Trading and long term equity appreciation option
Hence called off-market transaction. Thank You Sir for your wonderful effort. I want to ask one question. If I buy shares and sell with in months ,can I show this as non-speculative business income? Dheeraj, if you are not actively trading i.
Business income only if you are doing this actively. Hi NIthin, I wish to thanks a lot for this wonderful effort. Good explanation about the market related taxation. And one doubt for me. Should i pay the gain income tax. All long term capital gain stocks held for more than 1 year is exempt from taxes.
One more doubt in the above statement. Saravana, like I have mentioned in the chapter above, there is no such fixed number of trades to consider low or high. But a general rule to follow is that if trading is your primary business, then best to consider it as non-speculative business income. If trading is not your primary source of income, even if number of trades is a little higher, you can still show it under STCG.
But best to consult your CA once. Thank you very much for all the informative articles. I have a few questions about filing my taxes. I have just started investing and trading since Feb The money Rs 7,00, was given to me by my father since he wants me to get involved in trading.
He is a Government employee and does not have time to trade himself. I have no other income since I am a student. I have incurred loss worth Rs 90, Which ITR form should I use? Should I show the Rs 7,00, that I have taken from father as my income or not? Or will it be treated as gift from family? I have no income.
Trading is not my business and in the future we will be making Long term investments only once I get a job. Thank you very much for all the hard work you are doing and the modules in Varsity have been very helpful. Explained in the module Tushar, it depends on what you are trading. Do read up all the chapters, all details you know already there. Also since your net income for the year is negative for the year, you no mandatory to file returns. But it is preferable.
Karthik, what do you mean by last year. If you are talking April to March , then yes of course you can declare those losses when filing returns this year. April onwards, you need to file returns only by next september.
Do check out the other chapters, has everything you need to know about filing returns. Hi Nithin, Wonderful initiative from you and the team at Zerodha.
All the articles and modules have been of great help. Thank you for such thoughtful and helpful content. I have a few questions revolving around carry forward of losses. I had filed it in time and since there was no other source of income, it was carried over fully. Next year I made a profit of 1.
Now how much is to be the brought forward loss. There is no other income source. I understand it is for a maximum of 8 years. If profit is 3 lacs which is in taxable bracket , then how much is to be brought forward?
Is there an argument that since the full loss cannot be reduced, the 4 continues to be brought forward? Thanking you in advance. You can carry forward only 2. Yes, you can carry forward for 8 years max. If profit is 3lks, you can carry forward 1lk Only the net loss can be carried forward.
I also have long term holding. Dinkar, like I have mentioned in the post, this is a very grey area. Not mandatory to file the return if ur net income is below 2. But it is best if you did. Why I ask is most of the companies say for the full time positions the employee should not indulge in a business activity.
Also I am a central govt. Nithin, Thanks for the detailed explanations. I am house wife. My husband given 10lacs rupees to do investment in stock market. Shall I show the profit as non speculative business income?. Whether I have to show the initial source of money 10lacs also income?. My husband already paid tax for this money. And in the article you mentioned about Audit, what kind of audit I have to maintain. Please guide me on this. Sir, My query is regarding different Mutual Funds offering Monthly Income Plans, does they remit any proceedings every month may it depend on respective applicable NAV?
I am a daily stock market trader. But this time due to bad market condition, i am holding my short term position in a specific stock for more than 2 months and i have incurred heavy loss in that scrip.
Thereofore can i be a intraday trader with loss which is to be carry forward for 4 year and have short term capital loss to be carry forward for 8 years and also have long term stocks to be kept for more than 12 months.
It means that even if you are investing very actively, you need not be worried about it being considered as a business income. Hi Nithin, Given the latest circular, can we declare our trading income less than 12 months as business income and still have a separate portfolio for for long term holdings and make use of LTCG exemption when we eventually sell them. After the new circular, yes you can. But you need to maintain separate books tab of expenses so there is no confusion.
Hello sir, In , my income from salary was 3 lac and income from equity trading was RS. Will I be allowed to file return now? I have a very basic question. I wish to classify myself as both trader and investor. Is this OK to follow this pattern?
You will need to divide this expense on your own. I am a fresher in Tax related things. So what could be the state?
