in instruments and funds must be safeguarded, especially in the event of the insolvency of the firm or of its proprietors, seizure, set-off or any other action by creditors of the firm or of its proprietors;
(b)the firm must be subject to rules designed to monitor the firm’s solvency and that of its proprietors;
(c)the firm’s annual accounts must be audited by one or more persons empowered, under national law, to audit accounts;
(d) where the firm has only one proprietor, that person must make provision for the protection of investors in the event of the firm’s cessation of business following the proprietor’s death or incapacity or any other such event;

UNION PARENT INVESTMENT FIRM  an investment firm in a Member State which is part of an investment firm group and which has an investment firm or a financial institution as a subsidiary or which holds a participation in such an investment firm or financial institution, and which is not itself a subsidiary of another investment firm authorised in any Member State, or of an investment holding company or mixed financial holding company set up in any Member State
THIRD-COUNTRY FIRMA firm that would be a credit institution providing investment services or performing investment activities or an investment firm if its head office or registered office were located within the Union
FINANCIAL UNDERTAKING

  any of the following entities:

(a)a credit institution, a financial institution or an ancillary banking services undertaking within the meaning of Article 4(1), (5) and (21) of Directive 2006/48/EC respectively;
(b)an insurance undertaking, or a reinsurance undertaking or an insurance holding company within the meaning of Article 212(1)(f);
(c)an investment firm or a financial institution within the meaning of Article 4(1)(1) of Directive 2004/39/EC; or
(d)a mixed financial holding company within the meaning of Article 2(15) of Directive 2002/87/EC

LOCAL FIRMA firm dealing for its own account on markets in financial futures or options or other derivatives and on cash markets for the sole purpose of hedging positions on derivatives markets, or dealing for the accounts of other members of those markets and being guaranteed by clearing members of the same markets, where responsibility for ensuring the performance of contracts entered into by such a firm is assumed by clearing members of the same markets
PARENT UNDERTAKINGA parent undertaking within the meaning of Article 2(9) and 22 of Directive 2013/34/EU of the European Parliament and of the Council
NON-LISTED COMPANYA company which has its registered office in the Union and the shares of which are not admitted to trading on a regulated market
REINSURANCE UNDERTAKINGAn undertaking which has received authorisation in accordance with Article 14 of Directive 2009/138/CE to pursue reinsurance activities
THIRD-COUNTRY REINSURANCE UNDERTAKINGAn undertaking which would require authorisation as a reinsurance undertaking in accordance with Article 14 of Directive 2009/138/CE if its head office were situated in the Community
G-SII ENTITYAn entity with legal personality that is a G-SII or is part of a G-SII or of a non-EU G-SII
FINANCIAL SECTOR ENTITY

Any of the following:

(a)an institution;
(b)a financial institution;
(c)an ancillary services undertaking included in the consolidated financial situation of an institution;
(d)an insurance undertaking;
(e)a third-country insurance undertaking;
(f)a reinsurance undertaking;
(g)a third-country reinsurance undertaking;
(h)an insurance holding company;
(i)a mixed-activity holding company
(j)a mixed-activity insurance holding company as defined in point (g) of Article 212(1) of Directive 2009/138/EC;
(k)an undertaking excluded from the scope of Directive 2009/138/EC in accordance with Article 4 of that Directive;

(l)a third-country undertaking with a main business comparable to any of the entities referred to in points (a) to (k)

PUBLIC SECTOR ENTITY  a non-commercial administrative body responsible to central governments, regional governments or local authorities, or to authorities that exercise the same responsibilities as regional governments and local authorities, or a non-commercial undertaking that is owned by or set up and sponsored by central governments, regional governments or local authorities, and that has explicit guarantee arrangements, and may include self-administered bodies governed by law that are under public supervision
INSTITUTIONA credit institution or an investment firm
CCPA legal person that interposes itself between the counterparties to the contracts traded on one or more financial markets, becoming the buyer to every seller and the seller to every buyer
QCCPA central counterparty that has been either authorised in accordance with Article 14 of Regulation (EU) No 648/2012 or recognised in accordance with Article 25 of that Regulation
CREDIT INSTITUTIONAn undertaking the business of which is to take deposits or other repayable funds from the public and to grant credits for its own account
EU PARENT CREDIT INSTITUTIONAn EU parent institution that is a credit institution
PARENT CREDIT INSTITUTION IN A MEMBER STATEA parent institution in a Member State that is a credit institution;
NON-UE GLOBAL SYSTEMICALLY IMPORTANT INSTITUTION OR NON-UE G-SIIA global systemically important banking group or a bank (G-SIBs) that is not a G-SII and that is included in the list of G-SIBs published by the Financial Stability Board, as regularly updated
GLOBAL SYSTEMICALLY IMPORTANT INSTITUTION OR G-SIIA G-SII that has been identified in accordance with Article 131(1) and (2) of Directive 2013/36/EU
RESOLUTION ENTITY

(a) a legal person established in the Union, which, in accordance with Article 12, is identified by the resolution authority as an entity in respect of which the resolution plan provides for resolution action; or

(b) an institution that is not part of a group that is subject to consolidated supervision pursuant to Articles 111 and 112 of Directive 2013/36/EU, in respect of which the resolution plan drawn up pursuant to Article 10 of this Directive provides for resolution action

FINANCIAL INSTITUTIONAn undertaking other than an institution, the principal activity of which is to acquire holdings or to pursue one or more of the activities listed in points 2 to 12 and point 15 of Annex I to Directive 2013/36/EU, including a financial holding company, a mixed financial holding company, a payment institution within the meaning of Directive 2007/64/EC of the European Parliament and of the Council of 13 November 2007 on payment services in the internal market (23), and an asset management company, but excluding insurance holding companies and mixed-activity insurance holding companies as defined in point (g) of Article 212(1) of Directive 2009/138/E
THIRD-COUNTRY FINANCIAL INSTITUIONAn entity, the head office of which is established in a third country, that is authorised or licensed under the law of that third country to carry out any of the services or activities listed in Directive 2013/36/EU, Directive 2014/65/EU; Directive 2009/138/EC of the European Parliament and of the Council ( 4 ), Directive 2009/65/EC of the European Parliament and of the Council ( 5 ), Directive 2003/41/EC of the European Parliament and of the Council ( 6 ) or Directive 2011/61/EU of the European Parliament and of the Council
LARGE INSTITUION

An institution that meets any of the following conditions:

