Australian Share Market – Glossary of common terms and definitions

Important Notes

These are a general explanation of the meaning of terms used in relation to (product name).

Policy wording may use different terms and you should read the terms and conditions of the relevant policy to understand the inclusions and exclusions of that policy. You cannot rely on these terms to the part of any policy you may purchase.

Refer to the product disclosure statement and Canstar′s FSG.

All ordinaries (all ords)

The all ords index comprises the weighted share prices of around 500 of the largest Australian companies. It was established by the ASX at 500 points in January 1980, and is the predominant measure of the overall performance of the Australian sharemarket. Companies are weighted according to their size in terms of market capitalization (total market value of a company’s shares).

ASX code

The unique code used by the Australian Securities Exchange to identify listed companies.

Bear market

When share prices are generally falling.

Bid

The price at which someone is prepared to buy shares.

Blue chip

Shares highly valued in a large company known for its ability to make profits in good times or in bad, and with reduced risk.

Brokerage

Fee paid to stockbroking firm for buying or selling of shares on behalf of a client.

Bull market

When share prices generally are rising.

Clearing House Electronic Subregister System

Performs the settlement of share trades and provides an electronic subregister for shares in ASX listed companies.

Conditional order

Instructions to monitor a particular stock on your behalf and, if the share price reaches your target, a buy or sell order can be automatically triggered.

Contract note

A written document confirming a transaction between two dealers or a broker and a client which details the costs, type and quantity of shares traded.

Delayed price

A price that is not the current live price for the share, but is delayed but a certain amount of time, usually around 10 to 15 minutes.

Delisted

When a company is removed from the Official List of the stock exchange and its shares are no longer quoted.

Derivative

A financial instrument that derives its value from that of an underlying instrument (such as shares, share price indices, fixed interest securities, commodities, currencies etc). Futures, exchange-traded options, contracts for difference and some warrants are types of derivatives.

Dividend

Distribution of part of a company’s net profit to shareholders. Usually expressed as a number of cents per share.

Dynamic data

A service offered by online trading systems which allows you to view live market information without needing to click a refresh button.

Float

Initial raising of capital by public subscription to securities, such as shares offered on the sharemarket for the first time.

Fundamental analysis

An overall examination of the financial position of a company, its industry sector, and the current economic environment.

Futures

Futures are contracts to buy or sell a particular asset (or cash equivalent) on a specified future date.

HIN (Holder Identification Number)

Identifies you as the owner of your securities and should be stored securely.

Limit order

An instruction to a broker to buy or sell a security at a specified price or better.

Listed company

A company which has agreed to abide by ASX Listing Rules so that its shares can be bought and sold on ASX.

Live Price

The current price of a share.

Market depth

A snapshot of the demand and supply or the liquidity of a particular share.

Market order

Order to a broker to buy or sell at the current market price at the time the order is given.

Option

An option is a contract between two parties giving the taker (buyer) the right, but not the obligation, to buy or sell a pre-existing underlying asset at a particular price on or before a particular date.

Short selling

Seen as a contributing factor to undesirable market volatility during the global financial crisis, short selling involves selling a financial instrument that the seller does not own, with the intent of later purchasing the financial instrument at a lower price.

SRN (Securityholder Reference Numbers)

Identify Issuer Sponsored holdings and begin with the letter ‘I’.

STP (Straight through processing)

An efficient way to electronically process transactions. It includes different stages like trading, clearing and settlement.

Substantial shareholder

A person/company which holds more than 10% of a company’s voting rights.

Takeover

Acquisition of a controlling interest in a company through the purchase of shares.

Technical analysis

Examines the actual history of trading and the price of a security or index, usually in the form of a chart.

Unlisted company

Any company that is not listed on a licensed stock exchange.

Write down

Reduce the book value of an asset to take into account depreciation or a fall in market price.

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