One of our most senior financial translators, Danielle Davis , has been working with financial terminology for over a decade. I then added the French, German and Finnish titles when I found them in a new term base just for the IFRS titles so that everyone who works for Sandberg, in-housers and freelancers, could benefit from them. Only a conscientious financial translation expert would understand and undertake such an excavation to ensure the terminology is up-to-date and compliant with relevant regulations and industry standards.
A generalist translator may find terms in dictionaries, even financial ones, that were once correct but are no longer used. So it took a while to work out which terms to use instead, especially as the standards were not available in our source languages. The result of this approach is an accumulated store of terminology that is made available to all translators at Sandberg. One of our Project Coordinators, Elizabeth , talked about the importance of term bases in ensuring the correct application of specialised terminology in her recent blog post.
But importantly: the work mentioned above, of accumulating treasure troves of terminology, may also greatly benefit you when it comes to fast delivery. Her second point refers to what is known in the language services trade as translation memory TM. When we produce a translation for you, the text is stored anonymised in compliance with GDPR in our system. The next time you send us a similar text, the TMs, together with the above-mentioned term lists and term bases, will help us to produce a correct translation faster.
All of our systems and procedures are designed and built with your needs in mind. For example, we can develop a private translation memory just for you to ensure consistency year after year. Another of our senior financial translation experts, Tom McNeillie , highlights another important aspect to consider in financial translation, namely that the target audience of the text may not all be accountants and finance experts:.
In addition to certain legal and regulatory requirements, investor information must also be easy to understand for non-professionals, and combining these needs takes considerable skills, which Tom and his colleagues thankfully have in spades. UK company incorporation number: Financial translation services. Scroll to find out how. Fast turnaround. The right documents in the right language, at the right time. Financial and legal terminology experts. Annual reports.
Bank statements. Balance sheets. Tax reports. Keeping your data confidential and secure. Leveraging the latest technology to bring you accurate financial translations, faster. Get in touch. Find out more about how we can we work with you on your next financial translation project. More about financial translation. Explore more on the topic of financial translation on our blog. Make your next financial translation an asset — not a liability Accuracy, compliance and consistency are crucial for a successful financial translation.
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The bank or other financial institution issues credit cards to buyers that allow any number of loans up to a certain cumulative amount. Repayment terms for credit card loans, or debts vary, but the interest is often extremely high. In addition to interest, buyers are sometimes charged a yearly fee to use the credit card.
In order to collect the money for their item, the seller must apply to the credit card company with a signed receipt. Sellers usually apply for many payments at regular intervals. Thus, in a credit card purchase, the transfer of the item is immediate, but all payments are delayed. The credit card holder receives a monthly account of all transactions. The billing delay may be long enough to defer a purchase payment to the bill after the next one.
This is a special type of purchase. The item or good is transferred as normal, but the purchaser uses a debit card instead of money to pay. A debit card contains an electronic record of the purchaser's account with a bank. Using this card, the seller is able to send an electronic signal to the buyer's bank for the amount of the purchase,and that amount of money is simultaneously debited from the customer's account and credited to the account of the seller.
This is possible even if the buyer or seller use different financial institutions. Currently, fees to both the buyer and seller for the use of debit cards are fairly low because the banks want to encourage the use of debit cards. The seller must have a card reader set up in order for such purchases to be made. Debit cards allow a buyer to have access to all the funds in his account without having to carry the money around.
It is more difficult to steal such funds than cash, but it is still done. See also skimming and shoulder surfing. Wikimedia Foundation. Financial transaction card — An ISO term. A card used to identify the card issuer and the cardholder to facilitate the financial transaction and to provide input data for such a transaction … International financial encyclopaedia.
Financial transaction — Any transaction which actually effects an account balance. It does not charge anything for involvement. The main goal of Twist is to create non proprietary XML message standards for the financial services industry. To this end it provides a message… … Wikipedia. Financial services — refer to services provided by the finance industry.
The finance industry encompasses a broad range of organizations that deal with the management of money. Among these organizations are credit unions, banks, credit card companies, insurance… … Wikipedia. Transaction — A transaction is an agreement, communication, or movement carried out between separate entities or objects, often involving the exchange of items of value, such as information, goods, services and money.
Transaction authentication number — A Transaction authentication number or TAN is used by some online banking services as a form of single use passwords to authorize financial transactions. TANs are a second layer of security above and beyond the traditional single password… … Wikipedia. Financial transaction. The conditions of non-standardised loans however are usually the result of negotiations between the creditor and the debtor.
