Glossary

The glossary includes current-day and historic stock exchange terms. Each entry in the glossary is linked to an explanatory screen. Entries marked * are taken from the Borsa Italiana glossary (http://www.borsaitaliana.it/) in summary format.

Arbitrage*
The execution of two or more transactions, normally of high amounts, at the same time one two or more markets in order to achieve a risk-free profit.

Baseline analysis*
A type of share price analysis to assess the opportunity of a share investment by estimating the intrinsic (or fair) value of the shares and comparing this with the shares’ market price.

Bullpen
A term which, in the open outcry market, indicated an area of the trading floor reserved for the public.

Call, Call trading
A type of trading characteristic of Italian stock exchanges until the 1990s in which authorised intermediaries, meeting around special ‘rings’, called out their respective buy and sell proposals, specifying the share, quantity and price. Contracts were concluded verbally and formalised in writing during that trading day.

Caller
In the open outcry stock market, a broker delegated by the Stockbrokers’ Executive Committee with the task of noting the prices established during the opening call (see entry) for listed shares to confirm the official prices.

Capitalisation*
In reference to a company, this is the product of the number of shares outstanding and their unit price; in reference to a market it is the total value – at market prices – of all securities listed.

Cassa di compensazione e garanzia (CC&G)*
A company founded in 1992 which became a member of the Borsa Italian group in 2000. It guarantees the compensation and conclusion of contracts stipulated on Borsa Italiana share and derivative markets and on MTS and BrokerTec bond markets.

Clearance
In the open outcry market, a verbal agreement between two contracting parties that confirmed the stipulation of a stock exchange contract.

Clearing house*
An organisation for the clearance of gross and net bilateral balances relating to financial instrument transactions.

Closure, Closing call
In the open outcry market, the closing stage of the trading day during which the official share price was established. If no opening call (see entry) was held, this stage simply known as the “open outcry”.

Commission broker
In an outcry market, the intermediary or operator authorised to enter the stock exchange and buy or sell shares on his own behalf or on behalf of a customer, from whom he received a commission.

Commissions
A fee payable to the intermediary for conclusion of a trade. The commission amount due to stockbrokers was established officially.

Compulsory settlement
A procedure which, in the event of default by one of the contracting parties, allowed rapid settlement of stock exchange contracts.

Corbeille
A French term used in the outcry market to denote the circular barrier around which the stockbrokers and jobbers met to conclude contracts. In leading stock exchanges the number of corbeilles was gradually increased to allow negotiation of different types of security. The Milan Stock Exchange reached a total of eight corbeilles: two for the open outcry, three for ordinary trading (see entry) and one each for fixed rate securities, exchanges and options.

Dematerialisation*
Elimination of paper certificates representing ownership of a security so that the security only existed as an accounting entry.

Desks (see Tables)

Expandi market*
A regulated market operated by Borsa Italiana for the trading of shares, bonds, warrants and options not admitted to listing on the official stock exchange.

Float*
The quantity of shares in a company not classed as controlling interests and therefore available for trading on the stock exchange.

Future, Futures contract
A contract typical of the buying and selling of shares on the open outcry market. It involved the settlement of contractual obligations on a certain future date established by the stock exchange calendar.

General jobber
Represents the stockbroker in his professional activities. The general jobber role did not necessarily include jobbing on the trading floor.

Government security*
Government securities (or public debt securities) are issued by the Ministry of the Economy and Finance to raise funds to meet state needs.
As these are guaranteed by the Italian government, they are considered risk-free with regard to insolvency and offer a lower return than that of higher risk instruments.
The main forms of government security currently in issue are: ordinary treasury bonds, treasury notes, long-term treasury bonds, zero coupon treasury notes, and inflation-indexed long-term treasury bonds.

Jobber
A representative of the open outcry stockbroker. Jobbers had to meet the same requisites as stockbrokers.

Investment firm (SIM)
SIMs, introduced in Italy after the 1991 reform, are investment firms authorised to operate on the stock markets.

