Alternative Investment Fund Managers Directive: An EU directive that regulates the managers of alternative investment funds.
The process of placing securities. During a subscription phase, investors can submit bids to purchase securities within a specific price range. At the end of the subscription phase, the bids are reviewed and a decision is made on which bidders receive the new securities at what issue price.
In the European Union, Regulation (EU) No. 575 / 2013 on “Prudential Requirements for Credit institutions and Investment Firms” (Capital Requirements Regulation – CRR) and the Capital Requirements Directive IV were adopted on June 27, 2013. They form the new supervisory framework for capital, leverage and liquidity ratios and implement the amendments to banking regulation proposed by the Basel Committee on Banking Supervision ( Basel 3). The new capital rules are applicable from January 1, 2014, while the leverage and liquidity ratios are expected to apply starting in 2015 and 2018, respectively.The implementation of the rules is complemented by more detailed technical standards by the EBA (European Banking Authority), which are to be published over the next few years.
Exchange-traded funds. A special kind of ETFs are physical replication ETFs, which precisely reflect an index by investing in its individual securities (as opposed to synthetically replicating an index via swaps).
Interbank Offered Rate. The rate at which banks lend each other liquid assets.
Single Euro Payments Area, established with the objective of harmonizing cashless euro payments.
The difference in interest rates, e.g. between the return on a security and the relevant reference rate.
The various interest groups of a company, often taken to mean owners (shareholders), clients, staff and society.
Target2 is the second generation of the Target payment system. It is the joint, real-time gross settlement system for the eurozone.
Internal: detailed risk assessment of every exposure associated with an obligor on the basis of internally developed criteria/models.
– Tier 1 capital: primarily share capital, reserves and certain trust preferred securities
– Tier 2 capital: primarily participatory capital, cumulative preference shares, long-term subordinated debt and unrealized gains on listed securities
– Tier 3 capital: mainly short-term subordinated debt and excess Tier 2 capital
Tier 2 capital is limited to 100 % of Tier 1 capital, and the amount of long-term subordinated debt that can be recognized as Tier 2 capital is limited to 50 % of Tier 1 capital. Regulatory capital is also corrected by regulatory filters and specific capital deduction items.