Jargon Buster


This jargon buster or glossary of words contains the definitions of some of the terms commonly used in financial services and related products.

Search below to find any word you are interested in.

  
A

Accident
An event or occurrence which is unforeseen and unintended.
Accidental Damage/Sudden and Unforeseen Damage Any kind of unexpected damage not excluded from the Insurance cover.
Account Information Service Provider (AISP)A payment service provider which provides account information services.
Account Servicing Payment Service Provider (ASPSP)A payment service provider providing and maintaining a payment account for the consumer (e.g. a bank)
Accrued Interest
Interest earned since last settlement (payment) date but not yet due or paid
Acquiring Bank
i) The provider of credit card merchant accounts. An acquiring bank handles funds from the time they are charged to the cardholder until they arrive at the merchant's bank (see also issuing bank). ii) In a merger, it is the bank that absorbs the bank acquired.
Acquisition
One company taking over the controlling interest in another company.
Act of God
An event outside of human control or activity. It's usually a natural disaster, such as a flood or an earthquake. Insurance policies usually specify which particular acts of God they cover, if any.
Actuary
A professional person or organisation who uses statistical theory and probability to evaluate the risk involved in an insurance, and therefore the premiums payable by persons taking out insurance.
Additional Insured
An insured party specifically named with the main insured under an insurance policy.
Adjustable-Rate Mortgages (ARMS)Also known as variable-rate mortgages. The initial interest rate is usually below that of conventional fixed-rate loans. The interest rate may change over the life of the loan as market conditions change.  
There is typically a maximum (or ceiling) and a minimum (or floor) defined in the loan agreement. If interest rates rise, so does the loan payment. If interest rates fall, the loan payment may as well. See also ARMs - Variable Rate Feature.
Advances
Term used to describe loans and overdrafts.
AffidavitA written document in which the signer swears under oath before a notary public or advocate that the statements in the document are true.
Agent
An intermediary, bank or other financial organisation that regularly performs services for another in a place or market to which the other does not have direct access. Intermediaries may have agents in foreign countries or on exchanges of which they are not members. Sometimes also referred to as 'correspondent'.
Agent (insurance)
A company or person appointed by an insurance company as its representative and licensed by the MFSA. The agent solicits, negotiates or effects contracts of insurance, and provides service to the policyholder on behalf of the insurer.
All risks policy
Coverage by an insurance contract that promises to cover all losses except those losses specifically excluded in the policy.
Alteration
Any change involving an erasure or rewriting in the date, amount, or payee of a check or other negotiable instrument.
Alternative investment
An asset that is not one of the conventional investment types, such as stocks, bonds and cash. Most alternative investment are held by institutional investors because of their complex nature and limited regulations. Alternative investments include private equity, hedge funds, managed futures, real estate, commodities and derivatives contracts.
Amortisation
The process of gradually paying off a loan (reducing the amount that a customer owes) through periodic instalment payments (of capital and interest) made according to a plan called the ‘amortisation schedule’.
Amortise
Repaying a loan by making regular payments over a given period of time. See Amortisation.
Annual Percentage Rate (APR)
The cost of credit on a yearly basis, expressed as a percentage. See also APR.
Annual Percentage Yield (APY)
A percentage rate reflecting the total amount of interest earnt on a deposit account or a savings account over one year. It takes into account the interest rate and compounding period (usually a 365-day year).
Annual Report
The formal financial statement issued yearly by a public company. The report shows assets, liabilities, revenues, expenses and earnings. The report also shows the company’s financial condition at the close of the business year and other basic information of interest to shareholders. The annual report is also the most widely-read shareholder communication. A semi-annual report is issued by a company for the first six months of its financial year.
Appraisal
(i) A survey to determine the insurable value of a property, or the amount of a loss. (ii) The act of evaluating and setting the value of a specific piece of personal or real property.
Appropriateness Test
A test which needs to be carried out by the entity to assess the level of knowledge and experience of the customer or prospective customer when the product is determined to be complex.
APR
The cost you have each year to borrow money, including any fees charged by the institution, expressed as a percentage.
Arbiter for Financial Services
The autonomous and independent body set up in terms of Act XVI of 2016 of the Laws of Malta with the power to mediate, investigate and adjudicate complaints filed by customers against financial services providers.
Arbitration
A way to resolve a dispute outside the courts. There are two types of arbitration: “voluntary” and “mandatory” (see voluntary arbitration and mandatory arbitration).
Arranged overdraft
The account provider and the consumer agree in advance that the consumer may borrow money when there is no money left in the account. The agreement determines a maximum amount that can be borrowed, and whether fees and interest will be charged to the consumer.
Ask/Bid Prices
A pair of prices, where “bid” is the price at which a trader is prepared to buy and “ask” is the price at which the trader is prepared to sell the security (note that “ask” is sometimes referred to as “offer”).
Assets
The various financial instruments and cash that an individual or organization owns.
Assignment
The legal transfer by the holder of a life insurance policy (the assignor) of the benefits of the policy to a lender (the assignee), as a collateral (security) for a loan. In the event of the death of the assignor, the assignee is paid first and the balance (if any) is paid to the policy's beneficiary.
ATM

See Automated Teller Machine.
Auditor’s Report
Often called the accountant’s opinion. It is the statement of the accounting firm’s work and its opinion of the company’s financial statements, especially if they conform to the normal and generally accepted practices of accountancy.
Authentication
A procedure which allows the institution to verify the identity of a payment service user or the validity of the use of a specific payment instrument, including the use of the user’s personalised security credentials.
Authorisation
The issuance of approval, by a credit card issuer, merchant, or other affiliate, to complete a credit card transaction.
Automated Teller Machine (ATM)
A 24/7 working machine that dispenses cash or performs other banking services when an account holder inserts a bank card and digits a PIN.
Available Balance
The balance of an account less any hold, uncollected funds, and restrictions against the account.
Available Credit
The difference between the credit limit assigned to a cardholder account and the present balance of the account.
Average
(i) A situation where the sum insured, on which the premium is based, is less than the full value of the insured property (also known as underinsurance). In such instances, the insured must bear a proportion of the loss in relation to the proportion of the sum insured to the full value.
(ii) In Marine insurance, it is the physical loss or damage caused by a marine peril.
B


