The Trade Lifecycle: Behind the Scenes of the Trading Process

1

Quoted from New York Mercantile Exchange website.

2

Leverage and “gearing” are both terms applied to the “more than one for one” change in the value of the asset compared to an identical sum invested in the underlying asset.

3

Quoted from the second Basel accord (Basel II), issued by the Basel Committee on Banking Supervision.

4

We assume an actual/actual day count convention to simplify the calculation.

5

Material in this section was taken from “The Nature and Management of Payment System Risks: An International Perspective” by Borio and Van den Bergh, published by the Bank for Internal Settlements.

6

Published by Comex Gold.

7

File Transfer Protocol (FTP) is a standard network protocol used to exchange and manipulate files over a network, such as the Internet.

8

The 6 months discount factor.

9

The 18 months discount factor.

10

See Peter Jäckel, Monte Carlo Methods in Finance, Wiley Finance, 2002.

11

This is the interest rate delta. For this instrument there would also be an aluminium price delta.

12

Example permissions taken from Financial Services Authority register.

13

A special purpose vehicle (SPV) or special purpose company (SPC) is a company that is created solely for a particular financial transaction or series of transactions. It may sometimes be structured as a trust. SPVs are often used to make a transaction tax efficient by choosing the most favourable tax residence for the vehicle. They can also remove assets or liabilities from a bank’s or corporate’s ...