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Scrip
A certificate exchangeable for cash before a specified date, after which
it may have no value. Usually issued for fractions of shares in connection
with a stock dividend or split or in a reorganization of a company. For
example, a one-for-three stock dividend would result in many shareholders
being entitled to a fraction of a share (1/3 or 2/3) for which scrip would
be issued instead of an actual stock certificate.
Seat
The traditional term for membership on a stock exchange. An investment
dealer would buy a seat on the exchange and one employee would be designated
as the seat holder.
SEC
The Securities and Exchange Commission, a federal body established by
the United States Congress as a national U.S. regulatory authority. In
Canada there is no national regulatory authority because securities legislation
is provincially administered.
Secondary Distribution or Secondary Offering
The redistribution of a block of stock after it has been initially sold
by the issuing company. Usually a large block of shares is involved (e.g.
from the settlement of an estate) and these are offered to the public
at a fixed price, set in relationship to the stock's market price.
Secondary Market
Secondary markets are the stock exchanges and the over-the-counter market.
Securities are first issued as a primary offering to the public. When
the securities are traded from that first holder to another, the issues
trade in these secondary markets.
Transferable certificates of ownership of investment products such as
notes, bonds, stocks, futures contracts and options.
Securities Administrator
A general term referring to the provincial regulatory authority (e.g.
securities commission) responsible for administering provincial securities
acts.
Securities Advisor
A person or firm registered with applicable securities commissions to
generally advise the public on securities, often through publications.
Securities Commission
Each province has a securities commission or administrator which oversees
the provincial securities act. This act is a set of laws and regulations
which set down the rules under which securities may be issued and traded.
Securitization
1. The development of markets for a variety of debt instruments that
permit the ultimate borrower to bypass the banks and other deposit-taking
institutions and to borrow directly from lenders. 2. In a narrow sense
it also refers to the process of converting loans of various sorts into
marketable securities by packaging the loans into pools and then selling
shares of ownership in the pool itself.
Self-Regulatory Organizations (SROs)
Many important rules governing securities industry practices and standards
in Canada are set by the self-regulatory organizations, which include
the Vancouver, Alberta and Toronto Stock Exchanges, the Montreal Exchange
and the Investment Dealers Association of Canada. Many of the regulatory
and compliance functions have been delegated to the SROs by the provincial
securities administrators.
Selling Group
Investment dealers who assist a banking group in marketing a new issue
of securities in order to obtain wide distribution. These dealers do not
assume financial responsibility for the underwriting of the issue as the
banking group does.
A corporate bond issue which has priority over other bonds as to its
claim on the company's assets and earnings. An example is a first mortgage
bond.
Senior Debt
A senior debt issue ranks before other issues in terms of claims on
assets in the event of a company break-up. For example, senior bonds rank
before junior bonds, which rank before senior debentures, which rank before
junior debentures, etc.
Serial Bond or Debenture
A bond or debenture issue in which a predetermined amount of the principal
becomes due and payable each year.
Settlement Date
The date on which a security buyer must pay for his or her purchase,
or a seller must deliver the securities he or she has sold. In Canada,
investors have three days to pay for a purchase or, if selling, three
days to turn in the securities certificate if it is in their possession.
Shareholder or Stockholder
Someone who owns preferred or common shares of a company.
Shareholders' Equity
Ownership interest of common and preferred stockholders in a company.
It is also the difference between the assets and liabilities of a company,
which is sometimes called net worth, or just "equity."
Shareholder of Record
A shareholder whose name is registered in the records of a company whose
shares he or she holds. Dividend payments and rights issues are announced
as being payable to shareholders of record.
Shares or Stocks
These two terms are used interchangeably. Certificates representing
ownership in a corporation and the appropriate claim on the corporation's
earnings and assets.
The sale of a security which the seller does not own. This is a speculative
practice done in the belief that the price of a stock is going to fall
and the seller will then be able to cover the sale by buying the security
back at a lower price. The profit would be the difference between the
initial selling price and the subsequent purchase price. It is illegal
for a seller not to declare a short sale at the time of placing the order.
Short-term Bond
A bond or debenture maturing within three years.
Short-term Debt
Company borrowings repayable within one year that appear in the current
liabilities section of the company's balance sheet. The most common short-term
debt items are bank advances or loans, notes payable, debentures and bonds
due within one year.
Sinking Fund
A fund set up by a company to retire, over a period of time, the major
part of a preferred share issue, or a debt issue prior to maturity. The
fund helps to "pay off" the debt issue over the term of the issue and
can be compared to principal payments made by a mortgage holder. Even
though the issue is outstanding until maturity, the small incremental
payments made under a sinking fund can make the maturity of the bond issue
less onerous on the company. Instead of having to re-fund the entire issue,
there may only be a small outstanding balance. A sinking fund security
is attractive to investors as there is more assurance that the debt will
be repaid on maturity.