Bad faith
The allegation that insurers have failed to act in good faith i.e. that they have acted in a manner inconsistent with what a reasonable policyholder would have expected. Bad faith can also be attributed to the proposer or assured.
Balance Sheet
A condensed financial statement showing the nature and amount of a company’s assets, liabilities and capital on a given date. The balance sheet shows what the company owned, what it owed, and the ownership interest in the company of its shareholders.
Bank
A licensed credit institution whose business is to receive deposits or other repayable funds from the public and to grant credit for its own account.
Bank Account
An arrangement with a bank in which the customer deposits and withdraws money and the bank keeps a record of those transactions.
Bank Account balance
The amount of money a person holds in a bank account at any given time.
Bank Account History
The payment history of an account over a specific period of time, including the number of times the account was overdue.
Bank Account Holder
Any and all persons designated and authorised to make transactions from an account. Each account holder's signature needs to be on file with the bank. The signature authorizes that person to use the account.
Bank draft
An order to pay on demand; a cheque written by one bank on its account with another bank, thus more acceptable to a payee (one to whom money is paid or payable) than a personal cheque. It is often used to send funds abroad.
Bank statements
A document that the bank sends to all clients at specific times of the year and reporting detailed information of each transaction for the relevant period. Usually, it is received in a monthly basis, for free. If a client requests it in a more frequent basis, the bank may charge a fee for those extra statements.
Banking Day
Any day in which normal banking business operations are conducted. See also Business Day.
Bankrupt
A bankrupt person, has insufficient assets to cover their debts. The debtor seeks relief through a court proceeding to work out a payment schedule or erase debts.
Base Rate
Rate as established by the individual bank for lending purposes or for those accounts earning interest (if any). Usually banks define this rate based on the reference date set by the central bank.
Basis Point
One step on a 100-point scale representing one percent: used especially in expressing variations in the yields of bonds. Fixed income yields vary often and slightly within one percent and the basis point scale easily expresses these changes in hundreds of one percent. For example, the difference between 12.83% and 12.88% is 5 basis point (or 0.05%).
Bear
A pessimist investor who expects the value of a product or market to fall.
Bear Market
A nickname investors give the stock market when security prices are generally declining over an extended period of time. Down markets got nicknamed bear markets because of the popular myth that bears attack with their paws pointing down. (See Bull Market)
Beneficiary
A person who is entitled to receive the benefits under a will, insurance policy, retirement plan, annuity, trust or other contract.
Benefit policy
An insurance policy that provides for stated amounts being payable in the event of specified contingencies happening. Such policies are not subject to the principles of indemnity. Examples are Personal Accident policies or Life Assurance policies.
Best execution
The duty of a regulated person providing investment service when executing clients orders taking all sufficient steps to obtain the best possible result for its Clients taking into account the best execution factors of price, costs, speed, likelihood of execution and settlement, size, nature or any other consideration relevant to the execution of the order
Betterment
Improvement which results from damage being repaired or reinstated and leaving property in a better condition than it was in before the damage.
BIC - Bank Identifier Code
Also referred to as SWIFT Code. It is a unique identification code for each bank, used particularly when transferring money between banks. Although it is optional for payments in euro, for other currencies it is mandatory.
Bid
The bid is the highest price anyone wants to pay for a security at a given time. (see Quote, Offer)
Bid-ask spread
The bid-ask spread is the difference between the price at which a market maker is willing to buy an asset and the price it is willing to sell at.
Blanket cover
Insurance cover for more than one item of property at a single location, or two or more items of property in different locations.
Block
A large order of the same security to be bought or sold by institutional or other large investors. A commonly used threshold is more than 10,000 shares (see also Block trade).
Block trade
A trade that involves a large quantity of stock (i.e., 10,000 shares or more) or a large euro amount of bonds (i.e., EUR 200,000 or more).
Blockchain
A distributed ledger through which transactions are recorded and verified by the users of the networks, in nodes which are distributed within the network.
Blue chip
Securities of a big, well-known company that has a history of good earnings. Some examples of blue chip companies are Disney, Microsoft and British Telecom.
Bond
Bonds are 'loans' to the company issuing the Bond. Therefore, when you purchase a Bond, you are lending money to that particular company. The issuer of a bond agrees to pay the investor the amount of the face value on a future date and to pay interest at a specified rate at regular intervals.
Bonus
(i) Share of the surplus of a life assurance company allocated to policy holders of with-profit policies.
(ii) Reduction of the premium on the renewal of the insurance contract, in the situations fixed in the policy (for example, no accidents occurred).
Bonus issue
Also known as free issues, scrip issues, capitalisation issues and stock dividends, bonus issue are additional shares given to the current shareholders without any additional cost, based on the number of shares that a shareholder owns, as an alternative to increasing the dividend payout.
As an example, in a 1 for 3 bonus issue, the shareholders receive one new share for every three existing shares they own.
Borrower
A person or company who incurs a loan or debt.
Brexit
Abbreviation for British Exit. It means that the United Kingdom will be leaving the European Union.
Broker
A person or company who acts as an intermediary and who deals with either agents or insurance companies in arranging for coverage required by the customer, being paid by commission.
Broker
A person or company who acts as an intermediary and who deals with either agents or insurance companies in arranging for coverage required by the customer, being paid by commission.
Budget
A tool for managing personal finances, tracking the money that comes in (income) and the one going out (expenses). It can help identifying what money a person has to save, spend and give.
Bull
An optimist investor who expects the value of a product or market to rise.
Bull market
A nickname investors give the stock market when stock prices are generally rising over an extended period of time. The bull market got its name by the popular myth that bulls raise their heads up high when they charge. (See Bear Market).
Bullet loan
A loan paid off with one lump sum (also called a balloon payment) instead of instalments.
Business day (BD)
Any day in which normal business operations are conducted.
Business Interruption
Also called Loss of Profits or Consequential Loss. This cover relates to the trading losses or additional expenses that result following the insured loss.
Business Owners policy
A policy that combines property, liability, and business interruption coverage for small to medium-sized businesses.
Buy-Back
A term mainly used in property insurance to describe the option to include certain cover that is normally excluded by paying an additional premium.
C

Call
The right of the issuer to redeem outstanding bonds before their scheduled maturity. Therefore a “callable bond” gives the option to the issuer to pay the face value of a bond before it matures.
Cancellation
The termination of an insurance policy before its normal expiry date, either by the insured or by the insurance company. The cancellation clause in the policy will show the terms for such cancellation and the period of notice required.
Cancelled Cheque
A cheque that a bank has paid, charged to the account holder's account, and then endorsed. Once cancelled, a cheque is no longer negotiable.
Capital
General term for cash or financial wealth. For example, that used to start or maintain a business, or that one granted by a loan.
Capital Protected Fund
A type of fund that guarantees an investor at least the initial investment plus any gains or returns, if held until the contract matures. Typically, these funds would indicate when the fund commences and the term until when it matures. There may be instances where no return is paid if the stock market is unfavourable. This type of fund tends to have higher expense ratios than other types of mutual funds.
Capital gain
The difference between a higher selling price and a lower purchase price of an asset. A person just has the gain when the asset is sold.
Capital loss
The loss on an investment when it is sold for less than it originally cost.
Capital Market
The market for the purchase and sale of medium- and long-term financial instruments, including bonds, notes, swaps, and equities.
Capitalisation
The value of a company obtained by multiplying the number of shares issued by their market price.
Capitalised interest
The interest that is not fully repaid with the instalment payments and is instead added to the total amount of the outstanding loan.
Card replacement
The consumer requests a replacement of a card that was lost, stolen or damaged.
Cash Advance Fee
A fee that a credit card issuer or a bank charge a customer for using a credit card to obtain cash. This fee can be a fixed fee or a percentage of the amount of the cash advance and may be higher than the one for the use of a debit card at an ATM.
Cash back
A benefit (usually monetary) paid by the regulated entity to the customers when making use of a particular product or service.
Cash withdrawal or deposit
The consumer requests to deposit or withdraw cash in or from an account.
Cease and Desist Letter
A letter requesting that a company stops the activity mentioned in the letter.
Central Bank of Malta
It is an independent institution, which take care of issuing bank notes and coins, setting interest rates, and controlling inflation.
Central Credit Register
A database that contains information of debtors (both legal and natural persons) and that is provided by local credit institutions. Banks report  to the Central Bank of Malta the end-of-month balances of exposures exceeding €5,000 of each customer.
Certificate
The actual piece of paper that is evidence of ownership of a share in a company or stock issued by a government.
Certificate of Deposit
A negotiable instrument issued by a bank in exchange for funds, usually bearing interest, deposited with the bank.
Certificate of Insurance
Official evidence, in the form of a certificate, as prescribed by law, that an insurance policy exists and that such policy at least covers the minimum requirements of the law, for example, that there is a Motor insurance in force which complies with the terms of the Motor Vehicles Insurance (Third Party Risks) Ordinance (Cap. 104).
Certified documents
Photocopies of original documents dated and signed off by professionals (e.g. a solicitor or a bank official) stating on the document that they have seen the original document and verified that the copies are genuine.
CFD

See Contracts for difference
Charge-off
A debt that is unlikely to be collected by the creditor because the borrower does not pay a debt for a period of time (usually 180 days). However, it does not mean the write-off of a debt entirely.
Charges
The fees that a licensed entity charges to its customers, e.g. transactions related fees, interest on overdrafts or declined payments due to unsufficient funds. See also Fees.
Cheque
A written, dated and signed printed form that contains an unconditional order directing a bank to pay a specified sum of money from the cheque writer's account to the person named on the check or, if a specific person is not named, to whoever bears the cheque to the institution for payment.
Cheque clearing
The process of transferring funds from the bank on which a cheque is drawn to the bank in which it was deposited. If a bank does not have a clearing arrangement with the bank on which a cheque is drawn, it will be unable to accept cheques from its customers drawn on that bank. Clearing of cheques takes some time since this involves presentation of the cheque to the bank on which it is drawn, and checking its authenticity. The clearing of cheques issued by banks in Malta is managed by the Malta Clearing House and the Central Bank of Malta is responsible for its operational management.
Churning (sometimes also known as excessive trading)
The action of an intermediary that excessively trades securities of an investor for the purpose of increasing his or her commissions, rather than to further the investor’s investment objective.
Civil Liability
Any liability which may be incurred in respect of the death of, or bodily injury to any person or in respect of any loss of, or damage to any property of any person which is required to be covered by a policy of insurance under compulsory insurance legislation.
Claim
A request for payment of a loss which may come under the terms of an insurance policy.
Cleared Date
The date when the funds can be withdrawn
Clearing
The process of transmitting, reconciling and, in some cases, confirming transfer orders prior to settlement, potentially including the netting of orders and the establishment of final positions for settlement.
Clients’ Account
Licensed entities are required to establish separate bank accounts into which investors’ money available for investment is maintained. MFSA prohibits an intermediary from using investors’ money to finance his own activities. It also requires licensed entities to segregate such money from that of his own.
Closed Ended Funds
Shares in Closed Ended Funds are not readily transferable on the market especially if they are not listed on a securities exchange. Shares issued by such funds are bought and sold similar to ordinary shares. The capitalisation of these companies remains the same unless action is taken to increase the issued share capital. (see Open Ended Funds)
Closed-End Loan
Generally, any loan in which the amount advanced, plus any finance charges, is expected to be repaid in full by a specified date. Most real estate and automobile loans are closed-end agreements.
Closing Costs
The expenses incurred by sellers and buyers in transferring ownership in real property. The costs of closing may include the origination fee, discount points, attorneys' fees, loan fees, title search and insurance, survey charge, and the credit report charge.
Co-insurance
A means of spreading the risk on larger insurances between two or more insurers, who share the insurance policy, each one being liable for his proportion of the risk.
Collateral
Assets (as properties) that a borrower offers to secure a loan. For example, for a real estate mortgage, the bank's collateral is typically the borrower`s house. Collateral becomes subject to seizure on default. See also security.
Collected Funds
Cash deposits or cheques that have been presented for payment and for which payment has been received.
Collection Agency
A company hired by a creditor to collect a debt that is owed. Creditors typically hire a collection agency only after they have made efforts to collect the debt themselves, usually through letters and telephone calls.
Collective Investment Scheme (“CIS”)
A type of investment scheme that involves collecting money from different investors and then combining all the money collected to fund the investment. The scheme or fund is divided into segments called ‘units’, which are to some degree similar to shares. Investors take a stake in the fund by buying these units – becoming unitholders. The price of a unit is based on the value of the investments the fund has invested in (see also Net Asset Value and mutual fund).
Collision Insurance
Protection against loss resulting from any damage to the policyholder's car caused by collision with another vehicle or object, or by upset of the insured car, whether it was the insured's fault or not.
Commission
(i) The broker's fee for purchasing or selling securities or property for a client.
(ii) The remuneration paid to an insurance agent or broker for the introduction of business, usually in the form of a percentage of the premium.
Commitment Fee