This is an important criterion which facilitates a distinction between non-standardised loans and debt securities. In the case of private security issues, however, the creditor and the debtor negotiate the issue conditions. Trade credit arises when payment for goods and services is not made at the same time as the change in ownership of a good or the provision of a service.
Trade bills drawn on a customer by the supplier of goods and services, which are subsequently discounted by the supplier with a financial corporation, become a claim by a third party on the customer. The securities borrower may be required to provide assets as collateral to the securities lender in the form of cash or securities.
Legal title passes on both sides of the transaction so that borrowed securities and collateral can be sold or 'on-lent'. The commitment to repurchase may be either on a specified future date or an 'open' maturity. The different features of the two arrangements are shown in Table 5.
Feature Securities lending Repurchase agreements Cash collateral Without cash collateral Specific securities General collateral Formal method of exchange Lending of securities with an agreement by the borrower to deliver it back to the lender Sale of securities and commitment to repurchase them under terms of master agreement Form of exchange Securities versus cash Securities versus other collateral if any Securities versus cash Cash versus securities Return is paid to the supplier of Cash collateral the securities borrower Securities not collateral securities the securities lender Cash Cash Return repayable as Fee Fee Repo rate Repo rate.
Such provision of funds to institutional units other than monetary financial institutions is treated as loans ; for deposit taking corporations, it is treated as deposits. They involve an exchange of gold for foreign exchange deposits with an agreement that the transaction be reversed at an agreed future date at an agreed gold price.
The transaction is recorded as a collateralised loan or a deposit. Under a financial lease, the lessor is deemed to make, to the lessee, a loan with which the lessee acquires the asset. Thereafter the leased asset is shown on the balance sheet of the lessee and not the lessor; the corresponding loan is shown as an asset of the lessor and a liability of the lessee. Other kinds of leases are i operating lease ; and ii resource lease.
Contracts, leases and licenses, as defined in Chapter 15, can be considered as leases as well. They are classified in other equity AF. Shares and stocks have the same meaning. A depository issues receipts listed on one exchange that represent ownership of securities listed on another exchange. Depository receipts facilitate transactions in securities in economies other than their home listing. The underlying securities may be shares or debt securities.
Such an exchange may be a recognised stock exchange or any other form of secondary market. Listed shares are also referred to as quoted shares. The existence of quoted prices of shares listed on an exchange means that current market prices are usually readily available. Dividend shares do not give holders the status of joint owners — holders therefore do not have the right to a share in the repayment of the registered capital, the right to a return on this capital, the right to vote at shareholders' meetings, etc.
Nevertheless, they entitle the holders to a proportion of any profits remaining after dividends have been paid on the registered capital and to a fraction of any surplus remaining on liquidation; Participating preference shares or stocks, which entitle holders to participate in the distribution of the residual value of a corporation on dissolution.
The holders have also the right to participate in, or receive, additional dividends over and above the fixed percentage dividend. The additional dividends are usually paid in proportion to any ordinary dividends declared. In the event of liquidation, participating preference shareholders have the right to a share of any remaining proceeds that ordinary shareholders receive, and receive back what they paid for their shares. Such equity securities are often issued by smaller, younger corporations for financing reasons, or by large enterprises to become publicly traded.
In an IPO the issuer may obtain the assistance of an underwriting entity, which helps to determine what type of equity security to issue, the best offering price and time to bring it to market. Normally, the issuing corporation is the one that applies for a listing but in some countries the exchange can list a corporation, for instance because its stock is already being actively traded via informal channels.
Initial listing requirements usually include a history of a few years of financial statements; a sufficient size of the amount being placed among the general public, both in absolute terms and as a percentage of the total outstanding stock; and an approved prospectus, usually including opinions from independent assessors. De-listing refers to the practice of removing the shares of a corporation from a stock exchange.
This occurs when a corporation goes out of business, declares bankruptcy, no longer satisfies the listing rules of a stock exchange, or has become a quasi-corporation or unincorporated business, often as a result of a merger or acquisition. Listing is recorded as an issuance of listed shares , and as a redemption of unlisted shares , while de-listing is recorded as a redemption of listed shares, and an issuance of unlisted shares where appropriate.
A share buyback is recorded as a financial transaction, providing cash to the existing shareholders in exchange for a part of the corporation's outstanding equity. That is, cash is exchanged for a reduction in the number of shares outstanding. The corporation either retires the shares or keeps them as a 'treasury stock', available for reissuance.
