MARKET: General
The Troubled Asset Relief Program (“TARP”) is a US governmental programme which is used to purchase assets and equity from financial institutions to strengthen its financial and banking sector. TARP allows the United States Department of the Treasury to purchase or insure up to $700 billion of troubled assets. Troubled assets are defined as "(A) residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before March 14, 2008, the purchase of which the Secretary determines promotes financial market stability; and (B) any other financial instrument that the Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market stability, but only upon transmittal of such determination, in writing, to the appropriate committees of Congress."
In short, this allows the Treasury to purchase illiquid, difficult-to-value assets from banks and other financial institutions. The targeted assets can be collateralised debt obligations, which were sold in a booming market until 2007 when they were hit by widespread foreclosures on the underlying loans. TARP is intended to improve the liquidity of these assets by purchasing them using secondary market mechanisms, thus allowing participating institutions to stabilise their balance sheets and avoid further losses.
TARP does not allow banks to recoup losses already incurred on troubled assets, but officials hope that once trading of these assets resumes, their prices will stabilise and ultimately increase in value, resulting in gains to both participating banks and the Treasury itself. The concept of future gains from troubled assets comes from opinion in the financial industry that these assets are oversold, as only a small percentage of all mortgages are in default, while the relative fall in prices represents losses from a much higher default rate.
Technical Analysis
MARKET: General
The analysis of group investor/trader behaviour, as reflected in the patterns of asset prices/rates and volumes, indices, exchange rates, commodities and other instruments. Also known as charting. Technical analysis involves the observation and examination of price graphs in order to establish patterns which can then be used to give buy and sell signals (also known as entry and exit levels).
Technical Indicators
MARKET: General
Statistical information about the behaviour of the financial market as a whole. Such indicators have nothing to do with economics, fundamental analysis or share/company valuation, but are highly useful arithmetical expressions of demand and supply forces on the market.
Tenor
MARKET: General
Either the period (life) of a financial contract, debt instrument or transaction when it is first entered into or issued, as well as the remaining life of an already-issued financial instrument/contract or transaction.
Term Structure of Interest Rates
MARKET: Interest Rates
Also known as the yield curve. This represents a graphical representation of the yields (interest rates) on fixed-income securities with similar credit qualities, but different maturities (tenors).
Termination
MARKET: Risk Management
Cancellation of a financial agreement or derivative transaction upon a pre-agreed event and on previously agreed terms and conditions.
Terms Currency
MARKET: FX
The currency in terms of which the exchange rate is quoted. For example, in the quote USD/JPY = 107.50, the JPY is the terms currency. Its value is quoted in terms of one USD. The terms currency is the second currency quoted in the currency pair or exchange rate quotation.
Terms of Trade
MARKET: Economics
An index which measures the ratio of a country’s export prices relative to its import prices.
Theta
MARKET: Options
The sensitivity of an option contract to a change in time (or remaining life), all other factors staying the same. This sensitivity is usually measured in a one-day change in time.
Tick
MARKET: Derivatives
The minimum price movement allowed in the price/value of a futures contract or exchange-traded option contract. For example, the tick size on the 3-month Eurodollar futures contract that trades on the CME is 0.005% or $12.50 per contract, which is equal to $ 1 million.
Time Value
MARKET: Derivatives
Time value for an option contract is the difference between the intrinsic value and the premium. Its value is affected by the actual tenor of the contract as well as the volatility in the price of the underlying asset on which the option contract is based.
Trade Balance
MARKET: Economics
The trade balance is the monetary record of the net imports and exports of goods and services of a country. Also referred to as the current account.
Tom/Next
MARKET: FX
In most currency trades, settlement is two business days after the transaction (deal) date. Tomorrow-next (known as tom/next) trades arise because most currency traders are speculators and have no intention of taking delivery of one of the currencies in the transaction. If a trader buys and closes out (sells) a currency position on the same trade (deal) date, there is an equal and opposite settlement obligation in both currencies. For example, if a trader buys and sells EUR against the USD on the same date, the position in both currencies is square. However, traders who wish to hold their open position over the current business day and have no intention of accepting delivery of the currency would use tom/next procedures. The position is closed out that business day at a closing rate, and then the position is re-established the following day. This allows the trader to hold the position for that day without being concerned about delivery/settlement.
Toxic Asset
MARKET: Toxic Asset
A financial market term that is used to describe certain financial assets when their market value has fallen significantly and when there is no longer be a functioning market for these assets. This implies that these assets cannot be sold at reasonable market levels. This term became common during the global financial crisis that began in August 2007 and continued into 2009.
Trade Bills
MARKET: Money Markets
A bill of exchange that acknowledges a debt (commitment to pay) against the delivery of specified goods/products. Trade bills are straight discount instruments that sell at a discount to their face value, the rate quoted as a discount rate. For purposes of return measurement, trade bills require a discount-to-yield conversion to calculate an investor’s return.
Trade Weighted Index (TWI)
MARKET: FX
An economic instrument used by countries to compare their exchange rate against those of their major trading partners. The trading partners that constitute a larger portion of an economy's exports and imports receive a higher index. The intention of the trade weighted index is to make a complete comparison between one economy's currency and the other currencies it interacts with. It is a much more comprehensive analysis than comparing two currencies, such as the euro and the US dollar.
Trade-Weighted Rand
MARKET: Economics
The value of the South African currency (ZAR) expressed relative to a basket of preselected foreign currencies.
Treasury Bills
MARKET: Money Markets
Generally issued by governments in their domestic currencies, for periods ranging between 91 days and 270 days (depending on the country of issue). In South Africa, tenders for Treasury bills take place weekly on a Friday. Although Treasury bills are traded on a discount rate basis, the tenders are done as a price percentage. The results of the tender are published on Reuters Page RBMN at 12h00 local time.
Two-Way Price
A market price which consists of both a bid (buy) and an offer (sell) price