A tariff charged by a bank to its borrowers for unused credit or credit that has been promised at a specified future date. A commitment fee is different from interest; although, the two are often confused. A bank charges a borrower a commitment fee to keep a line of credit open, or to guarantee a loan at a certain future date even though the credit is not being used at that particular time.
CommoditiesRaw materials, such as precious metals or grains, for which contracts are bought and sold on commodities exchanges.
Competent authority
The Authority responsible for the regulation and supervision of entities providing either an investment; banking or insurance related service. In the case of Malta, this would be the MFSA
Compliance Officer
An official of a regulated person (entity) whose role is to ensure that the entity complies with all laws under which it operates and rules issued by the Regulator.
Compound interest
The interest on a loan or other fixed-income instrument where interest previously paid is included in the calculation of future interest. For example, if one has a loan of EUR 1,000 on a simple interest rate of 12% (giving a monthly simple interest rate of 1%), after a month, the interest owed is 1% of EUR 1,000, which is EUR 10, making the outstanding balance EUR 1,010. The next month, the 1% would be charged on that EUR 1,010, adding EUR 10.10 to the balance to make it EUR 1,020.10. This incremental increase continues each month, meaning that by the end of the year, the balance is EUR 1,126.83.
Compulsory Insurance
A requirement arising from law to effect insurance. In Malta it is compulsory for a user of a motor vehicle on a road to insure his liability for injury to others and damage to their property up to a specified limit.
Concealment
Deliberate failure of an applicant for insurance to reveal a material fact to the insurer.
Conditions (Policy conditions)
Provisions inserted in an insurance contract that qualify or place limitations on the insurer's promise to perform.
Consequential Loss
See Business Interruption.
Consideration
The money value of a transaction (the number of shares multiplied by the price) before adding or deducting commission, stamp duty etc.
Consumer
A natural person (individual) who is acting for purposes other than his trade, business or profession.
Consumer credit
Loans granted to households for personal use in the consumption of goods and services.
Continuous Payment Authority (CPA)
A type of automatic payment allowing a business to regularly take money from the payer`s debit or credit card whenever they think they’re owed money.
A CPA is different from a standing order or Direct Debit because the payment instruction is with the business, not with a bank. This gives them more flexibility in taking money from your account – they can charge fixed or varying amounts, and they don’t have to specify a date when they’re going to take a payment.
Contract
A binding agreement between two or more parties for the doing or not doing of certain things. A contract of insurance is embodied in a written document called the policy.
Contract Note
On the same day as a transaction takes place or by the next day following execution, an intermediary sends to the investor a contract note detailing the transaction including full title of the security, price, stamp duty (if applicable), consideration, commission, time of deal etc.
Contract of Insurance
An agreement of utmost good faith between the insurer and one or more parties, called the insured, whereby the insurer undertakes in return for the payment of a certain consideration, called the premium, to pay to the insured a certain sum of money or to grant certain compensation on the happening of a specified event.
Contracts for difference
An agreement between a ‘buyer’ and a ‘seller’ to exchange the difference between the current price of an underlying asset (shares, currencies, commodities, indices, etc.) and its price when the contract is closed thus requiring the investor to only put down a small margin (‘deposit’) of the total value of the trade.
CFDs are derivatives that allow traders to take advantage of prices moving up (long positions) or down (short positions) without directly dealing with the underlying financial instruments.
Contractual Liability
Liability that arises solely out of the terms of a contract that otherwise would not arise from common or statute law.
Contribution
If there are two or more indemnity policies covering the same interest in the same subject matter for the same risk, then insurers will share the loss proportionately. This supports the principle of indemnity.
Convertible bond
A type of bond that can be converted into shares of an issuing company at a specific price within a certain time frame.
Cooling-off period
The period of time during which the buyer of a life insurance policy may cancel the purchase withdrawing from the transaction at no expense. The Right to Withdraw (or Cooling-off Period) from a financial services contract is NOT AUTOMATIC and applies to select products only (such as a life insurance contract). For example, it does not apply for investments in securities or collective investment schemes.
Counterparty
Any party (person or institution) representing the opposite side in a financial deal.
Coupon
The interest that the borrower promises to pay the holder of a bond. A 5% coupon implies that the bond pays 5% interest.
Courier Charge
Postal expenses incurred for sending a foreign cheque for clearing or collection.
Cover Note
A document issued as evidence that insurance has been granted, pending the issue of a policy. There may be a time limit of 15 or 30 days for the issue of the policy although in some cases the time limit could be longer.
Credit
(i) when you receive money into your account. For example, if A sends a transfer to B, the operation will show up in B’s account as a credit.
(ii) the purchase of goods or services in the present with a promise to pay in the future, usually paying interest as well as the original money.
Credit Agreement
A document to be completed by an applicant seeking to apply for a credit with a lending institution. The information on the application is used to determine the borrower's credit history (residence, employment, income, and existing debt) to allow the lender to establish the applicant's creditworthiness. An application fee may be charged to cover the cost of loan processing.
Credit CardA card that gives the card holder access to a certain amount of money, known as a credit limit. The money must be paid back to the institution issuing the card at a later date.
There are two ways of paying back the money borrowed: either by repaying the entire amount by a given date (usually indicated on the card statement) or by paying the remaining balance either at the next payment date or in installments. Banks usually charge interest on the oustanding balance.
Credit Card Account Agreement
A written agreement that explains the terms and conditions of the account, credit usage and payment by the cardholder, and duties and responsibilities of the card issuer. See also Credit Card.
Credit Card Issuer
Any credit or financial institution that issues bank cards to those who apply for them.
Credit Institutions
Another designation for banks.
Institutions that can give loans to consumers but also receive deposits. That is the major difference in relation to financial institutions.
Credit Life Insurance
A type of life insurance that helps repay a loan if you should die before the loan is fully repaid. This is optional coverage.
Credit Limit
The maximum amount of credit that is available on a credit card or other line of credit account.
Credit rating
A rating given to a person or business from the credit industry. The score is obtained from the individual’s credit history and these details are available from specialist organisations. See also Ratings.
Credit Score
A number, roughly between 300 and 800, that measures an individual's credit worthiness. Banks use a credit score to help determine whether you qualify for a particular credit card, loan, or service.
Credit scoringBefore granting a loan to a customer, usually banks carry out an assessment to determine whether the customer is eligible for the loan.
In this process a company will take information from an application form when applying for credit and considering the answers given. There are certain responses that will attract higher scores than others, and depending on your total score the organisation will decide whether or not they want to do business with the individual.
Credit transfer
A payment instruction allowing the payer to instruct the institution with which its account is held to transfer funds to a beneficiary (the person who will receive the money).
Creditworthiness
The decision of the organisation which is deciding on whether they take the individual on as a customer. For instance, you may be considered creditworthy by one organisation, but not another. Every organisation has their own criteria and some may see you as a higher risk than others,
Cryptocurrency
A type of virtual currency that only exists digitally. It has no central issuing authority but uses a decentralized system to record transactions and manage the issuance of new units, and that relies on cryptography to prevent fraudulent transactions.
Current priceThe market price at any given time.
Custodian
Someone who is responsible for the safety of clients' assets.
Cut-Off Time
A time of day established by a licensed entity by which a client can send an instruction for processing by that entity.
For example, if a person wants to deposit cash in an account to be available on the same day he would need to visit the branch until the cut-off time, otherwise that deposit would be available on the next banking day.
D

Damages
Financial compensation for the loss suffered. This may be agreed between the parties or awarded by a court.
DCF
Abbreviation for discounted cash flow analysis, a method used to value a project, company, or financial asset.
DCM
Abbreviation for Debt Capital Markets.
Death Benefit
A payment made to a designated beneficiary upon the death of the life assured.
Debit
Money is transferred out from the bank account. Therefore, after such transaction one would have less monies in the account.
Debit Card
A debit card allows the owner to access his/her funds electronically. Debit cards may be used to obtain cash from automated teller machines or purchase goods or services using Point-Of-Sale systems (POS). When paying with a debit card the sum is immediately withdrawn from the bank account. If the amount needed for the purchase is higher than the amount deposited in the owner`s account, the transaction will be refused. Banks may limit the amount of transactions per day, e.g. by limiting the withdrawals to EUR 200 per day.
Debt
A sum owned by one person to another or to an institution. That person usually must repay the full amount plus interest.
Debt Collector
Any person who regularly collects debts owed to others.