(a) it is a G-SII;
(b) it has been identified as an other systemically important institution (O-SII) in accordance with Article 131(1) and (3) of Directive 2013/36/EU;
(c) it is, in the Member State in which it is established, one of the three largest institutions in terms of total value of assets;
(d)the total value of its assets on an individual basis or, where applicable, on the basis of its consolidated situation in accordance with this Regulation and Directive 2013/36/EU is equal to or greater than EUR 30 billion

EU PARENT INSTITUTIONA parent institution in a Member State which is not a subsidiary of another institution authorised in any Member State, or of a financial holding company or mixed financial holding company set up in any Member State
PARENT INSTITUION IN A MEMBER STATEAn institution in a Member State which has a institution or a financial institution as a subsidiary or which holds a participation in such an institution or financial institution, and which is not itself a subsidiary of another institution authorised in the same Member State, or of a financial holding company or mixed financial holding company set up in the same Member State
SMALL AND NON-COMPLEX INSTITUTION

An institution that meets all the following conditions:

(a) it is not a large institution;
(b) the total value of its assets on an individual basis or, where applicable, on a consolidated basis in accordance with this Regulation and Directive 2013/36/EU is on average equal to or less than the threshold of EUR 5 billion over the four-year period immediately preceding the current annual reporting period; Member States may lower that threshold;
(c) it is not subject to any obligations, or is subject to simplified obligations, in relation to recovery and resolution planning in accordance with Article 4 of Directive 2014/59/EU;
(d)its trading book business is classified as small within the meaning of Article 94(1);
(e)the total value of its derivative positions held with trading intent does not exceed 2 % of its total on- and off-balance-sheet assets and the total value of its overall derivative positions does not exceed 5 %, both calculated in accordance with Article 273a(3);
(f) more than 75 % of both the institution’s consolidated total assets and liabilities, excluding in both cases the intragroup exposures, relate to activities with counterparties located in the European Economic Area;
(g)the institution does not use internal models to meet the prudential requirements in accordance with this Regulation except for subsidiaries using internal models developed at the group level, provided that the group is subject to the disclosure requirements laid down in Article 433a or 433c on a consolidated basis;
(h)the institution has not communicated to the competent authority an objection to being classified as a small and non-complex institution;
(i) the competent authority has not decided that the institution is not to be considered a small and non-complex institution on the basis of an analysis of its size, interconnectedness, complexity or risk profile;

HOST MEMBER STATE  the Member State, other than the home Member State, in which an investment firm has a branch or provides investment services and/or activities, or the Member State in which a regulated market provides appropriate arrangements so as to facilitate access to trading on its system by remote members or participants established in that same Member State
HOME MEMBER STATE

(a)in the case of investment firms:

(i)if the investment firm is a natural person, the Member State in which its head office is situated;
(ii)if the investment firm is a legal person, the Member State in which its registered office is situated;
(iii)if the investment firm has, under its national law, no registered office, the Member State in which its head office is situated;

(b)in the case of a regulated market, the Member State in which the regulated market is registered or, if under the law of that Member State it has no registered office, the Member State in which the head office of the regulated market is situated;

(c)in the case of an APA, a CTP or an ARM:

(i)if the APA, CTP or ARM is a natural person, the Member State in which its head office is situated;
(ii)if the APA, CTP or ARM is a legal person, the Member State in which its registered office is situated;
(iii)if the APA, CTP or ARM has, under its national law, no registered office, the Member State in which its head office is situated

TRADE EXPOSUREA current exposure, including a variation margin due to the clearing member but not yet received, and any potential future exposure of a clearing member or a client, to a CCP arising from contracts and transactions listed in points (a), (b) and (c) of Article 301(1) of  Regulation 575/2013, as well as initial margin
OUTSOURCINGAn arrangement of any form between an investment firm and a service provider by which that service provider performs a process, a service or an activity which would otherwise be undertaken by the investment firm itself
CONVERSION FACTORThe ratio of the currently undrawn amount of a commitment that could be drawn and that would therefore be outstanding at default to the currently undrawn amount of the commitment, the extent of the commitment being determined by the advised limit, unless the unadvised limit is higher
SUSTAINABILITY FACTORSEnvironmental, social and employee matters, respect for human rights, anti‐corruption and anti‐bribery matter
K-FACTORSOwn funds requirements set out in Title II of Part Three of Regulation 2019/2033 for risks that an investment firm poses to clients, markets and to itself
SUBSIDIARY1. A subsidiary undertaking as defined in Articles 1 and 2 of Directive 83/349/EEC  2. A subsidiary undertaking within the meaning of Articles 2(10) and 22 of Directive 2013/34/EU, including any subsidiary of a subsidiary undertaking of an ultimate parent undertaking
LARGE SUBSIDIARYA subsidiary that qualifies as a large institution;
MATERIAL SUBSIDIARY

A subsidiary that on an individual or consolidated basis meets any of the following conditions:

(a) the subsidiary holds more than 5 % of the consolidated risk-weighted assets of its original parent undertaking;
(b)the subsidiary generates more than 5 % of the total operating income of its original parent undertaking;
(c) the total exposure measure, referred to in Article 429(4) of this Regulation, of the subsidiary is more than 5 % of the consolidated total exposure measure of its original parent undertaking;

SPECULATIVE INMMOVABLE PROPERTY FINANCINGLoans for the purposes of the acquisition of or development or construction on land in relation to immovable property, or of and in relation to such property, with the intention of reselling for profit
TRADE FINANCEFinancing, including guarantees, connected to the exchange of goods and services through financial products of fixed short-term maturity, generally of less than one year, without automatic rollover
DAILY TRADING FLOW OR DTFThe daily value of transactions that an investment firm enters through dealing on own account or the execution of orders on behalf of clients in its own name, excluding the value of orders that an investment firm handles for clients through the reception and transmission of client orders and through the execution of orders on behalf of clients which are already taken into account in the scope of client orders handled
EXCHANGE-TRADED FUNDA fund of which at least one unit or share class is traded throughout the day on at least one trading venue and with at least one market maker which takes action to ensure that the price of its units or shares on the trading venue does not vary significantly from its net asset value and, where applicable, from its indicative net asset value;
GOODWILLIt has the same meaning as under the applicable accounting framework
EUROPEAN LONG‐TERM INVESTMENT FUND OR ELTIFEuropean long‐term investment fund’ or ‘ELTIF
INSTITUTION FOR OCCUPATIONAL RETIREMENT PROVISION OR IORPAn institution for occupational retirement provision authorised or registered in accordance with Article 9 of Directive (EU) 2016/2341 except an institution in respect of which a Member State has chosen to apply Article 5 of that Directive or an institution that operates pension schemes which together have less than 15 members in total
DEFAULT FUNDSA fund established by a CCP in accordance with Article 42 of Regulation (EU) No 648/2012 and used in accordance with Article 45 of that Regulation
OWN FUNDSThe sum of Tier 1 capital and Tier 2 capital
BASIC OWN FUNDSBasic own funds within the meaning of Article 88 of Directive 2009/138/EC
FUNDS FOR GENERAL BANKING RISKIt has the same meaning as under Article 38 of Directive 86/635/EEC
LIQUIDITY FRAGMENTATION