How much I have to pay? You can reduce all these expenses from your total income. Do go through this: I have few questions: Assume that this income to me will run in several lacs per annum. Any money that comes to you either has to be as income or loan. If it is an income, yeah you have to pay taxes as per the IT slabs. But whatever money you get as income, your friend can show that as an expense and hence not have to pay taxes on that.
Hi Nitin Sir, is central govt. Check this brochure which is intended to serve as a guide. No Government servant shall speculate in any stock, share or other investment: Provided that nothing in this sub-rule shall apply to occasional investments made through stock brokers or other persons duly authorised and licensed or who have obtained a certificate of registration under the relevant law.
Hi Nithin, i am Employee in private company and have a salary 7lpa. I have opened trading account in nov , i have invested RS and started learning trading. Most of trading i have done Intraday and some delivery based also which i kept less than 4 days. I suffer loss in delivery based trading and turnover is and intraday turnover is This will be cheaper than going for an audit which might cost anywhere between 5k to 15k.
Ideal way would be to get an audit done. My short term capital gain turnover is Can i show - Sir Pl go through Point No. All intraday equity trading has to be considered as speculative. If you buy stocks for delivery and sell, since you have taken delivery it is not speculative.
It is speculative when you trade without taking delivery. I am salaried person. I have not yet started investing in stocks directly only in MF. Only issue would be with STCG, if the frequency is more and holding duration is less, then it should be considered as business income.. It says that irrespective of how often you do delivery based trades, you can still show it as capital gains if you wish.
You can also show as business income, but whatever you show, you have to continue showing it based on the same logic in the future.
To file TR 2 or 4. By reading Zerodha articles my doubt get cleared and also learn other things which has in hence my financial understanding.
Thanks a lot for such simple and clear articles. Is my understanding correct? Does this mean whatever is written in all these chapters is applicable for mutual Funds also, especially equity Mutual Funds? Following is what is written in red in the beginning of the chapter: Does this mean that the individual can decide to show gains from frequent say twice a week high volume stock trading as capital gain and maintain that stand in the future?
Can all expenses related to Trading be shown as part of the business expenses. Yes, all expenses while trading can be added as cost of your acquisition while calculating capital gains.
But here turnover in trading account becomes too high. Or is it the actual money transferred to trade account from bank account , that needs to be counted as Turnover? In light of the this CBDT circular can you guys please upload a sample ITR4 specially the balance sheet schedule for an investor who invests in listed securities, take delivery and sell later.
Your sample ITR4 does not deal with this. I have a question. It depends on how you declare, if you declare it as LTCG, then no tax. If you declare it as non-speculative business, then yeah u need to pay.
What is the correct form for me? Intraday gains can be shown only on ITR4. Yes on ITR 4 you can declare capital gains and get exemption on long term capital gains. Please advice on my query on my e-mail so that i can keep it for my future reference.
What about shares lying in my demat account. Paurush, it is best to open a new NRI trading and demat account. Move all the stocks in your resident demat to NRI demat. Everything you need to know about opening a NRI account is here. Dear Nithin, You are blessed. Depth of knowledge combined with simplicity of expression is just great. Makes life simple for many.
Pls move this new comment box to the top Pls darken the text colours…. Light grey is very difficult to read….. Or can we change this stance after years? What instance would you prefer should I take? I have to pay no tax on this … Right? Only equity delivery you have an option to show as either STCG or business. But if your activity reduces, you should be able to.
You will have to decide. Zerodha has clearly wiped out my doubts. Now, a big confusion is that as I have already filed my return for FY and also claimed refund of excess of tax while filing ITR2. Since, I am a trader with salaried income these speculative and non-speculative subject made me to think whether I should refile my tax return under ITR4.
Ihave already filed ITR2. My primary aim is to invest for long term. But I have done some short term investments. Do I need to pay any tax for this? Is an auditing required in my case? Which ITR form I have to use for e-filing? My company has filed ITR-1 already for me but not e-verified yet. If in case ITR-1 is not the right one, then can I re-file it? ITR2, you will have to show this as short term capital gains. Yes you can refile. Nithin, out of the 8 Short term trades mentioned above, one stock I have purchased in CNC and sold the next day.