Debt Service-To-Income (DSTI) RatioA measure of the amount of debt service payments relative to total disposable income. It is frequently used to assess households` ability to repay debt.
Debt settlement
A financial agreement between a borrower and a lender in which the borrower pays back less than the full amount of a debt and the lender agrees to accept this as full payment.
Debtor
Someone who owes monies to another party.
Declaration
A statement signed by the proposer (insured) at the foot of a proposal form, certifying the accuracy and truthfulness of the information given to the best of his/her knowledge or belief
Declaration Basis
An arrangement whereby a provisional or minimum premium is paid and subsequently adjusted by an additional or return premium on receipt of a declaration from the insured giving details of values at risk.
Declinature
The insurer's refusal to accept a new proposal or renew an existing policy after careful evaluation of the application for insurance and any other pertinent factors.
Decreasing Term Assurance
A form of Term assurance under which the sum assured decreases during the term of the policy.
Deductible
See Excess
Default

A credit whose collection is not certain (for banks and financial entities that have given the loan) since the borrower is assessed as being insolvent (i.e. is irreversibly incapable of paying the debt).
Deferred Payment
A payment postponed until a future date.
Deflation
The opposite of inflation. It means a decrease in the prices for goods and services.
Dematerialisation
Securities (such as shares and bonds) are no longer available in certificate form. Actual paper certificates are no longer (or rarely found) in circulation and have been replaced by electronic recording ("dematerialised"). This means that securities are now registered and transferred electronically.
Deposit
Money placed into a bank account. 
Deposit Slip
An itemized memorandum of the cash and other funds that a customer presents to the bank for credit to his or her account.
Depositing and encashing a cheque
The consumer presents a cheque, whether local or international, for deposit or encashment.
Depositor Compensation Scheme
The Depositor Compensation Scheme is a rescue fund for depositors of failed banks which are licensed by the MFSA. The Scheme can only pay compensation if a bank is unable to meet its obligations towards depositors or has otherwise suspended payment. The Scheme is based on the EU Directive 2014/49/EU on deposit-guarantee schemes. For more information check https://www.compensationschemes.org.mt/
Depreciation
A decrease in the value of a good or property over a period of time due to wear and tear or obsolescence.
Derivative
A financial instrument whose characteristics and value depend upon the characteristics and value of an underlying financial instrument such as a bond, share or currency. Futures and options are examples of derivatives. Professional investors may purchase or sell derivatives to manage the risk associated with the underlying financial instrument, to protect against fluctuations in value, or to profit from periods of inactivity or decline. Derivatives are complicated and risky, and not usually available to retail investors.
Direct Debit
The consumer permits someone else (recipient) to instruct the account provider to transfer money from the consumer's account to that recipient. The account provider then transfers money to the recipient on a date or dates agreed by the consumer and the recipient. The amount may vary.
Direct Loss
The loss/damage suffered by the insured person/entity caused by a disaster, accident or event. For example office furniture lost during a fire is a direct loss.
Director
Person elected by shareholders, usually during an annual meeting, to serve on the Board of Directors of a company. Directors decide, among other matters, if and when dividends shall be paid.
Disclosures
Certain information that a licensed entity is required to provide to its customers/prospective customers in terms of a specific product or service.
Discount
The amount by which a stock may sell below its par value.
Discretionary Portfolio Management
When you are provided with a discretionary portfolio management service, this means that the portfolio manager will carry out transactions (i.e buy or sell a financial instrument) without asking for permission before carrying out such transaction. When setting up the account, you have to discuss with the portfolio manager what are your investment objectives and your appetite to risk and any other information relevant for the investments and then the portfolio manager will take the decisions in line with your requirements as discussed at account opening stage
Discretionary Portfolio Management
The practice of putting money into a number of different investments (Don't put all your eggs in one basket!) in order to reduce the risk of losing money. Collective Investment Schemes are typically diversified investments.
Dividend
The payment determined by the Board of Directors to be distributed among the shareholders of a company. The dividend varies with the profits of the company and may not be distributed if business is poor or if the directors determine to withhold earnings to invest in plants and equipment. Sometimes a company will pay a dividend out of past profits even if it is not currently operating at a profit.
Dormant Account
See inactive account.
Draft
A signed, written order by which one party (the drawer) instructs another party (the drawee) to pay a specified sum to a third party (the payee), at sight or at a specific date. Typical bank drafts are negotiable instruments and are similar in many ways to checks. See also Bank Drafts.
Drawee
The person (or bank) who is expected to pay a cheque or draft when it is presented for payment.
Drawer
The person who writes a cheque or draft in payment for goods or services to someone else.
Due diligence

The checks carried out by a regulated person on its prospective customers/customers/service providers or counterparties before entering into a transaction; concluding an agreement, etc.
Durable medium
Any instrument which enables the recipient to store information addressed personally to the recipient in a way accessible for future reference for a period of time adequate to the purposes of the information and which allows the unchanged reproduction of the information stored.
Duty of Disclosure
The duty of the proposer to disclose all the material facts (to the insurer) about the risk being proposed whether such facts are requested or not.
E


Early repayment charge
The fee that a bank may charge the customer repaying all or part of a loan earlier than the agreed term.
This may not always apply, or if applied it may not exceed a certain amount of the credit repaid early, but the sanction letter should include a statement as to the circumstances under which such fee may be levied and the extent of the fee.
Earnings Per Share (EPS)
EPS is the total profit that a company has made, divided up among the ownership units (shares). EPS is reported quarterly and is calculated by dividing the net income (earnings) for the quarter by the number of shares outstanding during that quarter.
Effective Date
The date on which the insurance cover under a policy begins. Also called the Inception date.
Electronic Money
A monetary value, represented by a claim on the issuer, which is: (i) stored on an electronic device (e.g. a card or computer);
(ii) issued upon receipt of funds in an amount not less in value than the monetary value received; and
(iii) accepted as a means of payment by undertakings other than the issuer.
Encroachment
The situation where either (i) an account is overdrawn without a formally approved overdraft limit or (ii) an account has become overdrawn beyond the agreed overdraft limit (where the account is said to be "in excess"). Such "encroached" accounts may be subject to a specific additional fee by the bank, which is usually referred to as an "encroachment fee.
Endorsement
Any amendment to the standard terms of a policy or to the original agreed terms. These amendments are evidenced by an additional document that is attached to the policy. See also Rider.
Endowment
Life insurance payable to the policyholder if living, on the maturity date stated in the policy, or to a beneficiary if the insured dies prior to that date. Can be With or Without Profits.
Equity
Shares in a listed company. Equity is finance raised from investors in exchange for a share in the business.
Error Resolution
The required process for resolving errors involving electronic transfers to and from deposit accounts.
Escrow
A financial instrument held by a third party on behalf of the other two parties in a transaction. The funds are held by the escrow service until it receives the appropriate written or oral instructions-or until obligations have been fulfilled. Securities, funds, and other assets can be held in escrow.
Escrow Analysis
The periodic examination of escrow accounts by a mortgage company to verify that monthly deposits are sufficient to pay taxes, insurance, and other escrow-related items on when due.
EU
Abbreviation of European Union. Presently, the countries forming part of the EU are: Austria, Belgium, Bulgaria, Cyprus, Croatia, Czechia, Denmark, , Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and United Kingdom.
Eurobond
(i) A long-term loan issued in a currency other than that of a country or market in which it is issued. Interest is paid without the deduction of tax.
(ii) The term Eurobond – with a capital “E” – refers to an unrelated proposal for joint bonds issued by Eurozone countries.
Ex Gratia
A payment made where there is no legal liability
Excess
The first portion of a loss, being an agreed or fixed sum, which the insured agrees to bear.
Exclusion or Exception
Specific conditions or circumstances listed in the policy for which the policy will not provide cover
Ex-Dividend
A synonym for ‘without dividend’. A share is described ex-dividend (xd or ex-div) when a potential purchaser will no longer be entitled to receive the company’s current dividend, the right to which remains with the vendor.
Execution venue
The place where a transaction takes place, usually a regulated market (such as a Stock Exchange), an MTF, a systematic internaliser or a market maker or other liquidity provider or an entity that performs a similar function in a Third Country.
Execution-only
The provision of an investment service without the carrying out of the suitability or appropriateness test only under specific circumstances for example the financial instrument is not complex.
Exit fees
Fees payable by a customer in case or early redemption (investments) or early repayments (loans). See also closing costs.
Expired facility
A sanction letter will normally include an expiry date. It would usually bind the borrower as to the date by which time the facility has to be repaid. If a facility is not repaid by the stipulated date, the bank would normally have to review the situation before agreeing to extend the facility. In the case of business facilities updated supporting documentation will normally be required by the bank before extension or renewal of the facilities can be sanctioned. The bank would normally charge a fee for undertaking the required review of facilities.
Externalities
Social consequences of financial transactions and economic activity that are either positive (benefits) or negative (costs).
F