They are not recorded; debentures and loan stock convertible into shares. They are classified as debt securities AF. They are classified as other equity ; government investments in the capital of international organisations which are legally constituted as corporations with share capital. They are classified as other equity AF. Share split issues are also not recorded. The amount of such investments corresponds to new investments in cash or kind, less any capital withdrawals; the financial claims that non-resident units have against notional resident units and vice versa.
When the transaction value is not known, it is approximated by the stock exchange quotation or market price for listed shares and by the market-equivalent value for unlisted shares. However, in cases where the issue of bonus shares involves changes in the total market value of the shares of a corporation, the changes in market value are recorded in the revaluation account.
In some cases, funds can be transferred by assuming liabilities of the corporation or quasi-corporation. They are known as units if the fund is a trust. When they are unlisted, they are usually repayable on request, at a value corresponding to their share in the own funds of the financial corporation. These own funds are revalued regularly on the basis of the market prices of their various components. MMF shares or units can be transferable and are often regarded as close substitutes for deposits.
These types of shares and units are issued by investment funds. Such own funds are revalued regularly on the basis of the market prices of their various components. Premiums are usually paid at the beginning of the period covered by the policy. On an accrual basis, the premiums are earned throughout the policy period, so that the initial payment involves a prepayment or advance.
Claims due but not yet settled correspond to the reserves against outstanding insurance claims, which are amounts identified by insurance corporations to cover what they expect to pay out arising from events that have occurred but for which the claims are not yet settled. However, these are only recognised as liabilities and corresponding assets when there is an event giving rise to a liability.
Otherwise, equalisation reserves are internal accounting entries by the insurer representing saving to cover irregularly occurring events, and do not represent existing claims of policy holders. Reserves in the form of annuities are based on the actuarial calculation of the present value of the obligations to pay future income until the death of the beneficiaries.
Their transactions are not fully recorded and their other flows and stocks are not recorded in the core accounts, but in the supplementary table on accrued-to-date pension entitlements in social insurance. Contingent pension entitlements are not liabilities of the central government , state government , local government or social security funds subsectors and are not financial assets of the prospective beneficiaries.
If the employer continues to determine the terms of the pension schemes and retains the responsibility for any deficit in funding as well as the right to retain any excess funding, the employer is described as the pension manager and the unit working under the direction of the pension manager is described as the pension administrator. If the agreement between the employer and the third party is such that the employer passes the risks and responsibilities for any deficit in funding to the third part in return for the right of the third party to retain any excess, the third party becomes the pension manager as well as the administrator.
Where the amount accruing to the pension fund exceeds the increase in entitlements, there is an amount payable by the pension fund to the pension manager. This item is shown as an adjustment in the use of income account. As an increase in a liability, it is also shown in the financial account. This item is likely to occur only rarely and, for pragmatic reasons, changes in such non-pension entitlements may be included with those for pensions.
Like provisions for prepaid insurance premiums and reserves, provisions for calls under standardised guarantees include unearned fees premiums and calls claims not yet settled. Such arrangements involve three parties: the borrower, the lender and the guarantor. Either the borrower or the lender may contract with the guarantor to repay the lender if the borrower defaults. Examples are export credit guarantees and student loan guarantees.
Much like a non-life insurer, a guarantor working on commercial lines will expect all the fees paid, plus the property income earned on the fees and any reserves, to cover the expected defaults and associated costs and leave a profit.
Accordingly a similar treatment to that of non-life insurance is adopted for such guarantees, described as standardised guarantees. They are usually provided by a financial corporation, including but not confined to insurance corporations , but also by general government. The value of the liabilities in the accounts of the guarantor is equal to the present value of the expected calls under existing guarantees, net of any recoveries the guarantor expects to receive from the defaulting borrowers.
The liability is called provisions for calls under standardised guarantees. A fee may be payable annually or up-front. In principle, the fee represents charges earned in each year the guarantee holds, with the liability decreasing as the period gets shorter assuming that the borrower repays in instalments. Thus recording follows that of annuities with the fee paid as the future liability decreases.
Such net fees may be payable by any sector of the economy and are receivable by the sector in which the guarantor is classified. Calls under standardised guarantee schemes are payable by the guarantor and receivable by the lender of the financial instrument under guarantee, regardless of whether the fee was paid by the lender or the borrower.
Financial transactions refer to the difference between the payment of fees for new guarantees and calls made under existing guarantees. One-off guarantees are individual, and guarantors are not able to make a reliable estimate of the risk of calls. The granting of a one-off guarantee is a contingency and not recorded. Exceptions are certain guarantees provided by government and described in Chapter Financial derivatives meet the following conditions: they are linked to a financial or non-financial asset, to a group of assets, or to an index; they are either negotiable or can be offset on the market; and no principal amount is advanced to be repaid.
