Dealer

A financial intermediary who buys or sells securities for his own account and not on behalf of clients as stockbrokers do. A dealer thus acts as a principal in a security transaction. A dealer resells the securities to clients at approved margin above the transaction price. The margin is what the dealer gets since he does not earn a commission.

 

Dealing Member

A member of a stock exchange authorized to buy and sell securities on behalf of the public or for their own account.

 

Debentures

Interest-bearing securities of corporate bodies representing indebtedness by the issuer to subscribers. The issuer pays subscribers interest at stated intervals and redeems the principal on maturity.

 

Debt Financing

The issuance of debt-securities by a company to raise funds to finance a specific project, working capital and/or retire current indebtedness. A government could also issue debt securities to finance specific projects. t Security: See debt instruments.

 

Debt Service

Settlement of interest and principal of a loan as they fall due within a period usually a year.

 

Debt/Equity Ratio

Indicates the extend to which shareholders' fund can absorb creditors' claims in the event of a company's liquidation; derived by dividing the long-term debt of a company by its equity capital (shareholders' fund).

 

Default

The non-performance of the terms of a bond such as the inability of a company or government to meet its financial obligations e.g. the payment of interest or principal to its bondholders. (creditors).

 

Delisting

The removal of a security from the official list of a stock exchange resulting usually from the failure of a company to comply with post-listing requirements, maturity of debt instruments or merger between quoted companies. Once delisted, the security ceases to be traded on the exchange.

 

Depository

An institution which provides custodial services by holding, for safe keeping, documents relating to an investment in securities or other assets (see also custodian).

 

Debt Instruments

Interest-bearing securities of governments and corporate bodies. Interest is paid to creditors at stated intervals throughout the life of the security, and on maturity, the debt (principal) is redeemed.

 

Depreciation

A decline in the value of a security or an asset.

 

Deregulation

Relaxation or removal of economic and legal controls (restrictions) in a country essentially to promote competition, efficiency, and ultimately foster socio-economic progress.

 

Derivative Instrument

A financial instrument whose value is derived from an underlying instrument or product such as a security (e.g. stock index) or commodity (e.g. cocoa).

 

Development Loan Stock

Long-term, interest-bearing securities of the Federal Government of Nigeria traded on the Stock Exchange.

 

Disclaimer Clause

A requirement by some securities commissions that issuers carry on the front cover page of a prospectus, a clause which states that the commission has not approved (endorsed) the merit of the securities on offer to the public. Some markets also carry a liability clause stating the liabilities for providing false and misleading information in a prospectus or any vending document.

 

Disclosure

The release of information by a company or government to existing and prospective investors and other members of the public, about its activities. The securities laws require that any information which is material to an offer of security or to investment in the secondary market must be disclosed to the public.

 

Disclosure Requirement

Information which is required of issuers by regulatory agencies such as securities commissions and stock exchanges to be provided in an offer document or released from time to time to shareholders and the public.

 

Discount

When the market price of a security is below the par value, the security is said to be trading at a discount. Discount also means transaction price below the market price.

 

Discretionary Account

A client account kept by a broker-dealer carrying the mandate of the client to buy and sell securities on his behalf without his (client's) prior consent but for his notification after the transaction has been effected.

 

Divestment

The disposal of all or a portion of an equity interest in a company. The term is usually used in respect of relatively large disposal.

 

Dividend Cover

The number of times the net profit of a company 'covers' the dividend declared. Fast-growing companies, which need capital for reinvestment, are likely to have higher dividend cover than more mature ones.

 

Dividend Warrant

A cheque issued by a company to its shareholders for the payment of dividends.

 

Dividend Yield

The ratio of current dividend to the market price of a security.

 

Double Option

The right to buy and sell a security at an agreed price within an agreed period which is usually not more than three months. 99 Dual Capacity When a securities firm acts both as a stockbroker (i.e. agent to its clients) and market-maker (i.e. dealer or principal trading for its account).

 

Dual Listing

The listing of a security on more than one stock exchange. This usually improves the liquidity of the security and could encourage arbitrage trading. 98 Due Date The date when interest on a debt instrument or the principal falls due for payment to creditors/investors.