378 entries
Markets & structure
Market structure and venue mechanics — primary vs secondary, exchanges, dark pools, indices.
- Free-Float Adjustment Adjusting index weights to exclude non-tradeable shares held by insiders and governments, reflecting only freely available stock.
- Frontier Market Emerging economies with small, illiquid stock markets that lack major-index inclusion and face significant structural barriers to foreign investment.
- Frontier Market vs Emerging Market Index: Classification Criteria MSCI and FTSE classify countries as developed, emerging, or frontier based on thresholds for openness, size, and liquidity. Reclassification triggers significant index flows.
- Frontier Markets The tier of smaller, less-liquid markets below emerging-market classification and their distinct risk profile.
- FTSE 100 Index UK primary stock market benchmark tracking the 100 largest companies listed on the London Stock Exchange
- Full Order Depth Full order depth refers to visibility of all buy and sell orders in an order book, not just the best bid and ask. Showing full depth increases transparency but requires more bandwidth and processing power. Most retail investors see only the best bid-ask; institutions see deeper levels.
- Fundamental Index An index construction method that weights stocks by accounting metrics like sales, earnings, and book value instead of market price.
- Fungibility in Securities Markets What makes a security fungible, why fungibility is the foundation of liquid trading, and which instruments break fungibility.
- GDP-Weighted Index vs Market-Cap-Weighted Index How GDP-weighted indices rank countries by economic output while market-cap-weighted indices rank by equity market size, creating different exposures for investors.
- Global Depositary Receipt An international depositary receipt tradable on multiple exchanges simultaneously, usually in multiple currencies, enabling broader cross-border equity participation than single-market variants.
- Global Market Contagion How a shock in one national market transmits to others through correlated portfolios, funding channels, and sentiment.
- Global Stock Market Correlation During a Crisis Why international stock correlations spike during market crashes, eliminating diversification benefits precisely when investors need protection most.
- Global Stock Market Trading Hours Overlap Which global stock markets trade simultaneously and how overlapping sessions create windows of higher liquidity and volatility.
- Gray-Market Securities Gray-market securities are shares of a company that are traded before they officially begin trading on a public exchange. This includes pre-IPO trading and when-issued trading. Gray-market transactions occur in the legal gray zone between private and public markets.
- Greenshoe Option The over-allotment clause that allows underwriters to stabilise share prices and cover short positions after an IPO launches.
- Grey Market (Securities) Unofficial, unregulated trading in shares or debt before formal listing and regulatory approval, typically during the interval between company announcement and IPO settlement.
- Hang Seng Index The primary stock market benchmark of Hong Kong, tracking large-cap companies listed on the Hong Kong Stock Exchange.
- Home Bias in Equity Investing The persistent tendency of investors to overweight domestic stocks relative to the global opportunity set.
- How a Country's Exchange Rate Regime Affects Stock Returns How pegged, managed-float, and free-float exchange rate regimes create distinct return and volatility profiles for equity investors.
- How ETF Arbitrage Keeps Price Close to NAV How ETF arbitrage works: how authorized participants use creation and redemption to close premiums and discounts, keeping ETF market price anchored to net asset value.
- How ETF Arbitrage Keeps Price Near NAV Authorized participants use creation and redemption to exploit ETF price premiums and discounts, keeping market prices aligned with net asset value.
- How High-Frequency Trading Earns Rebates How high-frequency trading earns rebates by providing liquidity: the rebate structures exchanges use to attract market makers and how HFT firms scale across venues.
- How Index Rebalancing Moves Stock Prices Learn how index rebalancing forces passive funds to buy and sell stocks mechanically, creating predictable short-term price pressure.
- How International Stock Indices Are Weighted International stock indices use free-float market capitalization, GDP weighting, and equal-weighting methods to determine country exposure and index composition.
- How Limit Orders Affect Price Discovery How limit orders on both sides of the order book set prices, tighten spreads, and reveal supply and demand. Resting orders are quotes.
- How Margin Calls Cascade in Volatile Markets Understand how forced liquidations from margin calls can trigger falling prices, sparking additional margin calls across leveraged accounts in a volatile feedback loop.
- How Market Indices Are Constructed: Price-Weighted vs Cap-Weighted How stock market indices are constructed determines their behavior; price-weighted, market-cap-weighted, and equal-weight methods each produce different results.
- How Market Indices Handle Mergers and Acquisitions Market indices manage acquisitions, mergers, and privatizations by removing acquired constituents and adjusting exposure dynamically.
- How Market Makers Profit Market makers profit by capturing the bid-ask spread, managing inventory risk, and collecting rebates from exchanges. Learn the mechanics of their edge.
- How MSCI Free-Float Adjustment Works MSCI free-float adjustment removes restricted shares from index weightings, ensuring foreign investors see accurate market exposure in global equity indices.
