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Fair pricing (fair value)

A term used in the futures market which would represent the cash price plus the net cost of carry. In the options market, it is the value derived from the mathematical equation used (e.g. Black-Scholes model).

Financial Services Authority (FSA)

Regulatory authority given statutory powers by the Financial Services and Markets Act 2000. Responsible for overseeing and authorizing Recognised Clearing Houses (RCHs) and Recognised Investment Exchanges (RIEs) and also firms who carry out investment business. The FSA's four statuatory objectives are: maintaining market confidence; promoting public awareness of the financial system; consumer protection and the reduction of financial crime.

FLEX® options

Exchange-traded options that allow the buyer to specify the style (American or European), strike, maturity, and notional principal of an option. This enables hedgers to eliminate the timing mismatch between hedge and underlying position that can occur with standardised exchange-traded products. They also avoid the gamma and vega mismatches which occur: for example, near-the-money options with a long time to run have high vega but little gamma whereas near-the-money options, with little time to run, have the opposite.

 

Forward yield curve

The forward yield curve is often derived from the zero coupon yield curve and indicates each point as the implied forward interest rate.

 

Futures contract

An agreement (obligation) to buy or sell a given quantity of a particular asset, at a specified future date, at a pre-agreed price. Futures contracts have standard delivery dates, trading units, terms and conditions.

 

French Trésor (Trésor Francais)

French Treasury. Issuer of Treasury debt in the form of BTANs and OATs which are fully guaranteed by the French Government. Maturities range from three months to 30 years. The introduction of OATs in 1985 has made the French government securities market one of the most active in the world. The French Treasury has simplified the issuance procedure by regularly publishing auction calendars and introducing fungible bonds. Foreign investors hold approximately one third of outstanding French Government debt.