A situation in which:

(a) participants in a trading venue are unable to conclude a transaction with one or more other participants in that venue because of the absence of clearing arrangements to which all participants have access; or
(b) a clearing member or its clients would be forced to hold their positions in a financial instrument in more than one CCP which would limit the potential for the netting of financial exposures;

RETAINED EARNINGSProfits and losses brought forward as a result of the final application of profit or loss under the applicable accounting framework
PORTFOLIO MANAGEMENTManaging portfolios in accordance with mandates given by clients on a discretionary client-by-client basis where such portfolios include one or more financial instruments.
GROUP1. A group of undertakings of which at least one is an institution and which consists of a parent undertaking and its subsidiaries, or of undertakings that are related to each other as set out in Article 22 of Directive 2013/34/EU of the European Parliament and of the Council  2.In relation to an investment firm,   the group of which that firm forms a part, consisting of a parent undertaking, its subsidiaries and the entities in which the parent undertaking or its subsidiaries hold a participation, as well as undertakings linked to each other by a relationship within the meaning of Article 12(1) of Council Directive 83/349/EEC on consolidated accounts
GROUP OF CONNECTED CLIENTS

Any of the following:

(a) two or more natural or legal persons who, unless it is shown otherwise, constitute a single risk because one of them, directly or indirectly, has control over the other or others;
(b) two or more natural or legal persons between whom there is no relationship of control as described in point (a) but who are to be regarded as constituting a single risk because they are so interconnected that, if one of them were to experience financial problems, in particular funding or repayment difficulties, the other or all of the others would also be likely to encounter funding or repayment difficulties

INVESTMENT FIRM GROUPA group of undertakings which consists of a parent undertaking and its subsidiaries or of undertakings which meet the conditions set out in Article 22 of Directive 2013/34/EU of the European Parliament and of the Council, of which at least one is an investment firm and which does not include a credit institution
RESOLUTION GROUP

(a) a resolution entity and its subsidiaries that are not:

(i) resolution entities themselves;
(ii)subsidiaries of other resolution entities; or
(iii)entities established in a third country that are not included in the resolution group in accordance with the resolution plan and their subsidiaries; or

(b) credit institutions permanently affiliated to a central body and the central body itself when at least one of those credit institutions or the central body is a resolution entity, and their respective subsidiaries

NORMAL TRADING HOURSFor a trading venue or an investment firm those are the hours which the trading venue or investment firm establishes in advance and makes public as its trading hours
ACTIONABLE INDICATION OF INTERESTA message from one member or participant to another within a trading system in relation to available trading interest that contains all necessary information to agree on a trade
FINANCIAL REPORTA financial report within the meaning of Articles 4 and 5 of Directive 2004/109/EC of the European Parliament and of the Council
TOTAL GROSS REVENUEThe annual operating income of an investment firm, in connection with the investment firm’s investment services and activities it is authorised to perform, including income stemming from interest receivable, from shares and other securities whether fixed yield or variable, from commission and fees, any gain and losses that the investment firm incurs on its trading assets, on assets held at fair value, or from hedging activities, but excluding any income which is not linked to the investment services and activities performed
CASH ASSIMILATED INSTRUMENTA certificate of deposit, a bond, including a covered bond, or any other non-subordinated instrument, which has been issued by an institution, for which the institution has already received full payment and which shall be unconditionally reimbursed by the institution at its nominal value
BAIL-IN TOOLThe mechanism for effecting the exercise by a resolution authority of the write-down and conversion powers in relation to liabilities of an institution under resolution in accordance with Article 43 of Directive 2014/59/EU
FINANCIAL INSTRUMENT(1)Transferable securities;
(2)Money-market instruments;
(3)Units in collective investment undertakings;
(4)Options, futures, swaps, forward rate agreements and any other derivative contracts relating to securities, currencies, interest rates or yields, emission allowances or other derivatives instruments, financial indices or financial measures which may be settled physically or in cash;
(5)Options, futures, swaps, forwards and any other derivative contracts relating to commodities that must be settled in cash or may be settled in cash at the option of one of the parties other than by reason of default or other termination event;
(6)Options, futures, swaps, and any other derivative contract relating to commodities that can be physically settled provided that they are traded on a regulated market, a MTF, or an OTF, except for wholesale energy products traded on an OTF that must be physically settled;
(7)Options, futures, swaps, forwards and any other derivative contracts relating to commodities, that can be physically settled not otherwise mentioned in point 6 of this Section and not being for commercial purposes, which have the characteristics of other derivative financial instruments;
(8)Derivative instruments for the transfer of credit risk;
(9)Financial contracts for differences;
(10)Options, futures, swaps, forward rate agreements and any other derivative contracts relating to climatic variables, freight rates or inflation rates or other official economic statistics that must be settled in cash or may be settled in cash at the option of one of the parties other than by reason of default or other termination event, as well as any other derivative contracts relating to assets, rights, obligations, indices and measures not otherwise mentioned in this Section, which have the characteristics of other derivative financial instruments, having regard to whether, inter alia, they are traded on a regulated market, OTF, or an MTF;
(11) Emission allowances consisting of any units recognised for compliance with the requirements of Directive 2003/87/EC (Emissions Trading Scheme).
OWN FUNDS INSTRUMENTSCapital instruments issued by the institution that qualify as Common Equity Tier 1, Additional Tier 1 or Tier 2 instruments
MONEY-MARKET INSTRUMENTSThose classes of instruments which are normally dealt in on the money market, such as treasury bills, certificates of deposit and commercial papers and excluding instruments of payment;
EXCHANGE FOR PHYSICALA transaction in a derivative contract or other financial instrument contingent on the simultaneous execution of an equivalent quantity of an underlying physical asset
MINORITY INTERESTThe amount of Common Equity Tier 1 capital of a subsidiary of an institution that is attributable to natural or legal persons other than those included in the prudential scope of consolidation of the institution
INSURANCE INTERMEDIARYAny natural or legal person, other than an insurance or reinsurance undertaking or their employees and other than an ancillary insurance intermediary, who, for remuneration, takes up or pursues the activity of insurance distribution
SYSTEMATIC INTERNALISER