- How Options Expiration Affects the Underlying Stock Options expiration drives pinning, gamma exposure, and delta-hedging unwinds that move the underlying stock on expiration days.
- How Repo Markets Fund Securities Dealers Repurchase agreements are the primary short-term funding mechanism for broker-dealers. Learn how overnight and term repo finance inventory, and why these markets matter.
- How S&P 500 Companies Are Selected Companies are added to the S&P 500 by committee vote based on profitability, liquidity, float, and other criteria. Learn the selection process and why inclusion is competitive.
- How Securities Lending Supports Short Selling Explains how securities lending connects institutional lenders and borrowers, enabling short sellers to borrow shares and obligating them to return them later.
- How Short Interest Is Calculated Understand the formula behind short interest ratio and days-to-cover, revealing crowded positioning and squeeze risks.
- How Sovereign Wealth Funds Move Equity Markets Why large sovereign wealth fund purchases and sales move global equity prices, and how their disclosures affect market sentiment.
- How Stock Market Indices Are Weighted How price-weighted, market-cap-weighted, and equal-weighted indices differ in which stocks drive returns and what biases each method creates.
- How Stock Splits Are Handled in Market Indices How indices adjust divisors and weights for stock splits to maintain price continuity without distorting returns.
- How Stop Orders Trigger in Fast Markets Learn why stop orders execute far below their trigger price in fast markets and how slippage occurs between the stop level and the actual fill price.
- How Tax Treaties Reduce Foreign Dividend Withholding Explains how bilateral tax treaties lower the withholding rate on foreign dividends and the steps to claim treaty relief on cross-border investment income.
- How the VIX Is Calculated The CBOE formula that derives 30-day volatility expectations from S&P 500 options prices, with worked examples of what VIX readings mean.
- How to Choose a Benchmark Index for a Portfolio Learn how to choose a benchmark index that matches your asset class, geography, and investment strategy for meaningful performance comparison.
- How Trade Matching Engines Work Trade matching engines pair buy and sell orders using priority rules—price-first, then time-first—executing instantly at lit exchanges and OTC venues.
- Hybrid Market Stock exchange structure combining electronic order-book matching with floor-based human intermediaries who provide liquidity and manual intervention during market stress.
- IEX Speed Bump Mechanism How IEX's 350-microsecond delay levels the playing field between algorithmic and human traders by slowing latency arbitrage.
- Immediate-or-Cancel vs Fill-or-Kill Mechanics How these two all-or-none immediacy instructions differ in whether partial fills are accepted and how each interacts with order-book sweep logic.
- Index Inclusion Announcement Effect on Stock Price Index inclusion announcement effect on stock price: why stocks typically rise between announcement and rebalance date, and the mechanics behind the gain.
- Index Inclusion Effect on Stock Price When a stock is added to a major index, its price typically rises before the effective date, then stabilizes. Learn why this happens and how the effect fades.
- Index Licensing Fees: How Index Providers Charge Fund Managers Index licensing fees are charges that S&P, MSCI, and FTSE Russell collect from asset managers for the right to track their indices.
- Index Overlap: S&P 500 and Total Market Funds How much of the US total stock market index is covered by the S&P 500, quantifying the diversification value of holding both.
- Index Rebalancing Periodic resetting of constituent weights in an index and the predictable price movement it creates for removal candidates.
- Index Rebalancing: How Reconstitution Moves Stock Prices Understand how index rebalancing creates buying and selling pressure, why it affects stock prices temporarily, and what investors observe during reconstitution windows.
- Index Reconstitution The scheduled addition and deletion of constituent stocks from an index and the predictable trading opportunity it creates.
- Index Reconstitution Effect on Stock Price When a stock is added to a major index, its price typically jumps 1–3% in the days surrounding the announcement, then partially reverses. Learn the mechanics of index-inclusion demand.
- Index Reconstitution Front-Running Explained How traders profit from predictable index additions and deletions, and the drag this creates on passive fund returns.
- Interbank Market Structure and How Banks Trade The interbank market structure is a decentralized wholesale market where banks lend to each other. It sets benchmark rates and transmits monetary policy.
- Interdealer Broker A specialised intermediary that facilitates anonymous wholesale trades between financial institutions in over-the-counter markets.
- Interdealer Market The wholesale tier where registered brokers, dealers, and institutions trade with each other away from retail clients—the backbone of bonds, currencies, and over-the-counter derivatives.
- Intermarket Trading System Overview How the Intermarket Trading System linked US stock exchanges, enforced price parity, and was later superseded by Regulation NMS.
- Internal Market How brokers execute client orders against their own inventory, bypassing exchanges while meeting price commitments.
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