Market terms Glossary

Simple definitions to international markets trading terminology.


Exposure

The total amount of money loaned to a borrower or country. Banks set rules to prevent overexposure to any single borrower. In trading operations, it is the potential for running a profit or loss from fluctuations in market prices.

Expiry Date

The last date on which an option can be bought or sold.

Expiration Month

The month in which an option expires.

Expiration Date

(1) Options - the last date after which the option can no longer be exercised.
(2) Bonds - the date on which a bond matures.

Exotic Currency

A foreign exchange term for a thinly traded currency. Exotic currencies are illiquid, lack market depth and trade at low volumes. Trading an exotic currency can be expensive, as the bid-ask spread is usually large. Examples: Thai baht, Nok, Mexico peso.

Exercise Price (Strike Price)

The price at which an option can be exercised.

European Union

Is a politico-economic union of 28 member states that are located primarily in Europe.

Exchange Rate Risk

The potential loss that could be incurred from an adverse movement in exchange rates.

Effective Exchange Rate

An attempt to summarise the effects on a country's trade balance of its currency's changes against other currencies.

Economic Indicator

A data release which indicates current economic growth rates and trends such as retail sales and employment.

Economic Exposure

Reflects the impact of foreign exchange changes on the future competitive position of a company in the sense of the impact it can have on the future cash flows of the company.

ERM

Exchange Rate Mechanism.

EOE

European Options Exchange.

EMU

European Monetary Union.

EMS

European Monetary System.

EFT

Electronic Fund Transfer.

ECB

The European Central Bank.