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A risk-free type of trading where the same
instrument is bought and sold simultaneously in two different markets
in order
to profit from the difference in these markets.
An option whose payoff depends on
the average price of the underlying asset over a certain period of time
as
opposed to at maturity. Also known as an average option. 
B
An
overall statement of a
country's economic transactions with the rest of the world over some
period,
often a year. A table of the balance of payments shows amounts received
from
the rest of the world and amounts spend abroad. The current account
includes
exports and imports, that is visible trade, and receipts from and
spending
abroad on services such as tourism. It also includes receipts of
property
incomes from abroad and remittances of property incomes abroad, and
receipts and
payments of international transfers, that is gifts. The capital account
of the
balance of payments includes inward and outward foreign direct
investment, and
sales and purchases of foreign securities by residents and of domestic
securities by non-residentsThe
third
element in the balance of payments is changes in official foreign
exchange
reserves
It
includes loans, cash credit and overdrafts, and inland bills and
foreign bills
purchased and discounted. Bills exclude those rediscounted with RBI and
IDBI. Bank credit to commercial sector
includes credit to
commercial sector by RBI and commercial banks. RBI's credit
includes advances to and investments in shares and debentures of
financial
institutions, and land mortgage banks.Net Bank Credit to government
includes
total net credit to Central and State governments by RBI and commercial
banks.
Credit to government by commercial banks indicates investments by banks
in
government securities.
Bank
Rate
is
that rate at
which the RBI lends overnight money to
commercial banks.
Bond is
an IOU from a government or
company.
In exchange for you lending them money, they issue a bond that promises
to pay you back in the future the amount lent (principal) plus interest
(yield).
C
Call/
Notice/ Term Money Call money market is that part of
the national
money market where the day to day surplus of funds, of banks and
primary
dealers, are traded in. Call/ Notice/ term money market ranges between
one day
to 15 days borrowing and considered as highly liquid. Other key feature
is that
the borrowings are unsecured and the interest rates are very volatile
depending
on the demand and supply of the short term surplus/ defeciency amongst
the
interbank players.
CBLO
(Collateralized Borrowing and Lending Obligation) is a
money market instrument as approved by RBI and developed by CCIL
(Clearing
Corporation of India Limited) for the benefit of the entities who have
either
been phased out from inter bank call money market or have been given
restricted
participation in terms of ceiling on call borrowing and lending
transactions
and who do not have access to the call money market. It is a type of
derivative
debt instrument, securitised by approved bonds lodged with the CCIL
through
Subsidiary General Account. The instrument has short maturities, from
1day (to
an year).Membership to CBLO segment is extended to entities who are
RBI- NDS
members viz. Nationalized Banks, Private Banks, Foreign Banks,
Co-operative
Banks, Financial Institutions, Insurance Companies, Mutual Funds,
Primary
Dealers etc. Associate Membership to CBLO segment is extended to
entities who
are not members of RBI- NDS viz. Co-operative Banks, Mutual Funds,
Insurance
companies, NBFC's, Corporates, Provident/ Pension Funds etc. Eligible
securities are Central Government securities including Treasury
Bills,as
specified by CCIL from time to time. The instrument was developed when
the RBI
decided to turn the Call Money Market into a pure interbank market and
phase
out other entities.
Certificate
of Deposit Certificates of Deposit
(“CD”) were introduced in 1989 following the acceptance of the Vaghul
Working
Group of Money Market. These are also usance promissory notes issued at
a
discount to the face value and transferable in demat form. They attract
stamp
duty. CDs are issued by scheduled commercial banks and it offers them
an
opportunity to mobilise bulk resources for better fund management. To
the
investors they offer better cash management opportunity with market
related
yield and high safety.
Clearing
Organization or Clearing House An
entity
through which futures and other derivative transactions are
cleared and settled. It is also charged with assuring the proper
conduct of
each contract’s delivery procedures
and the adequate financing of trading. A clearing organization may be a
division of a particular
exchange, an adjunct or affiliate thereof, or a freestanding entity.
Commercial Paper It
is a
short term money market instrument comprising of unsecured, negotiable,
short
term usance promissory note with fixed maturity, issued at a discount
to face
value. CPs are issued by corporates to mpart flexibility in raising
working
capital resources at market determined rates. CPs are actively traded
in the
secondarymarket since they are issued in the form of Promissory Notes
and are
freely transferable in demat form.
Commodity Futures click to see details
Commodity Index
An
index or average, which may be weighted, of selected commodity prices,
intended to be
representative of the markets in general or a specific subset of
commodities, e.g., agricultural
commodities or metals.
CMR
The ‘call
money rate’ is the interest rate in the call money market,
where money is lent (by one bank to another, typically) for short
durations,
ranging from ‘overnight’ to 14 days.
CMYC
Constant
Maturity Yield Curve is a curve
which relates the yield on a security to its time to maturity. The
usual practice worldwide is to provide yields of traded bonds
for finely defined residual maturity brackets. The monthly
CMYs given here provide information on (Indian government)
bond yields for several chosen residual maturities,
like 3 & 6 months, 1/2/5/10/12/15 years. Say, the market
determined YTMs for all traded Gilts with 340 to 380 days left to
mature would give the CMY for the 1 year maturity bracket. The monthly
CMYs are estimated from marketwide data, i.e., from all trades for
the month reported on the RBI NDS platform.
Correction
A short-term drop in stock market prices. The term comes from the
notion that, when this happens, overpriced stocks are returning back to
their "correct" values.
CPI
Consumer Price
Index is an economic indicator that measures the change in a batch of
consumer
products. The change in price is
considered to be inflation.
CPI actually measures the increase in prices a consumer will
have to pay for a particular commodity basket (which may be revised
every four
to five years to factor in changes in consumption pattern). India
does not
have an aggregate CPI, but only sectional CPIs for industrial workers
(CPI-IW),
agricultural labour (CPI-AL), urban non-manual workers (CPI-UNME) and
rural
labour (CPI-RL).
Credit
Crunch The situation created when banks hugely reduced
their lending to each other because they were uncertain about how much
money they had. This in turn resulted in more expensive loans and
mortgages for ordinary people.
Credit
Default Swap A swap designed to transfer credit risk, in
effect a form of financial insurance. The buyer of the swap makes
periodic payments to the seller in return for protection in the event
of a default on a loan.
Credit
derivatives are based on the risk of borrowers defaulting on
their loans, such as mortgages.
CRR
Cash
Reserve
Ratio is the percentage of
bank deposits which are statutorily parked with the RBI as reserve.
Currency
peg A commitment by a government to maintain its currency at a
fixed value in relation to another currency. Typically this is done by
the government buying its own currency to force the value up, or
selling its own currency to lower the value. One example of a peg was
the fixing of the exchange rate of the Chinese yuan against the dollar.
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