Face Value
The value of a bond that appears on the certificate of the bond, unless the value is otherwise specified by the issuing company. It is the nominal value of a bond stated by the issuer. See also par value.
Facility
Another name for loans taken on by consumers and companies. Examples of such facilities include loans, advances, overdrafts, lines of credit etc.
Fact Find
A document recording information about customers, their finances and their present and future needs that investment firms must acquire before providing them with advice or managing their portfolios. Also called 'Client Profile'.
Fair Market price
A reasonable price for securities based on supply and demand. The price that a consumer would consider as adequate to pay for a security.
Fair Value Accounting (FVA)
A valuation principle that stipulates the use of either a market price, where it exists, or an estimation of a market price as the present value of expected cash flows to establish the balance sheet value of financial instruments.
Fee Information Document
A document reporting the fees for using the services linked to a payment account. It will help customers to compare these fees with those of other accounts and shall be given to customers by the bank when they request information about accounts.
Fees
All charges and penalties, if any, payable by the consumer to the institution for or in relation to services provided by that institution. See also commissions.
Fidelity Bond
A form of protection which reimburses an employer for losses caused by dishonest or fraudulent acts of employees.
Fiduciary
A person who holds something in trust for another.
Financial Instrument
Financial instruments are assets that can be traded. These assets can be cash, a contractual right to deliver or receive cash or another type of financial instrument, or evidence of one's ownership of an entity.
Financial Market
Markets in which those who have a surplus of funds lend to those who have a shortage.
Financial Year
A company’s accounting year. Due to the nature of that particular business, some companies do not use the calendar year for their bookkeeping. A typical example is the department store that finds December 31 too early a date to close its books after the Christmas rush. For that reason many stores wind up their accounting year on January 31. Their financial year, therefore, runs from February 1 of one year through January 31 of the next. The financial year of other companies may run from July 1 through the following June 30. Most companies though, operate on a calendar year basis.
Fixed income
Bonds, bills, and interest‐bearing notes that pay a specific interest rate over the life of a loan.
Fixed Rate Loan
The interest rate and the payment remain the same over the life of the loan. The consumer makes equal monthly payments of principal and interest until the debt is paid in full.
Fixed Rate Mortgage
A fixed-rate mortgage offering a set interest rate and payments that do not change throughout the life, or "term," of the loan.
A conventional fixed-rate loan is fully paid off over a given number of years - usually 15, 20, 30 or 35. A portion of each monthly payment goes towards paying back the money borrowed, the "principal"; the rest is "interest."
Fixed Rate Mortgage
A mortgage with payments that remain the same throughout the life of the loan because the interest rate and other terms are fixed and do not change.
Flotation
Issuing new shares or stocks.
Foreign bank
Any subsidiary or branch that is controlled by either an EU or a non-EU parent other then Malta.
Foreign Cheques
Cheques issued by an institution that is not located in Malta. Banks can charge extra fees for sending the cheque for clearance abroad.
Foreign Insurer
An insurer who is represented in Malta but is incorporated in another country, such as the UK.
Foreign Transaction Fees
A fee assessed by a bank to a customer for making a transaction using another bank's ATM, located outside Malta.
Forged Cheque
A cheque on which the drawer's signature has been forged. See also Forgery.
Forgery
The fraudulent signing or alteration of another's name to an instrument such as a deed, mortgage, or cheque. The intent of the forgery is to deceive or defraud.
Fortuitous Loss
Unforeseen and unexpected loss that occurs as a result of chance.
Framework contract
(i) An agreement between two parties to buy or sell an asset at a specified price on a given date. The terms (such as the delivery time and quantity) may be more “personalized” than is the case with standardized futures contracts.
(ii) A contract that established the terms and conditions to be applied in a specific product or service (as a loan or a card).
Frozen Account
An account on which funds may not be withdrawn until a lien is satisfied and a court order or other legal process makes the account available for withdrawal (e.g., the account of a deceased person is frozen pending a court order distributing the funds to the new lawful owners).
An account may also be frozen:
- when there is a dispute regarding the true ownership of an account. The bank will freeze the account to preserve the existing funds until legal action can determine the lawful owner;
- when there is a problem in the Bank and the competent authority orders that all the accounts are frozen until further notice.
FTSE 100
The Financial Times Stock Exchange index of the listed companies with the biggest market value in the UK. The index is revised every three months.
Fund Manager (or Fund Management Company)
A Fund Manager is usually a company whose line of business is investing in other companies and entities on behalf of a collective investment scheme. The Scheme appoints the Fund Manager to buy and sell securities in accordance with the investment objectives.
Future
A contract to buy or sell securities or a commodity at a predetermined price on a specified future date.
FX
Abbreviation for foreign exchange.
G


Garnishee
A legal process that allows a creditor to remove funds from the debtor`s bank account to satisfy a debt.
GCM
Abbreviation for Global Capital Markets.
GDP
Abbreviation for Gross Domestic Product. The total value of everything produced by all the people and companies in a country. It represents a broad measure of a nation’s economic well-being.
Gearing
The level of a company's debt expressed as a percentage of its equity capital.
Going Public
The process of a company selling shares that were privately held to the public for the first time. Also known as Initial Public Offering.
Going-concern value
The value of a company as an operating business to another company or individual. (See goodwill)
Gone-concern value
The value of a company that would be realised if its assets were liquidated.
Goodwill
The going-concern value of a company in excess of its asset value. Generally, it is the value of the business’ good name, its customer relations, high employee morale, and other factors that might translate into earning power.
Grace Period
A provision in loan and insurance contracts that allows payment to be received for a certain period of time after the actual due date with no late fees charged. 
Guarantor
A party who agrees to be responsible for the payment of another party's debts should that party default.
H


Hazard
Condition that creates or increases the chance of loss.
Health Insurance
Protection which provides payment of benefits for covered sickness or injury. Included under this heading are various types of insurance such as Accident insurance, Disability income insurance, Medical expense insurance, and Accidental death and Dismemberment insurance.
Hedge
The practice of balancing one`s investments in order to limit exposure to risk.
Hedge fund
A kind of alternative investment fund that is designed for professional investors and not regulated at EU level by the UCITS directive. The alternative investment fund managers (AIFM) directive covers managers of alternative investment schemes.
Hold
Used to indicate that a certain amount of a customer's balance may not be withdrawn until an item has been collected, or until a specific cheque or debit is posted.
Home Banking (see also Online banking)
Banking services which customers of credit institutions can access using various kinds of telecommunication device (e.g. telephones, mobile phones and personal computers).
Home Loan
See mortgage and mortgage loan.
Homeowners Policy
A package of insurance providing home owners with a broad range of property and liability coverage.
I
IBAN - International Bank Account Number
International Bank Account Number. The IBAN is a set standard for bank account numbers that uniquely identifies a customer’s bank account held at a bank anywhere in the world. It is quoted on bank statements together with the BIC.
Inactive Account
An account that has no activity; neither deposits nor withdrawals having been posted to the account for a significant period of time, usually 24 months, other than posting of the interest and/or service charges.
Indemnification
Compensation to the victim of a loss, in whole or in part, by payment, repair, or replacement.
Indemnity
Legal principle that specifies that an insured should not collect more than the actual cash value of a loss but should be restored to the same financial position that he enjoyed before the loss. This does not apply to policies which offer defined benefits or “new for old” cover.
Index-linked or indexing
Adjusting of values over a period of time to reflect the impact of inflation.
Individual Account
An account in the name of one individual.
Inducements
This refers to the monies or other non monetary benefits your bank/investment firms receives from another company when providing an investment service in relation to a particular financial instrument to their customers. The company receiving the 'inducement' must disclose this to its customer before providing an investment service and can only accept the monies or non-monetary benefit if certain conditions are met for example the company still acts in the best interest of its customer; as a result of such 'inducement' the company will offer a better service to its customers. If you are provided with an advisory service, and the company is receiving inducements, this must be disclosed to you before being provided with the advisory service.
Inflation
Increase in the prices for goods and services.
Informed decision
A decision which is taken after all details are explained or provided by a firm.
Initial Public Offering (IPO)