I am a newbie in market so little confused. All I learned from here that to be very successful in life, one must wake up early in the morning as Nithin does. Ok Thanks Nitin, 1. Yes you can revise and request for a refund. Or even refund is not possible coz they are more than 2 years old? Or should these entities necessarily declare their income as business income? However now I came to know that this must be under speculative loss. Was my ITR filling incorrect? Does speculative loss require book keeping and auditing?
I have received IT notice for Limited Scrutiny for security transactions. How should I deal with it? In the FY , I had profit of Rs.
Other than that my total income is around Rs. ITR 4 is correct, but yes it should have been speculative loss. You can revise your return even now. Audit requirement is again based on your turnover. Dear Sir, Thank you so much for excellent and crisp article, I have one question, I am salaried employee and primary income is salary.
I invest for short term and long term delivery based stocks. This is treated as day trading on 29th Sept? If you sold shares in a fear of price eroding and you bought this back and that too as a one off incident, you can consider this as capital gains itself.
If you show this as an intraday trade, you will be required to use ITR4. My friend got loss of 4 lakhs… Is it mandatory to show that loss. He thought it was not required to file ITR. He got scrutiny notice. What he has to do now? He traded intra day and so the buy and sell value was in crores but since he got loss he never thought that he had to show that loss in ITR.
Please explain in detail about this situation so that many will understand…. Ram, go through the entire module, has explanation.
I am salary employ and do trading in commodity segment. In FY salary income was 5 lakh but loss in Trading 2.
I have read mutiple post but anywhere not mention what happen if not shown loss in ITR. Do i need to? Do I need to as my income is less than Rs 2,50, Thanks a lot for this elaborate article. I have been for this since some time and most of my doubts have already been clarified here. I have a question on claiming expenses such as Telephone, Laptop, electricity etc.
As I am a housewife and all the bills are in my husbands name because he owns the house Is it possible to claim those expenses? Or is it mandatory to have in my name to be able to claim it? As long as you are using them for the business of your trading. Thanks for taking time to respond.
Yes, He isnt claiming those expenses. All the bills are directed to him as he owns the place. First time I have read an article which is so clear and compact about Taxation in Trading. Thank you so much. If you are an active trader, trading in equity and futures, both intraday and delivery and your total income is below the taxable income, do you still have to file income tax return.
Sir In key takeaway point 4 You write non speculative where as it should be speculative income. Hi Nithin, This is a great article. I have few basic questions here. I understand that we need to declare ourselves as Investor or Trader or both.
But my question is, where do we declare it? Is it somewhere in my ITR file, or is it somewhere in my profile created under incometax govt site, or is it to be done by my broker? To explain it better: So how do I declare myself once I know an answer to Qs 1?
Please throw some light how I should classify myself. How do we make a swicth.. I mean what is the process? I know that we should not make a change. Is it allowed and what is the process?
There is nothing like declaring. You just just file ITR4 like I mentioned above. Combine all capital gains and show as one on ITR4. There is no status as such to switch, just start using an ITR4 from this year. Hi Nithin, As you said earlier non — speculative business gains profits can be offset with any other business income or rental income or interest on deposits Speculative business gains profits can be offset with only other speculative gains.
My question is there any such source of income apart from intraday trading available that will generate speculative gains profits or to offset speculative business gains, i need to generate intraday trading profit and then only I can offset.
Have filed returns but not included trades in the last 4 returns filed. So you can revise only for FY Penalty would essentially mean paying the tax that might have gotten evaded with interest rate. If there is a loss, nothing. Thanks for clarifying Nithin! Do we have to pay the adjusted amount of tax before 31st March of the current year, or do we get time to do our calculations and pay the adjusted tax along with the last date of filing returns 31st July?
My CA says as per Section — 72, Income-tax Act, , we can only set off the net loss supposing we have more loss than profit for a year to the next financial year! If I pay Taxes for all the 6 lakhs, which is around Rs , and transfer half of the remaining amount to my lenders either online or by cheque will they be exempt from the Taxation for this income, If yes, what forms should I use to show this legally. When you are giving back 3lks, show it as interest you have paid for the loan taken. You will need to pay tax only on the remaining 3lks.
