S

Seat

The term often used to describe membership of some stock and commodity exchanges notably New York and Tokyo exchanges. Such exchanges have fixed number of seats (membership) which are bought and sold at prices determined by demand and supply. In other words, a prospective member can only be admitted when an existing member wishes to sell his seat.

Second-Tier Securities Market (SSM)

A second market established by The Stock Exchange in Lagos in 1985 to list the securities of smaller companies which are unable to meet the requirements for listing on the more stringent segment (main market) of the Exchange.

Secondary Market

A securities market such as a stock exchange or an over-the-counter market where existing securities of corporate bodies and governments are bought and sold. Such securities has been previously issued and sold in the primary market by the issuing entity. The secondary market allows holders of securities to sell, and those desirous of buying existing securities to do so whenever they wish to. Thus, unlike the primal market where proceeds of sale of securities go to the issuer, in the secondary market, proceeds go to the selling investor The secondary market, therefore, provides liquidity to investors by ensuring easy convertibility of securities into cash.

Secured Debt

Debt guaranteed by the pledge of some assets of the borrower.

Securities Acts

Laws enacted to regulate activities in the securities industry. Such laws are usually administered by a government agency which may delegate some of its functions to Self-Regulatory Organizations (SROs). Most securities laws are primarily focused on investor protection.

Securities and Exchange Commission (SEC)

A government agency established by statute to administer securities laws. Such laws usually empower these agencies to regulate the capital market with the primary aim of protecting investors. In some countries, market development is added to their functions.

Securities Market

A market, physical or otherwise, where financial instruments are bought and sold.

Self-Regulatory Organizations (SROs)

These are membership organizations in the securities industry such as stock exchanges and National Association of Securities Dealers which set and enforce rules to direct the professional activities of their members and, in some cases, provide trading facilities for members to conduct business in securities.

Settlement

The completion of a transaction in securities on a stock exchange or on an over-the-counter market by the payment after delivery of securities.

Share Certificate

A certificate issued by a company to its shareholders evidencing ownership of a stated number of shares in the company.

Share Transfer Form

A form which has to be completed by investors to facilitate the transfer of shares from seller to buyer.

Shareholder An individual or institution having ownership interest in a company and thus entitled to certain rights and privileges accruing to holders of equity shares.

Shareholders Funds

Derived by subtracting a company's liabilities from its assets. It indicates the amount that would be left with shareholders should the assets of the company be sold and liabilities settled. It also gives an indication of the solvency or otherwise of a company. (also called net worth).

See equity and preference shares.

Shelf Registration

A system adopted by the US SEC which allows a company having certain features to file a master registration statement with it in respect of an issue which the company hopes to offer within the next two years. Following the master registration, the company may sell the security any time within the period, provided it files short statements. The features for qualification include:

(i) an investment grade rating;

(ii) no default on its debt in the past one year;

(iii) a given size of market capitalization; and

(iv) non-violation of the Securities Act within the past one year.

Short Sale

The sale of a security or futures contract which the seller does not possess. This is with the hope of buying back the security or contract at a later date when prices drop thus profiting from the sale. It is essentially a speculative practice.

Sinking Fund

A special fund created an issuer of a debt security, into which regular payments are made, to meet certain obligations of the issuer such as retirement of the debt.

Specialist

A member of a stock exchange who is assigned to a particular security or securities for which he has to maintain order and stability in their trading. He does this by standing ready to buy and sell the securities for his account when there is a temporary imbalance in demand and supply. The activities of the specialist prevent wide movements in prices which could destabilize a stock market. The specialist, unlike the floor broker, has no direct dealings with investors (the public), but in addition to buying for his own account, he assists floor brokers execute limit orders.

Speculator

Market participant who engages in high-risk transactions in anticipation of quick profit arising from price increase. Unlike a risk-averse investor, the safety of principal is of secondary importance to the speculator.

Spread

The difference between the bid and ask prices of a security. The spread would narrow or widen depending on the supply and demand position.

Stamp Duties

The "advalorem" duty payable on the consideration money in the transfer of securities to a buyer.

Standby Underwriting

An underwriting arrangement in which the underwriter only underwrites the unsubscribed portion of an issue. The funds in respect of the unsubscribed portion would normally be made available to the issuer at the close of the offer, when the subscription level has been established. The standby underwriter would subsequently hold the unsubscribed securities for eventual distribution.

Stock Exchange

An organization which provides facilities for trading in securities by its members and also sets rules for the admission and trading of existing securities as well as rules to guide the business conduct of members.

Stock Index

A measure of stock market trends and performance. It is often used as a barometer for monitoring upswings and downswings in the economy. (see index)

Stock Purchase

Plan A corporate programme which enables employees to buy shares of the company. The plan usually takes various forms including compensation for executives, dividend reinvestment, and periodic deduction of a certain amount from the salaries of participating staff, for the purchase of the shares of the company.

Stock Split

The sub-dividing of the shares of a company in order to enlarge the number of shares of the company without a change in the shareholders' equity, proportional holding, or an increase in the market value of the company at the time of the stock split. A company having outstanding shares of one million and which makes a split of 2 for 1 would have new outstanding shares of two million.

Street Name

Securities held in the name of a broker rather than the client.

Subscription Price

The price at which a new issue of securities is offered to interested subscribers.

Subsidiary

A company which has a large proportion of its equity shares in the hands of another. Such holding by the parent company has to be substantial enough to control the affairs of the subsidiary company - usually above 50%.

Swap

An agreement between two parties to exchange some financial instruments or commodities. Swap agreements are usually entered to hedge against adverse fluctuations in say, interest rates (i.e. Interest rate swap) or currency as in currency swap. Interest rate swap may, for instance, involve two parties agreeing to exchange a fixed rate for a floating rate interest payment.

Syndicated Loan

A loan packaged by a group of creditors agreeing to come together to provide credit facilities to a company, an individual or government. Syndicated loans are based on terms written out in an agreement which specifies the level of obligation of each participant.