List*
The list of official prices for securities traded on the Stock Exchange.

Listing Committee
Performed the tasks of the Stockbrokers’ Executive Committee in stock exchanges where a Stockbrokers’ Executive Committee could not be established due to the limited number of authorised stockbrokers.

Market maker*
An intermediary, historically known as a “jobber” responsible for guaranteeing the continuous trading of certain securities.

Market rigging*
Now more commonly known as ‘market abuse’, this is an offence committed by a person that discloses false information or implements simulated operations or other ploys specifically appropriate to causing a considerable alteration in the price of financial instruments.

Middleman (see Remisier)

Money
The price offered by the buyer to purchase a certain quantity of shares. The “bull” is therefore the person declaring himself buyer of that share at that price; “in the money” relates to a market in which the demand for shares is predominant and therefore characterised by bullish prices.

Monte Titoli*
Monte Titoli is a multipurpose post-trading company offering central depository, settlement, clearance and accessory services and is one of the main European security settlement systems. These activities are performed as a company, under the supervision of the Bank of Italy and Consob.
Established in 1978, since 1986 Monte Titoli S.p.A. has been the Italian central depository for all Italian financial instruments, now centralised with the company almost exclusively in dematerialised format. This means that any kind of financial instrument, Italian or foreign, represented by securities can be deposited centrally with Monte Titoli and regulated by means of accounting entries with no physical handling of the actual securities.
Since 1989, Monte Titoli has also acted as the settlement system for the final balances in securities and from 2003 onwards has managed Express II, the clearing and settlement platform integrating the net and gross settlement processes into a single environment.

Mutual fund*
Mutual funds form part of the UCITS category and are investment vehicles that collect the financial resources of a number of investors together into a single indiscriminate fund which is then invested in financial assets.

Offer
The price at which a seller is willing to sell a given share. The “bear” is the person declaring himself seller of that share at that price. The term also indicates a market phase in which the offer of shares is predominant and therefore prices are bearish.

Opening, Opening Call
In the open outcry market, the initial stage of the trading day during which the day’s starting price was established. The Milan Stock Exchange abolished this opening call at the start of the 1980s.

Open outcry
In the open outcry market, a public auction of shares listed at the official price. This call auction was held on opening (see entry) and closure (see entry) of the trading day.

Open Outcry market (see Call)

Ordinary trading
In the open outcry market, the trading time between the end of the opening call and start of the closing call. If no opening call was held, this was the trading time between the start of trading and the open outcry, and between the open outcry and the close of trading. “Ordinary” trading was concluded at prices agreed between the parties.

Parterre
French term used as a synonym for the trading floor (see entry).

Premium*
This term has two possible meanings. Firstly, it can represent the amount paid by the buyer to the seller for an option, warrant or covered warrant to guarantee the buy or sell price of the underlying asset. It can also identify the contract that, against payment of an amount, gives the buyer the right of withdrawal on the quantity of underlying financial instruments, at the unit price established on the basis of an option contract. Borsa Italiana’s premium market (MPR) closed its doors on 14 February 2003.

Privileged share*
A share category that offers the holders priority rights over ordinary shareholders at the time of distribution of profits and reimbursement of capital on winding-up of the company, but with limited administrative rights (voting rights, right to challenge shareholders' meeting resolutions, right to withdrawal, option rights).

Registered share*
A share registered in the name of a natural or legal person, with the bearer’s name indicated on the share certificate and entered in the shareholders’ list of the issuer.

Remisier
A French term to indicate an orders middleman. In the open outcry market he collected his customers’ orders and “placed” them with a stockbroker for trading. For this task he received a commission known as a “remise”. Many jobbers were linked to stockbrokers by this form of relationship.

Ring (see Corbeille)

Runner
In the open outcry market, the stockbroker’s assistant responsible for ‘running’ orders to the corbeille desk. This duty was usually performed by the young stock exchange recruits.