They will be exempt from taxes only if they show this as return of their original capital. Best to do as in point 1. Issue of taxability of surplus on sale of shares and securities — Capital Gains or Business Income — Instructions in order to reduce litigation — reg. So my total income for the year is Rs 5,00,, and I have to pay taxes on this as per my tax slab.
Options were originally created with expiry cycles of 3, 6, and 9 months, with no option term lasting more than a year. Options of this form, for such terms, still constitute the vast majority of options activity. LEAPS were created relatively recently and typically extend for terms of 2 years out. For example, if today were November , one could buy a Microsoft January call option that would expire in , , or When LEAPS were first introduced in , they were derivative instruments solely for stocks ; however, more recently, equivalent instruments for indices have become available.
LEAPS are often used as a risk reduction tool by investors. The owner of the stock essentially creates the LEAP. Capital Gain or Loss Profit or loss resulting from the sale of certain assets classified under the federal income tax legislation as capital assets. This includes stocks and other investments such as investment property. Capital Gains Distribution A taxable distribution out of taxable gains realized by the issuer.
It is generally paid to security holders of trusts, partnerships, and funds. Like all distributions, it may be paid in securities or cash. The amount, payable date, and record date are established by the issuer.
Capital Pool Companies The TSX Venture Exchange Capital Pool Company CPC program offers a unique listing opportunity that brings experienced management teams with proven public financing ability together with development-stage companies in need of capital and management expertise.
Unlike traditional public companies, capital pools list and begin trading without an operating business. The nature of their business is to find and acquire a promising early-stage venture, and their treasuries are funded expressly for the search and due diligence process. Capital Stock All shares representing ownership of a company, including preferred and common shares. Capital Trust A form of financial trust that differs from other trusts in that it looks more like a fixed income instrument than an equity issue.
Capital trusts are generally issued by banks or other financial intermediaries. The business objective of capital trusts is to acquire and hold assets that will generate net income for distribution to unit holders. The trust's assets may consist of residential mortgages, mortgage co-ownership interests, mortgage-backed securities, other eligible investments, and other qualified debt obligations.
Capitalization Change Any change in the issued and outstanding listed securities of an issuer. This change may involve the issuance, repurchase, or cancellation of listed securities or listed securities that are issuable upon conversion or exchange of other securities of an issuer.
Capitalization Effective Date The date that the capitalization change is reflected in the issuer's share register, regardless of when it is reported to the Exchange.
Capitalization or Capital Structure Total dollar amount of all money invested in a company, such as debt, preferred and common stock, contributed surplus and retained earnings of a company. Capped Indices Indices for which there is a maximum relative weight by market capitalization for any one constituent. Any individual constituent of the index can represent no more than a specified percent of the index.
Cash A special term attached to an equity order that requires the trade to be settled either the same day or the following business day for cash. Cash Settlement Settlement of an option contract not by delivery of the underlying shares, but by a cash payment of the difference between the strike or exercise price and the underlying settlement price. Certificate The physical document that shows ownership of a bond, stock or other security.
Changes in Stock List Any modification to the list of tradable issues of an exchange. Clearing Day Any business day on which the clearing corporation is open to effect trade clearing and settlement. Client Order An order from a retail customer of a Participating Organization. Close Price The price of the last board lot trade executed at the close of trading. Closed-End Investment Fund An investment trust that issues a fixed number of securities that trade on a stock exchange or in the over-the-counter market.
Like other publicly traded securities, the market price of closed-end fund securities fluctuates and is determined by supply and demand in the marketplace. Closing Transaction An order to close out an existing open futures or options contract.
Commission The fee charged by an investment advisor or broker for buying or selling securities as an agent on behalf of a client. Commodities Products used for commerce that are traded on a separate, authorized commodities exchange. Commodities include agricultural products and natural resources such as timber, oil and metals. Commodities are the basis for futures contracts traded on these exchanges.
Common Shares or Common Stock Securities that represent part ownership in a company and generally carry voting privileges. Common shareholders may be paid dividends, but only after preferred shareholders are paid. Common shareholders are last in line after creditors, debt holders and preferred shareholders to claim any of a company's assets in the event of liquidation. Under UMIR rule Non-clearing firms may report through the firm that is responsible for their clearing.