Financial derivatives enable parties to trade specific financial risks such as interest rate risk, currency , equity and commodity price risk and credit risk, to other entities which are willing to take these risks, usually without trading in a primary asset. Accordingly, financial derivatives are referred to as secondary assets.
The reference price may relate to a financial or non-financial asset, an interest rate, an exchange rate, another derivative or a spread between two prices. The derivative contract may also refer to an index, a basket of prices or other items like emissions trading or weather conditions. The right to purchase is known as a call option, and the right to sell is known as a put option. The premium is a financial asset of the option holder and a liability of the option writer.
The premium can be conceptually considered to include a service charge, which is to be recorded separately. However, in the absence of detailed data, assumptions should be avoided as much as possible when identifying the service element. They give the holder the right but not the obligation to purchase from the issuer of the warrant a certain number of shares or bonds under specified conditions for a specified period of time.
There are also currency warrants based on the amount of one currency required to purchase another and cross-currency warrants tied to third currencies as well as index-, basket- and commodity-warrants. As a result, two separate financial instruments are recorded in principle, the warrant as a financial derivative and the bond as a debt security.
Warrants with embedded derivatives are classified according to their primary characteristics. Futures and other forward contracts are typically, but not always, settled by the payment of cash or the provision of some other financial asset rather than the delivery of the underlying asset, and, therefore, are valued and traded separately from the underlying item.
Common forward-type contracts include swaps and forward rate agreements FRAs. Such positions may switch between the parties, depending on market developments in the underlying asset in relation to the strike price in the contract. This characteristic makes it impractical to identify transactions in assets separately from transactions in liabilities.
Unlike other financial instruments, transactions in forwards are therefore normally reported net over assets and liabilities. In the case of an option, the buyer is always the creditor and the writer always the debtor; at maturity, redemption is unconditional for a forward, whereas for an option it is determined by the buyer of the option. Some options are redeemed automatically when they are positive at maturity. The most common types are interest rate swaps, foreign exchange swaps and currency swaps.
Examples of the types of interest rate swapped are fixed rate, floating rate and rates denominated in a currency. Settlements are often made through net cash payments amounting to the current difference between the two interest rates stipulated in the contract applied to the agreed notional principal.
FRAs are settled by net cash payments in a similar way as interest rate swaps. The payments are related to the difference between the forward rate agreement rate and the prevailing market rate at the time of settlement. Credit derivatives are designed for trading in loan and security default risk. Credit derivatives may take the form of forward-type or option-type contracts and, like other financial derivatives, are frequently drawn up under standard legal agreements which facilitate market valuation.
Credit risk is transferred from the risk seller, who is buying protection, to the risk buyer, who is selling protection, in exchange for a premium. A credit derivative may also be settled by the delivery of debt securities through the unit that has defaulted. They are intended to cover losses to the creditor buyer of a CDS when: a credit event occurs in relation to a reference unit, rather than being associated to a particular debt security or loan.
A credit event affecting the reference unit of concern may be a default, but also a failure to make a payment on any qualifying liability that has become due as in cases such as debt restructuring, breach of covenants, and others; a particular debt instrument, typically a debt security or a loan, goes into default.
As with swap contracts, the buyer of the CDS, regarded as the risk seller , makes a series of premium payments to the seller of the CDS regarded as the risk buyer. If there is a default, the risk buyer compensates the risk seller for the loss, and the risk seller ceases to pay premiums. Financial instruments where small principal amounts are invested relative to the prospective returns, and which are fully at risk, are classified as financial derivatives.
Financial instruments where the debt security component and the financial derivative component are separable from each other are classified accordingly; repayable margin payments related to financial derivatives are classified in other deposits or loans depending on the institutional units involved. The following terminology is used: the date of the agreement is the 'grant date'; the purchase price agreed is the 'strike price'; the agreed first date of purchase is the 'vesting date'; the period after the vesting date in which the purchase can be made is the 'exercise period'.
The value of the option is spread over the period between the grant date and vesting date; if the detailed data are lacking, they are to be recorded at the vesting date. Thereafter, transactions are recorded at exercise date or, if they are tradable and are actually traded, between the vesting date and the end of the exercise period.