Savings share*
A share without voting rights which offers shareholding privileges over ordinary shares.

Settlement*
The term 'settlement' is used with two different meanings on the securities market. It can refer to the calculation process for by contracting parties to reconcile the results of transactions completed, usually on a net basis, for the exchange of securities and money. In certain cases, and improperly, it can refer to the process of transferring securities on the settlement date.

Sensale di cambio
An Italian term indicating a stockbroker which preceded that deriving from the French “agent de change” (see entry for Stockbroker)

Speaker
The Chamber of Commerce representative appointed to preside over the opening call (see entry) and closing call (see entry) and supervise conduct of the call auction.

Stockbroker (or Broker)
Intermediary authorised to conclude stock exchange contracts. The Italian “agente di cambio” (broker), derived from the French code of commerce term “agent de change”, introduced in Italy in 1808, replaced the historic "sensale di cambio" (meaning ‘middleman’ or ‘finder’ (see entry). Qualified as public officials since 1925, stockbrokers held the exclusive over stock exchange contracts until 1992, when they were flanked by the investment firms (see entry).

Stockbrokers Executive Committees
A title given from 1932 onwards to Stock Exchange Syndicates (see entry), the self-governing bodies of the Italian stock exchanges. The Committee’s tasks included the measurement of official prices, admission of securities to listing, the amicable composition of parties in stock exchange disputes and the compulsory settlement of contracts. In the minor stock exchanges, its duties were assigned to a Listing Committee (see entry).

Stockbrokers Guild
The representative body of authorised intermediaries for the Trieste Stock Exchange.

Stock Exchange Board
Governing body of Italian markets that managed the privatisation reform and the transformation of traditional to electronic markets. Established in 1992 and based in Milan, replacing the former Stockbrokers’ Executive Committees (see entry) and Listing Committees (see entry) of the ten Italian Stock Exchanges.

Stock Exchange controller
The title of stock exchange controller was introduced when the Milan Stock Exchange was first founded. Assisted by a number of auxiliaries, the controller was responsible for supervising general trading and the identification of prices of exchanged securities.

Stock Exchange customs
A collection of rules governing the regular operation of Stock Exchanges. Their confirmation was

Stock Exchange Deputation
A ministry-appointed collegial body which, in the open outcry market, supervised regular conduct of meetings and internal policing. Under Austrian rule in Trieste the term Stock Exchange Deputation instead referred to the self-governing body of the merchant class, elsewhere represented by the Chambers of Commerce.

Stock Exchange syndicate
The Stock Exchange self-governing body established in 1866, renamed in 1932 as the Stockbrokers’ Executive Committee.

Tables
The workstations or desks available to stockbrokers, banks and commission agents on the stock exchange floor. Customer orders were received at the table and from here either ‘run’ to the corbeille by a runner or communicated through gestures.

Takeover
Systematic purchase of shares in a given listed company in order to acquire control.

Technical analysis*
A study of the behaviour of a share (or market) by historic data analysis of shares and volumes, with the aim of forecasting the future price performance of a financial instrument so as to aid trading decisions.

Trading floor
In the traditional Stock Exchanges this was the meeting area for the authorised intermediaries. In Milan it was also known as the “call floor”.

Unlisted securities market (ULM)
Established by Italian Law 49 of 23/2/1977, though using different methods and of a different size, this market had the same role as that of the Stock Market, with the role of 'acclimatising’ securities prior to official listing. The ULM market was held at the stock exchange at times different from those of the official market. In 2004 it was replaced by the Expandi Market (see entry).

Unofficial market
A room set up by banks, from the 1960s, for customers wishing to follow price changes ‘live’ on the leading stock exchanges.

Write-off
In open outcry market jargon, this indicated the cancellation of a newly concluded contract. As all transactions during the open outcry had to be adjusted to the final price, it was necessary to write off a contract when the share price exceeded the price limit established in the order.
the responsibility of the Chambers of Commerce and were subjected to 5-yearly review.