Continuous Disclosure A company's ongoing obligation to inform the public of significant corporate events, both favourable and unfavourable.
Convertible Security A security of an issuer for example - bonds, debentures, or preferred shares that may be converted into other securities of that issuer, in accordance with the terms of the conversion feature. The conversion usually occurs at the option of the holder of the securities, but it may occur at the option of the issuer. Corporation or Company A form of business organization created under provincial or federal laws that has a legal identity separate from its owners.
The shareholders are the corporation's owners and are liable for the debts of the corporation only up to the amount of their investment.
This is known as limited liability. With some approved exceptions, crosses can only occur within the current bid and ask for the stock.
Crossing Session After the close of the regular trading day, crosses can be executed between 4: ET at the last sale price of the stock. Cum Dividend With dividend. The owner of shares purchased cum dividend is entitled to an upcoming already-declared dividend. The opposite of this is ex dividend. Cum Rights With rights.
The owner of shares purchased cum rights is entitled to forthcoming, already-declared rights. The opposite of this is ex rights. Cyclical Stock A stock of a company in an industry sector that is particularly sensitive to swings in economic conditions.
Dd Daily Price Limit The maximum price advance or decline permitted for a futures contract in one trading session compared to the previous day's settlement price. Day Order An order that is valid only for the day it is entered. If the order is still outstanding when the market closes, it will be purged overnight.
Debenture A long-term debt instrument issued by corporations or governments that is backed only by the integrity of the borrower, not by collateral. A debenture is unsecured and subordinate to secured debt. A debenture is unsecured in that there are no liens or pledges on specific assets. Debt Value The total dollar value of volume traded on one side of the transaction for a specified period. It equals price multiplied by volume divided by Debt Volume The number of debt instruments traded on one side of the transaction for a specified period multiplied by the face value of the debt instrument.
Defensive Stock A stock purchased from a company that has maintained a record of stable earnings and continuous dividend payments through periods of economic downturn. Delayed Delivery Order A special term order in which there is a clear understanding between the buying and selling parties that the delivery of the securities will be delayed beyond the usual three-day settlement period to the date specified in the order.
Delist The removal of a security's listing on a stock exchange. This is done when the security no longer exists, the company is bankrupt, the public distribution of the security has dropped to an unacceptably low level, or the company has failed to comply with the terms of its listing agreement.
Delisted Issue The status of a security that is no longer listed on the Exchange. The security could trade on another market. A listed issuer is delisted when the last listed security of the issuer is delisted. Delivery The tender and receipt of the underlying commodity or the payment or receipt of cash in the settlement of an open futures contract. Delivery Month The calendar month in which a futures contract may be satisfied by making or taking delivery.
Delta A ratio that measures an option's price movement compared to the underlying interest's price movement. Delta values have a range of 0 to 1. Deep in-the-money options have deltas that approach 1.
Demand The combined desire, ability and willingness on the part of consumers to buy goods or services. Demand is determined by income and by price, which are, in part, determined by supply. Discretionary Account A securities account created when a client gives a partner, director or qualified portfolio manager of a Participating Organization specific written authorization to select securities and execute trades on the client's behalf.
Distribution The portion of the issuer's equity paid directly to the security holders. The issuer or its representative provides the amount, frequency monthly, quarterly, semi-annually, or annually , payable date, and record date. Diversification Limiting investment risk by purchasing different types of securities from different companies representing different sectors of the economy. Dividend The portion of the issuer's equity paid directly to shareholders.
It is generally paid on common or preferred shares. An issuer is under no legal obligation to pay either preferred or common dividends. Dividend Reinvestment Plan A means of reinvesting dividends, which would otherwise be paid to the shareholder in cash, in additional stock of the company.
Dividend Yield Equal to the indicated annual dividend rate per share divided by the security's price. Dollar Cost Averaging Investing a fixed amount of dollars in a specific security at regular set intervals over a period of time. Dollar cost averaging results in a lower average cost per share, compared with purchasing a constant number of shares at set intervals.
The investor buys more shares when the price is low and buys fewer shares when the price is high. The DJIA is calculated by adding the prices of each of the 30 stocks and dividing by a divisor.
