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Arbitrage: This is the practice of switching funds from one market to another in order to exploit price or yield differentials.

Contango: This is a term used when a member wishing to postpone or carry over the settlement of transactions to the following account does so on payment of interest on the sum due. It is a charge paid by a speculator for deferring settlement from one account day to the next on account of shares purchased.

Backwardation: This is a payment made by a speculator to the buyer when he is unable to deliver stock to the buyer on the agreed date.

Ticket Day: This is one of the two days in which the broker passes to the jobber the ticket which shows particulars of the transaction.

Account Day: Account day or settlement day is the second day on which settlement of the transaction is completed by the transfer of money due for securities purchased.

Bearer Securities: These are securities which are transferred by handing them over without change of registration. The holder is the legal owner.

Inscribed Securities: These are securities in which certificates are not given to the buyer.

Issuing Houses: These are financial institutions which specialize in making public issues of share on behalf of public limited companies.

Evaluation Questions

1. Explain the meaning of second tier securities market.

2. List four advantages of SSM to companies and investing public.

3. List the three operating regulations of SSM

4. Differentiate between primary and secondary market5. Discuss the major differences between the first tier and second tier securities market.


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