An investment firm which, on an organised, frequent systematic and substantial basis, deals on own account when executing client orders outside a regulated market, an MTF or an OTF without operating a multilateral system;

The frequent and systematic basis shall be measured by the number of OTC trades in the financial instrument carried out by the investment firm on own account when executing client orders. The substantial basis shall be measured either by the size of the OTC trading carried out by the investment firm in relation to the total trading of the investment firm in a specific financial instrument or by the size of the OTC trading carried out by the investment firm in relation to the total trading in the Union in a specific financial instrument. The definition of a systematic internaliser shall apply only where the pre-set limits for a frequent and systematic basis and for a substantial basis are both crossed or where an investment firm chooses to opt-in under the systematic internaliser regime

MATCHED PRINCIPAL TRADINGA transaction where the facilitator interposes itself between the buyer and the seller to the transaction in such a way that it is never exposed to market risk throughout the execution of the transaction, with both sides executed simultaneously, and where the transaction is concluded at a price where the facilitator makes no profit or loss, other than a previously disclosed commission, fee or charge for the transaction
APPLICABLE ACCOUNTING FRAMEWORKThe accounting standards to which the institution is subject under Regulation (EC) No 1606/2002 or Directive 86/635/EEC
INITIAL MARGIN OR IMAny collateral, other than variation margin, collected from or posted to an entity to cover the current and potential future exposure of a transaction or of a portfolio of transactions in the period needed to liquidate those transactions, or to re-hedge their market risk, following the default of the counterparty to the transaction or portfolio of transactions
COMMODITYAny goods of a fungible nature that are capable of being delivered, including metals and their ores and alloys, agricultural products, and energy such as electricity
CREDIT ENHACEMENTA contractual arrangement whereby the credit quality of a position in a securitisation is improved in relation to what it would have been if the enhancement had not been provided, including the enhancement provided by more junior tranches in the securitisation and other types of credit protection
SME GROWTH MARKETA MTF that is registered as an SME growth market in accordance with Article 33 of MiFID II
LIQUID MARKET

(a) for the purposes of Articles 9, 11, and 18, a market for a financial instrument or a class of financial instruments, where there are ready and willing buyers and sellers on a continuous basis, and where the market is assessed in accordance with the following criteria, taking into consideration the specific market structures of the particular financial instrument or of the particular class of financial instruments:

(i) the average frequency and size of transactions over a range of market conditions, having regard to the nature and life cycle of products within the class of financial instrument;
(ii)the number and type of market participants, including the ratio of market participants to traded financial instruments in a particular product;
(iii)the average size of spreads, where available;

(b) for the purposes of Articles 4, 5 and 14, a market for a financial instrument that is traded daily where the market is assessed according to the following criteria:

(i) the free float;
(ii)the average daily number of transactions in those financial instruments;
(iii) the average daily turnover for those financial instruments

RECOGNISED EXCHANGEAn exchange which meets all of the following conditions:
(a) it is a regulated market or a third-country market that is considered to be equivalent to a regulated market in accordance with the procedure set out in point (a) of Article 25(4) of Directive 2014/65/EU of the European Parliament and of the Council ;(b) it has a clearing mechanism whereby contracts listed in Annex II of Regulation (EU) 575/2013 are subject to daily margin requirements which, in the opinion of the competent authorities, provide appropriate protection;
REGULATED MARKETA multilateral system operated and/or managed by a market operator, which brings together or facilitates the bringing together of multiple third-party buying and selling interests in financial instruments – in the system and in accordance with its non-discretionary rules – in a way that results in a contract, in respect of the financial instruments admitted to trading under its rules and/or systems, and which is authorised and functions regularly and in accordance with the provisions of Title III of MiFID II
TRADING DESKA well-identified group of dealers set up by the institution to jointly manage a portfolio of trading book positions in accordance with a well-defined and consistent business strategy and operating under the same risk management structure
INTERNAL APPROACHESThe internal ratings based approach referred to in Article 143(1), the internal models approach referred to in Article 221, the own estimates approach referred to in Article 225, the advanced measurement approaches referred to in Article 312(2), the internal models method referred to in Articles 283 and 363, and the internal assessment approach referred to in Article 259(3) of Regulation (EU) No 575/2013
CLEARING MEMBERAn undertaking which participates in a CCP and which is responsible for discharging the financial obligations arising from that participation
INDEPENDET MEMBER OF THE BOARDA member of the board who has no business, family or other relationship that raises a conflict of interests regarding the CCP concerned or its controlling shareholders, its management or its clearing members, and who has had no such relationship during the five years preceding his membership of the board
ALGORITHMIC TRADINGTrading in financial instruments where a computer algorithm automatically determines individual parameters of orders such as whether to initiate the order, the timing, price or quantity of the order or how to manage the order after its submission, with limited or no human intervention, and does not include any system that is only used for the purpose of routing orders to one or more trading venues or for the processing of orders involving no determination of any trading parameters or for the confirmation of orders or the post-trade processing of executed transactions;
DEALING ON OWN ACCOUNTTrading against proprietary capital resulting in the conclusion of transactions in one or more financial instruments;
REFERENCE OBLIGATIONAn obligation used for the purposes of determining the cash settlement value of a credit derivative
LONG SETTLEMENT TRANSACTIONSLong settlement transactions as defined in point (2) of Article 272 of Regulation (EU) No 575/2013
PORTFOLIO TRADEA transaction in more than one security where those securities are grouped and traded as a single lot against a specific reference price
SECURITIES FINANCING TRANSACTION OR SFTAn instance of stock lending or stock borrowing or the lending or borrowing of other financial instruments, a repurchase or reverse repurchase transaction, or a buy-sell back or sell-buy back transaction
COMMODITY AND EMISSION ALLOWANCE DEALERAn undertaking the main business of which consists exclusively of the provision of investment services or activities in relation to commodity derivatives or commodity derivative contracts referred to in points (5), (6), (7), (9) and (10), derivatives of emission allowances referred to in point (4), or emission allowances referred to in point
(11) of Section C of Annex I to Directive 2014/65/EU;
LIMIT ORDERAn order to buy or sell a financial instrument at its specified price limit or better and for a specified size.
CLIENT ORDERS HANDLED OR COHThe value of orders that an investment firm handles for clients, through the reception and transmission of client orders and through the execution of orders on behalf of clients
MARKET OPERATORA person or persons who manages and/or operates the business of a regulated market and may be the regulated market itself
UNDERTAKING FOR COLLECTIVE INVESTMENT IN TRANSFERABLE SECURITIES OR UCITSAn undertaking authorised in accordance with Article 5 of Directive 2009/65/EC
MANAGEMENT BODYThe body or bodies of an investment firm, market operator or data reporting services provider, which are appointed in accordance with national law, which are empowered to set the entities strategy, objectives and overall direction, and which oversee and monitor management decision-making and include persons who effectively direct the business of the entity.
MANAGEMENT BODY IN ITS SUPERVISORY FUNCTIONThe management body acting in its role of overseeing and monitoring management decision-making
ORIGINATORAn entity which: (a) itself or through related entities, directly or indirectly, was involved in the original agreement which created the obligations or potential obligations of the debtor or potential debtor giving rise to the exposures being securitised; or (b)purchases a third party’s exposures on its own account and then securitises them;
OTHER RESERVESReserves within the meaning of the applicable accounting framework that are required to be disclosed under the applicable accounting standard, excluding any amounts already included in accumulated other comprehensive income or retained earnings;
ACCUMULATED OTHER COMPREHENSIVE INCOMEIt has the same meaning as under International Accounting Standard (IAS) 1, as applicable under Regulation (EC) No 1606/2002
OTHER CAPITAL INSTRUMENTSCapital instruments issued by financial sector entities that do not qualify as Common Equity Tier 1, Additional Tier 1 or Tier 2 instruments or Tier 1 own-fund insurance items, additional Tier 1 own-fund insurance items, Tier 2 own-fund insurance items or Tier 3 own-fund insurance items
SIMPLE REPURCHASE AGREEMENTA repurchase transaction of a single asset, or of similar, non-complex assets, as opposed to a basket of assets
REPURCHASE AGREEMENT AND REVERSE REPURCHASE AGREEMENTAny agreement in which an institution or its counterparty transfers securities or commodities or guaranteed rights relating to title to securities or commodities where that guarantee is issued by a recognised exchange which holds the rights to the securities or commodities and the agreement does not allow an institution to transfer or pledge a particular security or commodity to more than one counterparty at one time, subject to a commitment to repurchase them, or substituted securities or commodities of the same description at a specified price on a future date specified, or to be specified, by the transferor, being a repurchase agreement for the institution selling the securities or commodities and a reverse repurchase agreement for the institution buying them;
PACKAGE ORDER