The DJIA is one of the most widely quoted stock market averages in the media. Downtick A trade is on a downtick when the last trade occurred at a price lower than the previous one. The trust receives royalty income from producing properties essentially, net cash flow and then sells interests in the trust called trust units to investors.
Conventional oil and gas royalty trusts are actively managed portfolios holding assets of mature producing properties. Substantially all of the cash flow generated by the oil and gas assets, net of certain deductions, such as administrative expenses and management fees, is passed on to the unit holders as royalty income.
Capital expenses may also be deducted, but are usually subject to restrictions on the amount. The distributions are highly dependent upon the cash flow generated by the trust.
In general, the largest variable in determining the level of cash flow is the price of crude oil and natural gas. Royalty trusts provide an alternative from owning the shares of individual companies for investors to participate in the oil and gas sector. Equities Common and preferred stocks, which represent a share in the ownership of a company. The value equals the number of securities multiplied by the offering price.
The various forms of financial instruments may have an effect on determining the price or the number of securities. Equity Option An option contract that grants the holder the right to buy or sell a specific number of shares of stock at a specified price during a specific period of time. Equity Value The total dollar value of volume traded on one side of the transaction for a specified period.
It equals price multiplied by volume. Equity Volume The total number of shares traded on one side of the transaction. Escrowed Securities The outstanding securities of an issuer that are not freely tradable, because they are subject to an escrow agreement that restricts the ability of certain security holders of that issuer from trading or otherwise dealing in those securities until certain conditions are satisfied. European-Style Option Options that can be exercised only on their expiration date.
Ex Dividend The holder of shares purchased ex dividend is not entitled to an upcoming already-declared dividend, but is entitled to future dividends. Ex Right The holder of shares purchased ex rights is not entitled to already-declared rights, but is entitled to future rights issues. Exchange Offering Prospectus EOP A form of prospectus that allows a company to conduct a prospectus offering through the facilities of a stock exchange, rather than issuing them directly to the public.
The company then applies to list the securities on the exchange. Exchangeable Security A security of an issuer that is exchangeable for securities of another issuer usually a subsidiary in accordance with the terms of the exchange feature.
The exchange may be at the option of the holder or at the option of the issuer of the securities. Exchange-Traded Fund ETF A special type of financial trust that allows an investor to buy an entire basket of stocks through a single security, which tracks and matches the returns of a stock market index. ETFs are considered to be a special type of index mutual fund, but they are listed on an exchange and trade like a stock.
Also known as an index participation unit IPU. The ex-d date is two clearing days before the record date. The exchange that the issue is listed on sets the ex-d date. Exempt Issuer A listed issuer that has satisfied listing requirements as outlined in Section of the Listing Requirements Manual. An exempt issuer is not subject to special reporting rules. This status is generally reserved for senior listed issuers. Exercise The act of an option holder who chooses to take delivery calls or make delivery puts of the underlying interest against payment of the exercise price.
Expiration Date The date at which an option contract expires. This means that the option can't be exercised after that date. Ff Face Value The cash denomination of the individual debt instrument. It is the amount of money that the holder of a debt instrument receives back from the issuer on the debt instrument's maturity date. Face value is also referred to as par value or principal.
Filing Statement A disclosure document submitted by a listed company to outline material changes in its affairs. Filing statements are not used for the purposes of a financing. Floating Rate Security A security whose interest rate or dividend changes with specified market indicators.
A floating rate is one that is based on an administered rate, such as a prime rate. It can be an initial public offering IPO , secondary offering, or private placement.
Freeze An interruption in trading on a stock, triggered when an order violates parameters set by TSX. Frequency Frequency refers to the given time period on an intraday, daily, weekly, monthly, quarterly or yearly perspective. Typically, choosing a weekly or monthly perspective when looking at several years of data makes it easier to identify long-term trends. Daily charts are useful for active traders and short-term time period charts.
The "Daily", "1-Minute", "5-Minute", "Minute" and "Hourly" frequency are used for intraday charts and the remaining choices are applicable to end-of-day charts.