If an option proceeds to delivery, it may be exercised or not exercised. In cases where the option is exercised, there may be a payment from the option writer to the option holder equal to the difference between the prevailing market price of the underlying asset and the strike price, or, alternatively, there may be an acquisition or sale of the underlying financial or non-financial asset recorded at the prevailing market price and a counterpart payment between the option holder and the option writer equal to the strike price.
The difference between the prevailing market price of the underlying asset and the strike price is in both cases equal to the liquidation value of the option, which is the option price on the terminal date. In cases where the option is not exercised, no transaction takes place. However, the option writer makes a holding gain and the option holder makes a holding loss in both cases equal to the premium paid when the contract was taken out to be recorded in the revaluation account. There may also be the need to record transactions associated with the establishment of derivative contracts.
However, in many cases, the two parties will enter into a derivative contract without any payment by one party to the other; in such cases the value of the transaction establishing the contract is nil and nothing is recorded in the financial account.
The parties to a swap are not considered to be providing a service to each other, but any payment to a third party for arranging the swap is treated as payment for a service. Under a swap arrangement, where principal amounts are exchanged the corresponding flows are to be recorded as transactions in the underlying instrument; streams of other payments are to be recorded under the financial derivatives and employee stock options F.
While the premium paid to the seller of an option can conceptually be considered to include a service charge, in practice it is usually not possible to distinguish the service element. Therefore, the full price is to be recorded as acquisition of a financial asset by the buyer and as incurrence of a liability by the seller.
In both cases, implicitly, a financial derivative with a zero initial value is created at that point. Subsequently, the value of a swap will be equal to one of the following: for principal amounts, the current market value of the difference between the expected future market values of the amounts to be re-exchanged and the amounts specified in the contract; and for other payments, the current market value of the future streams specified in the contract.
The counterpart payment between the parties to the swap contract will be that specified within the contract. In total, transactions in financial derivatives and employee stock options must match the total revaluation gain or loss throughout the duration of the swap contract.
This treatment is analogous to that set out with respect to options , which proceed to delivery. Where the swap has a net liability value, it is also recorded on the asset side by convention to avoid flipping between the asset and the liability side. Accordingly, negative net payments increase the net value. If a payment is made prior to the change of ownership, there is an advance. They are classified in loans. This classification of the transactions in financial assets and liabilities corresponds to the classification of financial assets and liabilities.
The definitions of the categories are in general independent of the classification of institutional units. The classification of financial assets and liabilities can be further detailed by a cross-classification by institutional unit. An example is the cross-classification of transferable deposits between deposit taking corporations, other than the central bank , as inter-bank positions.
A claim is negotiable if its ownership is readily capable of being transferred from one unit to another by delivery or endorsement or of being offset in the case financial derivatives. While any financial instrument can be potentially traded, negotiable instruments are designed to be traded on an organised exchange or 'over-the-counter', although actual trading is not a necessary condition for negotiability.
Necessary conditions of negotiability are: transferability or offsetability in the case of financial derivatives; standardisation often evidenced by fungibility and eligibility of an ISIN code; and that the holder of an asset does not retain the right of recourse against the previous holders. Securities include debt securities AF.
Financial derivatives and employee stock options are not classified as securities even if they are negotiable financial instruments. They are linked to specific financial or non-financial assets or indices through which financial risks can be traded in financial markets in their own right.
Financial instruments which are not structured securities are, for instance, structured deposits which combine characteristics of deposits and of financial derivatives. While debt securities typically involve payment at inception of a principal to be repaid, financial derivatives do not. The linking of income with the corresponding financial assets and liabilities facilitates calculation of rates of return. Investment income is attributable to holders of investment fund shares and of insurance technical reserves.
The remuneration related to the participation in a financial derivative is not recorded as income, because no principal amount is provided. At the date of inception, from the debtor's perspective, the timing and value of interest payments and principal repayments are known. The reference value fluctuates in response to market conditions.
A financial asset or liability with long-term maturity is repayable at some date beyond one year, or has no stated maturity. A remaining maturity of financial assets or of liabilities is defined as the period from the reference date until the date of the final scheduled payment. Therefore, debt securities and loans are split by original maturity into short-term and long-term debt securities and loans.
A distinction between national currency and foreign currencies is particularly useful for currency and deposits AF. The currency of settlement refers to the currency into which the value of positions and flows of financial instruments such as securities are converted each time settlement occurs.
Measures of money are not defined in the ESA Lending of securities with an agreement by the borrower to deliver it back to the lender. Sale of securities and commitment to repurchase them under terms of master agreement.
Securities not collateral securities the securities lender. Insurance, pension and standardised guarantee schemes.