A company’s first offering of shares to the public. (see Going Public and IPO)
Insolvent
Having insufficient financial resources (assets) to meet financial obligations (liabilities).
Instant Payments
Electronic retail payment solutions available at any time and day of the year, resulting in the immediate or close-to-immediate interbank clearing of the transaction and crediting of the payee’s account with confirmation to the payer (within seconds of payment initiation).
Insufficient Funds
When a depositor's account balance is not enough to pay a cheque presented for payment. See also Overdraft.
Insurable Interest
This is the financial relationship that must exist between the insured and the subject-matter of the insurance policy such that he benefits from its safety or absence of liability or is prejudiced by its loss/damage or existence of liability. This relationship gives the insured the legal right to insure that subject-matter.
Insurable Risk
The conditions that make a risk insurable to an insurer are:
(i) the peril insured against must produce a definite loss not under the control of the insured
(ii) there must be a large number of circumstances which are alike and subject to the same perils
(iii) the loss must be calculable and the cost of insuring it must be economically feasible
(iv) the peril must be unlikely to affect all insured simultaneously and
(v) the loss produced by a risk must be definite and have a potential to be financially serious.
Insurance Company
Any corporation primarily engaged in the business of furnishing insurance protection to the public.
Insured (The)
A person or organisation covered by an insurance policy, including the 'named insured' and any other parties for whom protection is provided under the policy terms.
Insured Deposits
Deposits held in credit institutions that are guaranteed by the Depositor Compensation Scheme that will pay compensation if a bank is unable to meet its obligations towards depositors. The maximum amount covered per person and per credit institution is 100,000€
Insured Value
The maximum amount that the insurer would pay for own damage claims under an insurance policy.
Insurer (The)
Name given to the organisation providing insurance. Also known as principal or insurance company.
Interest
Lending money comes with a certain level of risk, so to compensate the lender for this risk, customers are charged an additional amount alongside the principal, and that's what is known as the interest. Different lenders charge different interest depending on the type of agreement.
In investments, if you invest the money, interest will be paid where appropriate to the investment.
See also Compound Interest and Simple Interest.
Interest Rate
Interest is what you pay for borrowing money and what banks pay you for saving money with them. Interest is shown as a percentage of the amount you borrow or save over a year.
Internet Scam
A type of fraud which makes use of the Internet. See also phishing.
Investment Firm
Any regulated entity whose regular occupation or business is the provision of any one or more investment services to third parties on a professional basis (see also Investment Service).
Investment grade
A rating category indicating relatively low to moderate credit risk. It is a market convention and does not imply any recommendation or endorsement of a specific security for investment purposes.
Investment Income
The portion of a company's or of an individual's income which is derived from its investments, including interest and dividends on shares and bonds
Investment objective
The goal – such as growth, capital appreciation, or income – that an investor pursues.
Collective investment schemes also have investment objectives which are stated in the prospectus. The investment objective often determines the type of securities in which the fund invests, the result expected and the level of risk with which it is associated.
Investment Portfolio
A variety of securities owned by an individual or an institution.
Investment risk
The possibility of losing money or not gaining value in an investment.
Investment Service
This refers to the regulated service an investment entity can provide and include advisory services, receiving instructions from customers and sending it to another entity for execution (known as reception and transmission of orders); execution of orders as well as management of your portfolio. The services that an entity would be licensed to carry out are listed on its licence.
Investor Compensation Scheme
The Investor Compensation Scheme is a rescue fund for customers of failed investment firms which are licensed by the MFSA. The Scheme can only pay compensation if a licensed investment firm is unable or likely to be unable to pay claims against it. In general this is when the licensed firm stops trading or becomes insolvent. The Scheme is based on the EU Directive 97/9 on investor-compensation schemes. For more information check https://www.compensationschemes.org.mt/
IPO
See Initial Public Offering, the inaugural issuance of stock or other securities by a company for sale to the public.
Issued capital
Each share represents the amount that a person has invested in that company
J

Issuing bank or issuer
A bank or other financial institution that issues credit cards to cardholders and reimburses an acquirer for transactions made by cardholders (see also acquirer).
Joint Account
An account owned by two or more persons. Either party can conduct transactions separately or together as set forth in the deposit account contract.
Jurisdiction Clause
A clause in the insurance policy that identifies in which country a claim must be brought against the insured for the policy to operate.
L

Lapse
The termination or discontinuance of an insurance policy due to non-payment of the renewal premium.
Late Charge
The fee charged for a late payment on an installment loan, usually expressed as a percentage of the loan balance or payment. Also, a penalty imposed by a card issuer against a cardholder's account for failing to make minimum payments.
Leader
The insurer who accepts the largest share of a risk which is co-insured.
Lease
A contract transferring the use of property or occupancy of land, space, or equipment in consideration of a payment (e.g., rent) during a specific period of time. There are two main kinds of leases as ownership of the asset can be transferred to the lessee at the end of the contract or the lessor can retain all rights of ownership at all times.
Legal Limit
The minimum monetary limit set by the law which an insurer can agree to pay in the event of loss or damage which is covered under the insurance policy.
Lender
A licensed credit or financial institution that lends money with the expectation that the money will be returned with interest.
Letter of Comfort
A letter of comfort can be used by banks expressing an opinion that a borrower can meet the payment obligations of a loan. They are opinions and are not guarantees that the bank will pay if the borrower fails to meet his obligations
Level Premium
A premium which remains unchanged throughout the term of a policy
Leverage
Using debt to finance a transaction or deal. A highly leveraged company is one which has taken on a large amount of debt. See also gearing.
Liability
(i) The debts and other financial obligations of a person or company; the opposite of assets.
Liability Insurance
Insurance covering the policyholder's legal liability resulting from injuries to other persons or damage to their property.
Lien
Legal claim against a property. Once the property is sold, the lien holder is then paid the amount that is owed.
Life Assured
This refers to the person being covered by the life insurance policy.
Limit of Indemnity
The maximum amount payable for any one claim or series of claims arising from one event.
Linked Long Term Contracts of Insurance or LLTCI
An LLTCI is a Life Assurance policy linked to property of any description – such as units in a collective investment scheme. The benefits are wholly or partly determined by reference to the value of the units in the collective investment scheme.
Liquidation
Dissolving a company by selling its assets for cash.
Liquidity
"In terms of assets, it means how quickly one can sell that asset in exchange for cash. For example money held in a fixed term account ( for example for three years) cannot be withdrawn before the accounts matures and is not very liquid"
Listed Security
The security of a company that is traded on a Stock Exchange.
Load
A one-time sales charge that some collective investment schemes charge unitholders to compensate the intermediary who sells the funds. The load is usually incurred only on purchase, there being, in most cases, no charge when the shares are sold (redeemed).
Loan To Value (LTV)
The ratio of the amount borrowed to the appraised value or market value of the underlying collateral, usually taken into consideration in relation to loans for real estate financing.
Loan Contract
The written agreement between a borrower and a lender in which the terms and conditions of the loan are set. See also Credit Agreement.
Local Cheque
A cheque payable by, at, or through a bank in Malta. The branch of the depository bank, which is the bank into which the cheque was deposited, shall also be located in Malta.
Long Term business
Policies of insurance that are not renewable annually at the option of the insurer but continue for a number of years. Life assurances are the most common form.
Loss
The happening of the event for which insurance pays.
Loss of use
(i) Value assigned to not having use of the damaged property for a period following the loss.
(ii) An extension to a Motor policy which covers the cost of renting a replacement vehicle while one's car is being repaired.
M