Front Month The closest month to expiration for a futures or option contract. GICS are used to classify the constituents of many indices worldwide. GICS is a four-level classification system. The four levels are: Good Delivery The term used to describe a security that is in proper form to transfer title, which means that the registered owner has endorsed it. To settle a sale, the certificate must be surrendered on good delivery by the seller. A certificate that bears a share transfer restriction will not constitute good delivery.
This type of order is also referred to as an open order. This is another kind of open order. Growth Stock The shares of companies that have enjoyed better-than-average growth over recent years and are expected to continue their climb. Guaranteed Investment Certificate GIC A deposit instrument most commonly available from trust companies or banks requiring a minimum investment at a predetermined rate of interest for a stated term, such as one or five years.
GICs are generally non-redeemable and non-transferable before maturity. Hh Halted Issue A temporary stoppage of trading of the listed securities of an issuer, which may be imposed by the Exchange, its agent Market Regulation Services Inc.
RS , or voluntarily requested by the issuer. Usually an issuer's listed securities are halted pending a public announcement of material information about the issuer, but the Exchange or RS may also impose a halt if the issuer is not in compliance with Exchange requirements or if the Exchange determines that it is in the public interest to do so.
Hedge A strategy used to limit investment loss by making a transaction that offsets an existing position. High Price The highest price at which a board lot trade on a security was executed during a trading session. Ii Improving the Market An order that either raises the bid price or lowers the offering price is said to be improving the market.
The market improves because the spread between the bid and offer decreases. Income Deposit Security IDS An exchange-traded, fixed income-like instrument consisting of a subordinated debt security and a share of common stock packaged together to form a tax-efficient delivery mechanism to distribute an issuer's free cash flow to its investors.
Investors are paid dividends from the common share component and interest from the subordinated debt. The structure was created for U. IDSs do not use the trust structure. Also known as income participating securities IPS.
Income Stock A security with a solid record of dividend payments and which offers a dividend yield higher than the average common stock. Income Trust Also called income funds. Income trusts are trusts structured to own debt and equity of an underlying entity, which carries on an active business, or has royalty revenues generated by the assets of an active business. By owning securities or assets of an underlying business, an income trust is structured to distribute cash flows, typically on a monthly basis, from those businesses to unit holders in a tax-efficient manner.
The trust structure is typically utilized by mature, stable, sustainable, cash-generating businesses that require a limited amount of maintenance capital expenditures. An income trust is an exchange-traded equity investment that is similar to a common share.
There are four categories of income trusts: Index A statistical measure of the state of the stock market, based on the performance of stocks.
The ICCP is calculated without reference to volatility parameters. A key objective of broadcasting the ICCP is to provide market participants with an early indication of potentially large price movements at the close. Inflation An overall increase in prices for goods and services, usually measured by the percentage change in the Consumer Price Index.
Inside Information Non-public information pertaining to the business affairs of a corporation that could affect the company's share price should the information be made public.
Insider All directors and senior officers of a company, and those who are presumed to have access to inside information concerning the company. Insider Trading There are two types of insider trading.
The first type occurs when insiders trade in the stock of their company. Insiders must report these transactions to the appropriate securities commissions. The other type of insider trading is when anyone trades securities based on material information that is not public knowledge. This type of insider trading is illegal. Intermarket Surveillance Group ISG An international committee comprised of members from 31 exchanges around the world, including every major stock exchange.
Membership in the ISG allows all members to share surveillance and investigative information to ensure that each regulator has access to the necessary information to effectively regulate its marketplace. The ISG promotes effective market surveillance among international exchanges and RS involvement helps ensure they are continually in touch with other regulators and part of the development of international best practices. It consists of a two-character alphabetic country code specified in ISO , followed by a nine-character alphanumeric security identifier assigned by a national security numbering agency , and then an ISIN check-digit.
Intrinsic Value The difference between the current market value of the underlying interest and the strike price of an option. In-the-money is a term used when the intrinsic value is positive. Investment The purchase or ownership of a security in order to earn income, capital or both. Investments may also include artwork, antiques and real estate.
Investment Advisor A person employed by an investment dealer who provides investment advice to clients and executes trades on their behalf in securities and other investment products. Investment Capital Initial investment capital necessary for starting a business.