AIOI: Actionable Indication of interest

APA: An approved publication agreement is authorized to publish trade reports on behalf of investment firms according to Article 4 of MiFID II.

API: Application programming interface accessing features or data of an operating system, application, or other service.

ARM: An approved reporting mechanism is authorized to publish transaction reports on behalf of investment firms according to Article 4 of MiFID II

AXES: Indicative interests which are considered more “firm” that runs, often linked with a bid, or offer in relation to a position

Back office (Settlements): Once an order is executed and turned into a trade, all details are provided to the Back office to ensure the traded is matched against the counterparty and eventually settled via the settlement agent in the custody account. This unit acts as the link between Front office (internally), and settlement agent and custodian (externally).

BENCHMARK: a reference used to measure execution quality. Examples include VWAP and implementation shortfall.

BESTEX: Short for Best Execution: All sufficient steps to obtain, when executing orders, the best possible results for clients taking into account the execution factors:  price, costs, speed, likelihood of execution and settlement, size, nature, or any other consideration relevant to the execution of an order as defined under MiFID II

Broker: This term can often cause confusion. Seen from the buy side all possible counterparties are brokers, as they carry out the same role. Seen from the perspective of the sell side, banks would act as liquidity providers/market makers, hence able to commit balance sheet, whereas brokers only act as intermediaries to stand in between two parties with opposite interest in a given security. This can be done by the broker without running any market risk or obligation to commit balance sheet.

Buy side: Asset managers, insurance companies, family offices, hedge funds and pension funds are typical Buy side companies. Previously the Buy side was only regarded as ‘price takers’, where it is now getting more common, that the Buy side can provide liquidity to the market, acting as ‘price providers’ in secondary markets, leaving the Sell side out of the picture. This should be seen the increased level of sophistication on the Buy side along with the increased amount of regulation on the Sell side, resulting in diminishing balance sheet to commit to the holding of assets.

Client: Seen from a buy side company a client would be the investor buying into a fund the company is running. In case of the buy side company operating a discretionary fund, it would be on behalf of a client. In the eyes of a sell side company – all counterparties, which the company is serving, would be seen as clients.

COMPETENT AUTHORITY: National or supranational entity which monitors financial services. Examples include the AMF in France, the English FCA or Finanstilsynet in Denmark.

Consolidated Tape: A central database, which aggregates the various post-trade data sources into a single view. A consolidated tape will ensure that more trading takes place on transparent regulated platforms, thereby increasing market depth and attractiveness of euro-denominated securities both for issuers and investors

Counterpart: When acting in both primary and secondary markets, an approved counterpart is a prerequisite to act as buyer or seller of any security in the financial market. The role of the counterparty is also to keep the other party (which seen from their perspective will be named a client) well informed about the market. That counterparty will also act as liquidity provider whenever the client needs to trade.

CSDR: Central Securities Depositories Regulation in which the third phase focus on SDR (settlement discipline regime) which focuses on how to prevent, address, and monitor failed settlements.

DEA: Direct Electronic Access. DEA is an arrangement where a member or participant or client of a trading venue permits a person to use its trading code so the person can electronically transmit orders relating to a financial instrument directly to the trading venue and includes arrangements which involve the use by a person of the infrastructure of the member or participant or client, or any connecting system provided by the member or participant or client, to transmit the orders (direct market access), and arrangements where such an infrastructure is not used by a person (sponsored access).

Decision maker: is responsible for entering orders into the OMS. The decision maker is typically the portfolio manager of the fund(s).

DMO: Debt Management Office

EMS: Execution Management System

ESMA: European Securities and Markets Authority

EXECUTABLE: Adjective describing a price or quote considered firm- often subject to AIOI as stated under MiFID II.

FIX: Financial Information eXchange is an electronic communication protocol allowing for standardized real-time data transmission.

FIXML: Financial information exchange mark-up language

FTP: File transfer protocol is standard communication protocol used for computer files transferal between servers on a network

FX: Foreign Exchange.

HNWI: High net worth individuals

IN: Information Network

IOI: Indication of interest

ISDA: An ISDA Master Agreement, a standard document that is commonly used to govern over-the-counter derivatives transactions.

LINKED AGENT: A local entity acting exclusively on behalf and under the responsibility of a European financial institution approved by the national competent authority.

LIS: Large in Scale.

LIT / SEMI-LIT / DARK – Description of liquidity pools in which participants can reveal their execution. The allusion to light refers to various degrees of transparency

Middle office: Is taking part throughout the full bond value chain. From ensuring that static data in the system is sufficient to generate an order, to maintain updated pre-trade limit checks, to surveil and conduct post-trade checks. Other supporting roles can apply to this unit.

MiFID II: Markets in Financial Instruments Directive 2014/65/EU.

MTF: Multilateral Trading Facility. A multilateral system, operated by an investment firm or market operator, which facilitates execution for third-party buying and selling interests in financial instruments in a way that results in a contract under MiFID II.

NAV: Net Asset Value

OMS: Order management system

OTC: Over the Counter.

OTF: Organized Trading Facility. A multilateral system which is neither a Regulated Market nor an MTF and in which multiple third parties can carry out buying and selling interests in bonds, structured finance products, emission allowances, and/or derivatives as classified under MiFID II.

PASSPORTING: Allowance of a firm registered in the European Economic Area (EEA) to do business in any other EEA state without the need for further authorization from that country.

PMS: Portfolio management system

PRINCIPAL VS AGENCY MODEL: Principal trades involves a brokerage’s own inventory of securities/balance sheet, while agency trading involves trading with another investor, potentially with another broker, without actually warehousing risk.

Professional client: A classification encompassing most asset managers under MiFID (the other two being Retail Client and Eligible Counterparty) and the given investor protection associated with it.

RFQ: Request for quote a process in which a client asks a liquidity provider for

RM: Regulated Market. A multi-lateral system operated and/or managed by a market operation, which facilitates the bringing together of multiple third-party buying and selling interests in financial instruments in a way that results in a contract, in respect of the financial instruments admitted to trading under its rules and/or systems, and which is authorized and functions regularly and in accordance with the provisions of Title III of MiFID II.

RTO: Reception and Transmission of Orders (RTO)

RUNS: Indicative market indications on an instrument or set of instruments transmitted via media such as mail or instant messaging. A market run indicates bids and offers.

Sell side: Typically, the banks in the financial system. Banks act as intermediaries between the issuers and the Buy side in the primary market. In this process the Sell side banks assist in origination and later the syndication of bonds. Traditionally the Sell side have also acted as liquidity providers in the secondary bond market – not only in bonds, which they assisted in bringing to the primary market, but also in bonds originated by other banks. The sell side banks earn fees from assisting the primary market process and generate revenues by providing liquidity in the secondary market – taking out the margin between the bid and the offer price in the market (the ‘bid/offer spread’). Brokers are also a part of the Sell side.

SI: Systematic Internalizer. An investment firm which, on an organized, frequent, and systematic basis, deals on own account by executing client transactions outside a Regulated Market or an MTF.

SSTI: Size Standard to Instrument.

STP: Straight through processing

STREAMING: Electronic prices and/or quotes shared bilaterally via an MTF, an OTF, a SI or other market participant often via an API.

TAG: Numeric electronic identifier used as a datapoint in a transaction often linked with the FIX protocol.

TCA: Transaction Cost Analysis.

VWAP: Volume Weighted Average Price