Maintaining the account
The account provider operates the account for use by the consumer.
Making payments using a local Debit or Credit Card
The account provider only enables the consumer to make local payments using a local debit or credit card.
Making payments using an International Debit or Credit Card
The account provider enables the consumer to make payments using an international debit or credit card.
Mandatory Arbitration
Arbitration is mandatory in the event of:
(i) any collision between vehicles, or
(ii) any involuntary damage to property involving vehicles, or
(iii) any such claim against an authorised insurer who in accordance with the Motor Vehicles Insurance (Third-Party Risks) Ordinance (Cap. 104) or any policy of insurance may be liable therefor, and
(iv) the value whereof does not exceed €11,646.87. A dispute for damages for personal injuries cannot be referred to arbitration. Therefore, two parties which are locked in a dispute as to who is at fault in a collision, where damages are less than €11,646.87 and none of the parties had been injured are required to refer their case to arbitration at the Malta Arbitration Centre. Decisions taken in respect of mandatory arbitration are public. The arbitration award is final and binding and cannot be appealed, except for points of law. This means that the parties cannot refer the case to the courts for the merits of the case to be reassessed.
Market Manipulation
An illegal operation. To enter into a transaction, place an order to trade, disseminate information or behave in any other way that gives false or misleading signals as to the supply of, demand for, or price of a financial instrument.
Margin of Solvency
The total assets of an insurance company must exceed its liabilities (other than share capital) by a relevant amount, known as the margin of solvency.
Marine Insurance
A form of insurance primarily concerned with means of transportation and communication (such as marine hull), and with goods in transit by sea, air or across frontier (such as marine cargo).
Market maker
Intermediaries, banks or stockbrokers who buy and sell securities on their own behalf to sell at a profit.
Market Price
The last reported price at which the security or good sold.
Market Value
(i) The market price obtained by multiplying the company's outstanding shares by its current market price.
(ii)The market value of a stock or bond is the current price at which that security is trading.
If an item has not been priced for sale, its fair market value is the amount a buyer and seller agree upon, assuming that both know what the item is worth and neither is being forced to complete the transaction.
Material Fact
A fact which influences a prudent underwriter in deciding whether to accept or to decline a risk and, if he accepts, in determining the rate and the imposition of special conditions, if any.
Maturity
(i) The end of the term granted to fulfil a certain duty, whether of payment of the price or of delivery of a certain asset.
(ii) The end of the term of an Endowment insurance policy when payment of the sum insured becomes due.
Maturity Date
The date on which a product expires. In the case of a bond, for example, it is the date when it comes due and must be paid off.
MD
Abbreviation for Managing Director.
Means of payments
Assets or claims on assets that are accepted by a payee as discharging a payment obligation on the part of a payer vis-à-vis the payee.
Medical Examination
The examination given by a qualified physician to determine the applicant’s state of health. A medical examination may also be used to determine whether an insured claiming disability is actually disabled and, if applicable, the percentage of disability.
Merger
A consolidation where the combined net assets of two or more companies form a new company.
MFSA
Malta Financial Services Authority. It is the single regulator for financial services in Malta.
MiFID
Markets in Financial Instruments Directive. Replaced by MiFiD 2
MiFID 2
MiFID II is a legislative framework instituted by the European Union to improve protection for investors with the aim of restoring confidence in the industry after the financial crisis exposed weaknesses in the system. It aims also to improve the transparency and the quality of the financial market.
Min
Short for minimum
Minimum Balance
The amount of money required to be on deposit in an account to qualify the depositor for a certain service.
Minimum Payment
The minimum amount that must be paid each month on a loan, line of credit, or other debt.
Misrepresentation
A false, incorrect, improper, or incomplete statement of a material fact, made in the application for a policy.
Missing Payment
A payment that has been made but not credited to the appropriate account.
Money Laundering
This is money gained from crime that is put into a bank account so it can be accessed safely by criminals and terrorists.
Money laundering is the practice of moving that money through legitimate channels in order to conceal its source or to prevent knowledge of the money in question.
Money Market
The market for the purchase and sale of short-term financial instruments with maturities that usually range from overnight to just under a year.
Moral hazard
The risk arising from the character, behaviour and circumstances of the policyholder including carelessness, safety standards, conviction record and extent of claims made.
Mortgage
A debt instrument used in a real estate transaction where the property is the collateral for the loan. A mortgage gives the lender a right to take possession of the property if the borrower fails to pay off the loan. See also Mortgage Loan.
Mortgage Loan
A loan made by a lender to a borrower for the financing of a house. See also Mortgage.
Mortgagee
The lender in a mortgage loan relationship.
Mortgagor
The borrower in a mortgage loan relationship. (Property is used as collateral to make payment.)
Motor Insurers’ Bureau (MIB)
The Motor Insurers’ Bureau (MIB) comprises all the insurers that are licensed to transact motor insurance business in Malta. The MIB compensates third party accident victims of negligent uninsured or untraced drivers. 
Mutual Company
A company owned by its policyholders.
Mutual Fund
A fund operated by an investment company that raises money from shareholders and invests it in stocks, bonds, options, commodities, or money market securities. These funds offer investors the advantages of diversification and professional management. To participate, the investor may pay fees and expenses.
N
N/A
Not applicable i.e. service that is not provided, clause that does not apply to the specific situation, etc.
Named Perils
Coverage in a property policy that provides protection against loss only from the perils specifically listed in the policy rather than protection from physical loss. Examples of named perils are fire, windstorm, theft, smoke, etc.
NCD Protection
An add-on purchased with a motor insurance policy which protects customer`s No-Claims Discount in the event that the customer makes a claim.
Negligence
Failure to use the care that a reasonable and prudent person would have used under the same or similar circumstances.
Negotiable instrument
A document that contains a promise to pay a specific amount of money to a person or entity in possession of the instrument, whether on a specified date or on demand.
Net Asset Value (NAV)
Represents the net value of an entity, and is calculated as the total value of the entity’s assets minus the total value of its liabilities.
Usually used in connection with collective investment schemes to mean net asset value per share. A collective investment scheme computes its assets by totalling the market value of all securities owned. All expenses are deducted, and the balance divided by the number of units held by the fund’s investors. The resulting figure is the net asset value per unit.
Net Return
See Return.
New for Old
A clause in insurance contracts meaning that, even if an item which has been damaged is very old, it will be replaced with a new one of the same make and specification.
Nil
No charge (for the specific service).
No load
(i) A term used to describe collective investment schemes that have no sales charges.
(ii) A term used to describe a mutual fund in which shares are sold without a commission or sales charge. This occurs because the shares are distributed directly by the investment company, instead of going through a secondary party.
Nominee
A person or entity who is requested or named to act for another.
Nominee Services
Investors' money and investments are held in the name of the regulated person (entity) on their behalf.
Non Performing Loan (NPL)
A bank loan is considered non-performing when more than 90 days pass without the borrower paying the agreed instalments or interest. Non-performing loans are also called “bad debt”.
Non-professional investor
See Retail Investor.
O
Occupational Hazards
Occupations which expose the insured to greater than normal physical danger by the very nature of the work in which the insured is engaged, and the varying periods of absence from the occupation, due to the disability, that can be expected.
Offer
The price at which a person is ready to sell.
Online Banking
A service that allows an account holder to obtain account information and manage certain banking transactions through a personal computer via the financial institution's web site on the Internet. (This is also known as Internet or electronic banking or home banking.)
Open-End Credit
A credit agreement (typically a credit card) that allows a customer to borrow against a preapproved credit line when purchasing goods and services. The borrower is only billed for the amount that is actually borrowed plus any interest due. (See also revolving credit.)
Open-ended Funds
Open-ended funds sell their own new units to investors, stand ready to buy back their old units, and are sometimes listed on a stock exchange. Open-ended funds are so called because their capitalisation is not fixed, they issue more shares depending on how much investors want to invest (in the fund). In Malta, the words SICAV p.l.c. (a French acronym that stands for collective investment scheme with variable capital) which follows a name of a collective investment scheme denote that the fund is open ended.
Option
A financial instrument that gives the owner the right, but not the obligation, to buy or sell specific assets (e.g. a bond or a stock) at a predetermined price (the strike or exercise price) at or up to a certain future date (the exercise or maturity date).
Orders
Specific instructions for handling transactions
Ordinary Shares
The most common form of share. Holders receive dividends which vary in amount in line with the profitability of the company and recommendation of directors. The holders are the owners of the company.
OTC (Over the Counter) Trading
A method of trading that does not involve a regulated market. In over-the-counter markets, participants trade directly with each other.
Outstanding Cheque
A cheque written by a depositor that has not yet been presented for payment to - or, if presented, still not paid by - the depositor's bank.
Outward Special Clearing
A customer instructs his bank to ensure that a cheque drawn on another local bank is cleared without any delay. See Special Clearing.
Over limit
An open-end credit account in which the assigned limit has been exceeded.
Overdraft
A negative balance in a bank account caused by withdrawing more money than the account holds. This can be either authorized, when the customer agrees with the bank an amount that can be withdrawn over the balance in the account, or unauthorized. The bank may charge fees and interest.
Overdrawn
When you withdraw more money than is available from your account. See also overdraft.
Overdrawn cheque
A cheque which was given to somebody and which has no funds.
Overseas transaction charge
A charge added to the exchange rate for using a card abroad to make a purchase in a foreign currency. Also referred to as “Issuer Option Fee”.
P