Speculator
A speculator is one who is prepared to accept calculated risks in the
marketplace for attractive potential returns. A speculator's objective
is usually short to medium term capital gain, whereas regular income and
safety of principal are the prime goals of the conservative investor.
Spread
1. The gap between the bid and ask prices in the quotation for a security.
2. The term can also be applied to certain strategies for options and
commodities where the investor is trading on the differences in prices
between two related securities.
Statement of Changes in Financial Position
A financial statement which provides information as to how a company
generated and spent its cash during the year. It links the company's balance
sheets for two successive years and provides a summary of the incoming
and outgoing movement of a company's funds for the period. It explains
changes in working capital (current assets less current liabilities) from
one year to the next.
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of Material Facts |
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A document presenting the relevant facts about a company and compiled
in connection with an underwriting or secondary distribution of its shares.
It is used only when the shares underwritten or distributed are listed
on a recognized stock exchange and takes the place of a prospectus in
such cases.
Stockholder or Shareholder
Someone who owns preferred or common shares of a company.
Stock Consolidation
The opposite of a stock split. A number of existing shares are combined
into a smaller number of shares, ie. turning every three shares into one.
Stock Dividend
Dividends paid to shareholders in shares of stock rather than cash.
Stock Exchange or Stock Market
An organized marketplace where buyers and sellers are brought together
to buy and sell stocks and must follow certain rules, regulations and
guidelines.
Stock Index
An indicator used to measure and report value changes in a specific
group of stocks. For example, the TSE 300 Index measures 300 stocks with
the greatest market capitalization of all the companies listed on the
Toronto Stock Exchange.
Stock Savings Plan
Some provinces, such as Quebec, Nova Scotia, Saskatchewan and Newfoundland
offer stock savings plans which allow individuals in those provinces a
deduction or tax credit for provincial income tax purposes. The credit
or deduction is a percentage figure based on the value of investment in
certain prescribed vehicles.
Stock Split
Division of a company's outstanding common shares into a larger number
of common shares. A three-for-one split by a company with one million
shares outstanding would result in three million shares outstanding. Each
holder of 100 shares before the three-for-one split would have 300 shares
after the split, but his or her proportionate equity in the company would
remain the same
These two terms are used interchangeably. Certificates representing
ownership in a corporation and the appropriate claim on the corporation's
earnings and assets.
Stock Symbol
An unique three or four letter symbol assigned to a security trading
on a stock exchange. For example, Hollinger Inc. is listed as HLG on the
Toronto Stock Exchange.
Stop Loss and Stop Buy Orders
Orders for certain securities when the price of a stock rises or falls
to a specified price. A stop loss order is an order to sell when the price
of the stock declines to, or below, a stated price. The purpose of this
is to reduce the amount of loss that might occur. A stop buy order is
an order to buy a stock when the price rises to a certain level. This
is given by a person who has sold a security short and is an attempt to
reduce loss or protect a profit should the price rise unexpectedly.
Street Certificate or "Street Name"
Most people who own securities today do not physically have possession
of the stock or bond certificates. Their securities are kept on their
behalf by their investment dealer, which is called keeping securities
in "street name." All interest payments and dividends are passed onto
the client by crediting their account with the dealer.
Strike Price
The price at which the underlying stock of a call option can be purchased,
or the price at which the underlying stock of a put option can be sold.
Also referred to as the exercise price.
Strip Bonds or Zero Coupon Bonds
Usually high quality federal or provincial government bonds originally
issued in bearer form, where some or all of the interest coupons have
been detached. The bond principal and any remaining coupons trade separately
from the strip of detached coupons, both at substantial discounts from
par.
Stripped Debentures
Debentures which have been separated from other securities, such as
warrants, which were originally issued together as a unit.
Subject Bid, Subject Offer
A bid or offer made for a security that indicates the buyer's interest,
in the case of a bid, or the seller's interest, in the case of an offer,
but does not commit the buyer or seller to the purchase or sale of the
security at that price or time.
Subsidiary
A company which is controlled by another company, usually by owning
the majority of the first company's shares.
Surplus
Contributed surplus is a balance sheet figure which originates from
sources other than earnings, such as the initial sale of stock above par
value. Earned surplus, or retained earnings, is the amount of accumulated
earnings retained in the business after the payment of all expenses and
dividends.
Surtax
An additional income tax over and above the regular income tax amount.
Usually used as a temporary measure to raise funds for short-term needs.
Sweetener
A feature included in the terms of a new issue of debt or preferred
shares to make the issue more attractive to initial investors. Examples
of sweeteners include warrants, or convertible, extendible or retractable
features.
Switching
Selling one security and buying another.
Syndicate
A group of investment dealers who underwrite and distribute a new issue
of securities or a large block of an outstanding issue.