An order priced as a single unit:

(a)for the purpose of executing an exchange for physical; or
(b)in two or more financial instruments for the purpose of executing a package transaction

PARTICIPATIONParticipation within the meaning of the first sentence of Article 17 of Fourth Council Directive 78/660/EEC of 25 July 1978 on the annual accounts of certain types of companies (24), or the ownership, direct or indirect, of 20 % or more of the voting rights or capital of an undertaking
QUALIFYING HOLDINGA direct or indirect holding in an investment firm which represents 10 % or more of the capital or of the voting rights, as set out in Articles 9 and 10 of Directive 2004/109/EC of the European Parliament and of the Council, taking into account the conditions regarding aggregation thereof laid down in Article 12(4) and (5) of that Directive, or which makes it possible to exercise a significant influence over the management of the investment firm in which that holding subsists
FINANCIAL MARKET PARTICIPANT(a)an insurance undertaking which makes available an insurance‐based investment product (IBIP);
(b)an investment firm which provides portfolio management;
(c)an institution for occupational retirement provision (IORP);
(d)a manufacturer of a pension product;
(e)an alternative investment fund manager (AIFM);
(f)a pan‐European personal pension product (PEPP) provider;
(g)a manager of a qualifying venture capital fund registered in accordance with Article 14 of Regulation (EU) No 345/2013;
(h)a manager of a qualifying social entrepreneurship fund registered in accordance with Article 15 of Regulation (EU) No 346/2013;
(i)a management company of an undertaking for collective investment in transferable securities (UCITS management company); or
(j)a credit institution which provides portfolio management
OFF-BALANCE-SHEET ITEMAny of the items referred to in Annex I to Regulation (EU) No 575/2013
DISTRIBUTABLE ITEMSThe amount of the profits at the end of the last financial year plus any profits brought forward and reserves available for that purpose, before distributions to holders of own funds instruments, less any losses brought forward, any profits which are non-distributable pursuant to Union or national law or the institution’s by-laws and any sums placed in non-distributable reserves in accordance with national law or the statutes of the institution, in each case with respect to the specific category of own funds instruments to which Union or national law, institutions’ by-laws, or statutes relate; such profits, losses and reserves being determined on the basis of the individual accounts of the institution and not on the basis of the consolidated accounts
DEFERRED TAX LIABILITIESIt has the same meaning as under the applicable accounting framework;
SPONSORAn institution other than an originator institution that establishes and manages an asset-backed commercial paper programme or other securitisation scheme that purchases exposures from third-party entities
SMALL AND MEDIUM-SIZED ENTERPRISESfor the purposes of this Directive,   companies that had an average market capitalisation of less than EUR 200 000 000 on the basis of end-year quotes for the previous three calendar years;
LOSS GIVEN DEFAULT OR LGDThe ratio of the loss on an exposure due to the default of a counterparty to the amount outstanding at default
RELEVANT PERSON

In relation to an investment firm,   any of the following:

(a)a director, partner or equivalent, manager or tied agent of the firm;
(b)a director, partner or equivalent, or manager of any tied agent of the firm;
(c)an employee of the firm or of a tied agent of the firm, as well as any other natural person whose services are placed at the disposal and under the control of the firm or a tied agent of the firm and who is involved in the provision by the firm of investment services and activities;
(d)a natural person who is directly involved in the provision of services to the investment firm or to its tied agent under an outsourcing arrangement for the purpose of the provision by the firm of investment services and activities

PERSON WITH WHOM A RELEVANT PERSON HAS A FAMILY RELATIONSHIP

  any of the following:

(a)the spouse of the relevant person or any partner of that person considered by national law as equivalent to a spouse;
(b)a dependent child or stepchild of the relevant person;
(c)any other relative of the relevant person who has shared the same household as that person for at least one year on the date of the personal transaction concerned

PENSION SCHEMEA contract, an agreement, a trust deed or rules stipulating which retirement benefits are granted and under which condition
TRADING VENUEA system operated by an investment firm or a market operator within the meaning of Article 4(1)(1) and 4(1)(13) of Directive 2004/39/EC other than a systematic internaliser within the meaning of Article 4(1)(7) thereof, which brings together buying or selling interests in financial instruments in the system, in a way that results in a contract in accordance with Title II or III of that Directive
RE-SECURITISATION POSITIONAn exposure to a re-securitisation
SECURITISATION POSITIONAn exposure to a securitisation;
POSITIONS HELD WITH TRADING INTENT(a) proprietary positions and positions arising from client servicing and market making;
(b) positions intended to be resold short term;
(c) positions intended to benefit from actual or expected short-term price differences between buying and selling prices or from other price or interest rate variations;
CROSS-SELLING PRACTICEThe offering of an investment service together with another service or product as part of a package or as a condition for the same agreement or package;
ORIGINAL LENDERAn entity which, itself or through related entities, directly or indirectly, concluded the original agreement which created the obligations or potential obligations of the debtor or potential debtor giving rise to the exposures being securitised;
PROBABILITY OF DEFAULT OR DPThe probability of default of a counterparty over a one-year period;
INSURANCE-BASED INVESTMENT PRODUCTAn insurance product which offers a maturity or surrender value and where that maturity or surrender value is wholly or partially exposed, directly or indirectly, to market fluctuations
PENSION PRODUCT

(a)pension products which, under national law, are recognised as having the primary purpose of providing the investor with an income in retirement and which entitle the investor to certain benefits;

(b)individual pension products for which a financial contribution from the employer is required by national law and where the employer or the employee has no choice as to the pension product or provider.

WHOLESALE ENERGY PRODUCT

The following contracts and derivatives, irrespective of where and how they are traded:

(a)contracts for the supply of electricity or natural gas where delivery is in the Union;
(b)derivatives relating to electricity or natural gas produced, traded or delivered in the Union;
(c)contracts relating to the transportation of electricity or natural gas in the Union;
(d)derivatives relating to the transportation of electricity or natural gas in the Union.

Contracts for the supply and distribution of electricity or natural gas for the use of final customers are not wholesale energy products. However, contracts for the supply and distribution of electricity or natural gas to final customers with a consumption capacity greater than the threshold set out in the second paragraph of Article 2(5) of Regulation 1227/2011  shall be treated as wholesale energy products

PAN‐EUROPEAN PERSONAL PENSION PRODUCT OR PEPPA long-term savings personal pension product, which is provided by a financial undertaking eligible according to Article 6(1) OF Regulation (EU) 2019/1238 under a PEPP contract, and subscribed to by a
PEPP saver, or by an independent PEPP savers association on behalf of its members, in view of retirement, and which has no or strictly limited possibility for early redemption and is registered in accordance with this Regulation
CONSOLIDATED TAPE PROVIDER or CTPA person authorised under  Directive 2014/65/EU to provide the service of collecting trade reports for financial instruments listed in Articles 6, 7, 10, 12 and 13, 20 and 21 of Regulation (EU) No 600/2014 from regulated markets, MTFs, OTFs and APAs and consolidating them into a continuous electronic live data stream providing price and volume data per financial instrument;
DATA REPORTING SERVICES PROVIDERAn APA, a CTP or an ARM.
CREDIT RISK MITIGATIONA technique used by an institution to reduce the credit risk associated with an exposure or exposures which that institution continues to hold
TRADE REPOSITARYA legal person that centrally collects and maintains the records of derivatives
RESERVESReserves as set out in Article 9 of Fourth Council Directive 78/660/EEC of 25 July 1978 based on Article 54(3)(g) of the Treaty on the annual accounts of certain types of companies and profits and losses brought forward as a result of the application of the final profit or loss
RESECURITISATIONSecuritisation where at least one of the underlying exposures is a securitisation position;
RISK OF EXCESSIVE LEVERAGEThe risk resulting from an institution’s vulnerability due to leverage or contingent leverage that may require unintended corrective measures to its business plan, including distressed selling of assets which might result in losses or in valuation adjustments to its remaining assets
CONCENTRATION RISK OR CONThe exposures in the trading book of an investment firm to a client or a group of connected clients the value of which exceeds the limits in Article 37(1) of Regulation 2019/2033
COUNTERPARTY CREDIT RISKThe risk that the counterparty to a transaction defaults before the final settlement of the transaction’s cash flows
DILUATION RISKThe risk that an amount receivable is reduced through cash or non-cash credits to the obligor
TRADING COUNTERPARTY DEFAULT OR TCDThe exposures in the trading book of an investment firm in instruments and transactions referred to in Article 25 of Regulation 2019/2033 giving rise to the risk of trading counterparty default
COMMODITY RISKThe risk of losses arising from movements in commodity prices
MARKET RISKThe risk of losses arising from movements in market prices, including in foreign exchange rates or commodity prices
NET POSITION RISKThe value of transactions recorded in the trading book of an investment firm
SUSTAINABILITY RISKAn environmental, social or governance event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of the investment
FOREIGN EXCHANGE RISKThe risk of losses arising from movements in foreign exchange rates
OPERATIONAL RISKThe risk of loss resulting from inadequate or failed internal processes, people and systems or from external events, and includes legal risk
CLIENT MONEY HELD OR CMHThe amount of client money that an investment firm holds, taking into account the legal arrangements in relation to asset segregation and irrespective of the national accounting regime applicable to client money held by the investment firm
ANCILLARY SERVICE(1) Safekeeping and administration of financial instruments for the account of clients, including custodianship and related services such as cash/collateral management and excluding maintaining securities accounts at the top tier level;
(2)Granting credits or loans to an investor to allow him to carry out a transaction in one or more financial instruments, where the firm granting the credit or loan is involved in the transaction;
(3)Advice to undertakings on capital structure, industrial strategy and related matters and advice and services relating to mergers and the purchase of undertakings;
(4)Foreign exchange services where these are connected to the provision of investment services;
(5)Investment research and financial analysis or other forms of general recommendation relating to transactions in financial instruments;
(6)Services related to underwriting.
(7) Investment services and activities as well as ancillary services of the type included under Section A or B of Annex 1 of Directive 2014/65/EU related to the underlying of the derivatives included under points (5), (6), (7) and (10) of Section C of Directive 2014/65/EUwhere these are connected to the provision of investment or ancillary services.
INVESTMENT SERVICES AND ACTIVITIESAny of the services and activities listed in Section A of Annex I relating to any of the instruments listed in Section C of Annex I of MiFID II. Which are:
(1)Reception and transmission of orders in relation to one or more financial instruments;
(2)Execution of orders on behalf of clients;
(3)Dealing on own account;
(4)Portfolio management;
(5)Investment advice;
(6)Underwriting of financial instruments and/or placing of financial instruments on a firm commitment basis;
(7)Placing of financial instruments without a firm commitment basis;
(8)Operation of an MTF;
(9)Operation of an OTF
The Commission shall adopt delegated acts in accordance with Article 89 measures specifying:(a)the derivative contracts referred to in Section C.6 of Annex I that have the characteristics of wholesale energy products that must be physically settled and C.6 energy derivative contracts;
(b)the derivative contracts referred to in Section C.7 of Annex I that have the characteristics of other derivative financial instruments;
(c)the derivative contracts referred to in Section C.10 of Annex I that have the characteristics of other derivative financial instruments, having regard to whether, inter alia, they are traded on a regulated market, an MTF or an OTF;
MULTILATERAL TRADING FACILITY (MTF)A multilateral system, operated by an investment firm or a market operator, which brings together multiple third-party buying and selling interests in financial instruments – in the system and in accordance with non-discretionary rules – in a way that results in a contract in accordance with Title II of MiFID II Directive;
CROSS-GUARANTEE SCHEME

A scheme that meets all the following conditions:

(a) the institutions fall within the same institutional protection scheme as referred to in Article 113(7) of Regulation 575/2013 or are permanently affiliated with a network to a central body;
(b) the institutions are fully consolidated in accordance with Article 1(1)(b), (c) or (d) or Article 1(2) of Directive 83/349/EEC and are included in the supervision on a consolidated basis of an institution which is a parent institution in a Member State in accordance with Part One, Title II, Chapter 2 of  Regulation 575/2013 and subject to own funds requirements;
(c) the parent institution in a Member State and the subsidiaries are established in the same Member State and are subject to authorisation and supervision by the same competent authority;
(d)the parent institution in a Member State and the subsidiaries have entered into a contractual or statutory liability arrangement which protects those institutions and in particular ensures their liquidity and solvency, in order to avoid bankruptcy in the case that it becomes necessary;
(e)arrangements are in place to ensure the prompt provision of financial   in terms of capital and liquidity if required under the contractual or statutory liability arrangement referred to in point (d);
(f) the adequacy of the arrangements referred to in points (d) and (e) is monitored on a regular basis by the competent authority;
(g) the minimum period of notice for a voluntary exit of a subsidiary from the liability arrangement is 10 years;
(h) the competent authority is empowered to prohibit a voluntary exit of a subsidiary from the liability arrangement

APPROVED REPORTING MECHANISM or ARMA person authorised under MiFID II Directive to provide the service of reporting details of transactions to competent authorities or to ESMA on behalf of investment firms;
MULTILATERAL SYSTEMAny system or facility in which multiple third-party buying and selling trading interests in financial instruments are able to interact in the system
ORGANISED TRADING FACILITY or OTFA multilateral system which is not a regulated market or an MTF and in which multiple third-party buying and selling interests in bonds, structured finance products, emission allowances or derivatives are able to interact in the system in a way that results in a contract in accordance with Title II of MiFID II Directive
PENSION SCHEME ARRANGEMENT

(a)institutions for occupational retirement provision within the meaning of Article 6(a) of Directive 2003/41/EC, including any authorised entity responsible for managing such an institution and acting on its behalf as referred to in Article 2(1) of that Directive as well as any legal entity set up for the purpose of investment of such institutions, acting solely and exclusively in their interest;

(b)occupational retirement provision businesses of institutions referred to in Article 3 of Directive 2003/41/EC;

(c)occupational retirement provision businesses of life insurance undertakings covered by Directive 2002/83/EC, provided that all assets and liabilities corresponding to the business are ring-fenced, managed and organised separately from the other activities of the insurance undertaking, without any possibility of transfer;

(d)any other authorised and supervised entities, or arrangements, operating on a national basis, provided that:

(i)they are recognised under national law; and
(ii)their primary purpose is to provide retirement benefits;

CONSOLIDATED SITUATIONThe situation that results from applying the requirements of  Regulation 2019/2033 in accordance with Article 7 to a Union parent investment firm, Union parent investment holding company or Union parent mixed financial holding company as if that undertaking formed, together with all the investment firms, financial institutions, ancillary services undertakings and tied agents in the investment firm group, a single investment firm; for the purpose of this definition, the terms ‘investment firm’, ‘financial institution’, ‘ancillary services undertaking’ and ‘tied agent’ shall also apply to undertakings established in third countries, which, were they established in the Union, would fulfil the definitions of those terms
INVESTMENT HOLDING COMPANYA financial institution, the subsidiaries of which are exclusively or mainly investment firms or financial institutions, at least one of such subsidiaries being an investment firm, and which is not a financial holding company
UNION PARENT INVESTMENT HOLDING COMPANYAn investment holding company in a Member State which is part of an investment firm group and which is not itself a subsidiary of an investment firm authorised in any Member State or of another investment holding company in any Member State
ASSET MANAGEMENT COMPANYAny company, the regular business of which is the management of UCITS in the form of unit trusts/common funds and/or of investment companies (collective portfolio management of UCITS) and an AIFM , including, unless otherwise provided, third country entities, that carry out similar activities, that are subject to the laws of a third country which applies supervisory and regulatory requirements at least equivalent to those applied in the Union
UCITS MANAGEMENT COMPANY(a) a company, the regular business of which is the management of UCITS in the form of common funds or of investment companies (collective portfolio management of UCITS); or (b) an investment company authorised in accordance with Directive 2009/65/EC which has not designated a management company authorised under that Directive for its management
FINANCIAL HOLDING COMPANYA financial institution, the subsidiaries of which are exclusively or mainly institutions or financial institutions, at least one of such subsidiaries being an institution, and which is not a mixed financial holding company
EU PARENT FINANCIAL HOLDING COMAPNYA parent financial holding company in a Member State which is not a subsidiary of an institution authorised in any Member State or of another financial holding company or mixed financial holding company set up in any Member State;
PARENT FINANCIAL HOLDING COMPANY IN A MEMBER STATEA financial holding company which is not itself a subsidiary of an institution authorised in the same Member State, or of a financial holding company or mixed financial holding company set up in the same Member State
MIXED FINANCIAL HOLDING COMPANYA parent undertaking, other than a regulated entity, which together with its subsidiaries, at least one of which is a regulated entity which has its head office in the Community, and other entities, constitutes a financial conglomerate
EU PARENT MIXED FINANCIAL HOLDING COMPANYA parent mixed financial holding company in a Member State which is not a subsidiary of an institution authorised in any Member State or of another financial holding company or mixed financial holding company set up in any Member State
PARENT MIXED FINANCIAL HOLDING COMPANY IN A MEMBER STATEA mixed financial holding company which is not itself a subsidiary of an institution authorised in the same Member State, or of a financial holding company or mixed financial holding company set up in that same Member State
MIXED ACTIVITY HOLDING COMPANYA parent undertaking, other than a financial holding company or an institution or a mixed financial holding company, the subsidiaries of which include at least one institution
DURABLE MEDIUMAny instrument which: (a)enables a client to store information addressed personally to that client in a way accessible for future reference and for a period of time adequate for the purposes of the information; and (b)  allows the unchanged reproduction of the information stored;
BRANCHA place of business other than the head office which is a part of an investment firm, which has no legal personality and which provides investment services and/or activities and which may also perform ancillary services for which the investment firm has been authorised; all the places of business set up in the same Member State by an investment firm with headquarters in another Member State shall be regarded as a single branch
GROUP SUPERVISORA competent authority responsible for the supervision of compliance with the group capital test of Union parent investment firms and investment firms controlled by Union parent investment holding companies or Union parent mixed financial holding companies;
CONSOLIDATING SUPERVISORA competent authority responsible for the exercise of supervision on a consolidated basis of EU parent institutions and of institutions controlled by EU parent financial holding companies or EU parent mixed financial holding companies
ONE-YEAR DEFAULT RATEThe ratio between the number of defaults occurred during a period that starts from one year prior to a date T and the number of obligors assigned to this grade or pool one year prior to that date
HIGH-FREQUENCY ALGORITHMIC TRADING TECHNIQUEAn algorithmic trading technique characterised by: (a)infrastructure intended to minimise network and other types of latencies, including at least one of the following facilities for algorithmic order entry: co-location, proximity hosting or high-speed direct electronic access; (b) system-determination of order initiation, generation, routing or execution without human intervention for individual trades or orders; and (c) high message intraday rates which constitute orders, quotes or cancellations;
INDIRECT HOLDINGAny exposure to an intermediate entity that has an exposure to capital instruments issued by a financial sector entity where, in the event the capital instruments issued by the financial sector entity were permanently written off, the loss that the institution would incur as a result would not be materially different from the loss the institution would incur from a direct holding of those capital instruments issued by the financial sector entity;
RECIRPOCAL CROSS HOLDINGA holding by an institution of the own funds instruments or other capital instruments issued by financial sector entities where those entities also hold own funds instruments issued by the institution
SYNTHETIC HOLDINGAn investment by an institution in a financial instrument the value of which is directly linked to the value of the capital instruments issued by a financial sector entity;
SECURITISATIONA transaction or scheme, whereby the credit risk associated with an exposure or a pool of exposures is tranched, having all of the following characteristics: (a)payments in the transaction or scheme are dependent upon the performance of the exposure or of the pool of exposures; (b) the subordination of tranches determines the distribution of losses during the ongoing life of the transaction or scheme; (c) the transaction or scheme does not create exposures which possess all of the characteristics listed in Article 147(8) of Regulation (EU) No 575/2013.
STRUCTURED FINANCE PRODUCTSThose securities created to securitise and transfer credit risk associated with a pool of financial assets entitling the security holder to receive regular payments that depend on the cash flow from the underlying assets
TRANCHEA contractually established segment of the credit risk associated with an exposure or a pool of exposures, where a position in the segment entails a risk of credit loss greater than or less than a position of the same amount in another segment, without taking account of credit protection provided by third parties directly to the holders of positions in the segment or in other segments;
CURRENT MARKET VALUE OR CMVThe net market value of the portfolio of transactions or securities legs subject to netting in accordance with Article 31 of Reguation 2019/2033, where both positive and negative market values are used in computing CMV
MARKET VALUE For the purposes of immovable property, the estimated amount for which the property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion
MORTGAGE LENDING VALUE  the value of immovable property as determined by a prudent assessment of the future marketability of the property taking into account long-term sustainable aspects of the property, the normal and local market conditions, the current use and alternative appropriate uses of the property
MARKING TO MARKETThe valuation of positions at readily available close out prices that are sourced independently, including exchange prices, screen prices or quotes from several independent reputable brokers
MARKING TO MODELAny valuation which has to be benchmarked, extrapolated or otherwise calculated from one or more market inputs
TRANSFERABLE SECURITIESThose classes of securities which are negotiable on the capital market, with the exception of instruments of payment, such as: (a) shares in companies and other securities equivalent to shares in companies, partnerships or other entities, and depositary receipts in respect of shares; (b) bonds or other forms of securitised debt, including depositary receipts in respect of such securities; (c) any other securities giving the right to acquire or sell any such transferable securities or giving rise to a cash settlement determined by reference to transferable securities, currencies, interest rates or yields, commodities or other indices or measures;
SECURITISATION SPECIAL PURPOSE ENTITY OR  SSPEA corporation trust or other entity, other than an institution, organised for carrying out a securitisation or securitisations, the activities of which are limited to those appropriate to accomplishing that objective, the structure of which is intended to isolate the obligations of the SSPE from those of the originator institution, and in which the holders of the beneficial interests have the right to pledge or exchange those interests without restriction
INDEPENDENT PRICE VERIFICATIONA process by which market prices or marking to model inputs are regularly verified for accuracy and independence
CLOSE LINKS

A situation in which two or more natural or legal persons are linked by:

(a)participation in the form of ownership, direct or by way of control, of 20 % or more of the voting rights or capital of an undertaking;
(b)‘control’ which   the relationship between a parent undertaking and a subsidiary, in all the cases referred to in Article 22(1) and (2) of Directive 2013/34/EU, or a similar relationship between any natural or legal person and an undertaking, any subsidiary undertaking of a subsidiary undertaking also being considered to be a subsidiary of the parent undertaking which is at the head of those undertakings;
(c)a permanent link of both or all of them to the same person by a control relationship;

If you have been interested in this section, you can consult our complete dictionary in the following link:

Dictionary (Jargon) of Financial Regularity

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