Package Policy
A policy covering several different classes of insurance.
Paid-up Policy
Policy kept in force for a reduced sum assured after the premiums have ceased to be paid prematurely.
Par Value
See Face Value
Partnership
A business relationship in which two or more people agree to share the risks and profits of running a business.
Passbook
A book in ledger form in which are recorded all deposits, withdrawals, and earnings of a customer's savings account.
Past Due Item
Any note or other time instrument of indebtedness that has not been paid on the due date.
Payday Loans
A small-amount, short-term loan that a borrower promises to repay out of their next paycheque or deposit of funds.
Payee
The person in whose favour some other person, the drawer or payer, makes out a cheque or draft, i.e. the person receiving the payment.
Payer
The person or organisation who pays.
Paying (Payer) Bank
The party to a payment transaction which issues the payment order or agrees to the transfer of funds to the payee.
Payment account
An account held in the name of one or more payment services users (persons or entities) where the holders can place and withdraw funds and make payment transactions.
Payment Due Date
The date on which a payment is due. It is set by a credit or financial institution. Any payment effected after this date is considered as a late payment and late payment fees might be charged by the credit/financial institutions (in case of borrowing).
Payment initiation service
A service to initiate a payment order at the request of the payment service user with respect to a payment account held at another payment service provider.
Payment Initiation Service Provider (PISP)
A payment service provider which provides payment initiation services (PIS).
Payment instrument
A tool or a set of procedures enabling the transfer of funds from a payer to a payee. The payer and the payee can be one and the same person.
Payment Protection Insurance (PPI)
An insurance policy which insures borrowers against an accident, sickness or unemployment circumstances that may prevent them from earning a salary/wage by which they can service the debt.
Payment service provider
An entity providing a payment service (e.g. card, payment account).
Payment service user
A natural or legal person making use of a payment service.
Payment transaction
An act, initiated by the payer or on his behalf or by the payee, of placing, transferring or withdrawing funds, irrespective of any underlying obligations between the payer and the payee.
Payoff
The complete repayment of a loan, including principal, interest, and any other amounts due. Payoff occurs either over the full term of the loan or through prepayments.
Penal Rates
When an overdraft facility is in excess of the agreed limit the balance on the account may be subject to interest at a higher rate of interest than the standard rate quoted on the sanction letter. The interest rates applicable during periods when the account is in excess are known as a Penal rates and will be subject to the terms and conditions quoted in the sanction letter.
Peril
The cause of a possible loss (such as fire, windstorm, theft, explosion, or riot) insured against in a policy. Also known as risk.
Periodic Rate
The interest rate described in relation to a specific amount of time. The monthly periodic rate, for example, is the cost of credit per month; the daily periodic rate is the cost of credit per day.
Periodic Statement
The billing summary produced and mailed at specified intervals, usually monthly. See also Statement.
Personal Identification Number (PIN)
A personal and confidential numerical code which the user of a payment instrument may need to use in order to verify his/her identity. The PIN must not be shared with anyone.
For example, for debit or credit cards, it is usually a four-character number that enables cardholders to access their accounts through an ATM or POS machine. The code is either randomly assigned by the bank or selected by the customer.
Phishing
When a criminal uses the internet to attempt to fraudulently obtain personal details of peoples accounts so they may access and use the account themselves, usually to take money out of. See also internet scams.
Plain vanilla
A simple, straightforward financial product without any unusual characteristics.
Point of Sale (POS)
(i) The location at which a transaction takes place.
(ii) An electronic device used by retail businesses to process card transactions. In the customer's presence, the retailer swipes or slides the card through the machine.
Policy
The legal document issued by the company to the policyholder, which outlines the conditions and terms of the insurance; also called the policy contract or the contract.
Policy fee
A charge made by an insurer for issuing a policy.
Policy Term
The period for which an insurance policy provides coverage.
Policyholder
A person who pays a premium to an insurance company in exchange for the insurance protection provided by a policy of insurance.
Portfolio
A collection of financial instruments (shares, bonds or other investments) owned by an investor.
POS
See Point of Sale.
Power of Attorney
A written instrument which authorizes one person to act as another's agent or attorney. The power of attorney may be for a definite, specific act, or it may be general in nature. The terms of the written power of attorney may specify when it will expire. If not, the power of attorney usually expires when the person granting it dies.
Pre-Accident Value
The value of a vehicle or property before the event giving rise to the claim (accident) occurred.
Pre-authorised Payment
A system established by a written agreement under which a credit or a financial institution is authorized by the customer to debit the customer's account in order to pay bills or make loan payments.
Preference Shares
Normally fixed-income shares whose holders have the right to receive dividends before ordinary shareholders but after debt holders have received their interest.
Premium
(i) Sum paid to an insurance company in exchange for the insurance protection provided by a policy of insurance. (ii)The difference between the par value of a security and its price when such price is higher than par.
Prepaid Card
Payment cards that can be topped up. Cardholders will be asked for a small sum, which is the cost of the card itself, and to lodge an amount of money of their choice, which will be credited on the card and that is the maximum amount that they can spend.
Pre-payment
The payment of a debt before it actually becomes due.
Pre-payment Clause
A clause in a mortgage, loan or credit arrangement allowing the borrower to pay off part or all of the unpaid debt before it becomes due. 
Prevention of Money Laundering and Terrorism Financing
Term used to describe the world-wide efforts to combat money laundering and the financing of terrorism and proliferation of weapons of mass destruction. In Malta, all licensed entities are obliged to follow strict rules to ensure the integrity of the financial system. As part of this process, subject persons must establish the identity of the person with whom they are dealing – a process usually referred to as “Know Your Customer” (KYC) – by requesting the person to provide his identity card and other identification documents.
Previous Balance
The cardholder's account balance as of the previous billing statement.
Price Earnings Ratio (P/E Ratio)
It is a measure of the valuation of a company, based on the level of confidence investors have in the company (rightly or wrongly). Generally, the higher the figure, the higher the confidence. It is worked out by dividing the current share price by the last published earnings per share (which is the net profit divided by the number of ordinary shares).
Primary Market
(i) The process by which a company’s share or stock is issued for the first time. It is then sold to the public on the secondary market. (see Initial Public Offering)
(ii) Market where buyers and sellers negotiate and transact directly without any intermediaries or resellers.
Principal
(i) The original amount of a loan or an investment, or the face amount of a bond. (see Face Value).
(ii) A person on whose behalf an agent or broker act. (iii) The owner of a private company.
Principal Balance
The outstanding balance on a loan, excluding interest and fees.
Privatisation
The process of converting a publicly or government-owned enterprise into a privately owned and operated entity.
Processing fee
A fee charged by a bank to process an application for a loan, such as a home loan. Processing fees are charged to cover some of the costs involved in processing the application such as basic administrative costs. Also called Loan Application Fee.
Professional Investors
An individual who can take investment decisions on his own.
Profit and Loss Account
A report on a company’s financial status of its earnings or losses over a given period. The profit and loss account lists the income earned, expenses paid and the net profit available for reinvestment.
Proof of Loss
Documentation presented to the insurance company by the insured in support of a claim so that the insurer can determine its liability under the policy.
Property Insurance
Provides financial protection against loss or damage to the insured's property caused by such perils as fire, windstorm, theft, etc.
Proposal
An application by a proposer for insurance, on a printed form. The 'proposer' becomes the 'insured' when the application has been accepted and the contract brought into existence.
Proposal Form
The form used in most classes of business to elicit basic information about the insured and the risk being proposed.
Pro-rata
(i) Proportional ratio.
(ii) In insurance, pro rata is used to determine risk based on the time the insurance policy is in effect. Calculation of return premium of a cancelled insurance policy is often done using a pro-rata method, taking into account the number of days remaining in the policy period divided by the number of total days of the policy. This factor is then multiplied by the policy premium to arrive at the return premium.
Prospectus
(i) A legal document that describes a collective investment scheme’s investment objective and policies, investment restrictions, officers, directors and expenses.
(ii) A document that provides details about a new offering of securities for sale to the public. It gives a detailed financial background of the issuing company, how the proceeds of the securities will be used, and other pertinent information investors will need to make an informed decision.
(iii) A form, which is often part of an insurance proposal form, giving details of the cover available with particulars of extra benefits and rebates.
Protected Commitment
In respect of Malta`s Protection and Compensation Fund Regulations, commitment falling under the following long term business classes of insurance: I:life and annuity; II: marriage and birth; IV: permanent health; VII: pension fund management and IX: social insurance.
Protected Liability
Any civil liability to any person which is required to be covered by a policy of insurance under compulsory insurance legislation
Protected Risk
A protected risk, in respect of payment of claims in the event of an insolvent insurer, is a risk falling under the following general business classes of insurance:
1: accident (where the insured is an individual);
2: sickness;
3: land vehicles;
8: fire and natural forces;
9: other damage to property;
10: motor vehicle liability;
13: general liability;
16: miscellaneous financial loss;
17: legal expenses and
18: Assistance.
Providing and renewing a credit card
The account provider provides a payment card linked to the consumer's payment account. The total amount of the transactions made using the card during an agreed period is taken either in full or in part from the consumer's payment account on an agreed date. A credit agreement between the provider and the consumer determines whether interest will be charged to the consumer for the borrowing.
Providing and renewing a debit card
The account provider provides a payment card linked to the consumer's account, enabling the latter to withdraw and pay, locally, abroad, and even online. The amount of each transaction made using the card is taken directly and in full from the consumer's account.
Q

Qualifying Person
A qualifying person may be :
(i) an insured of the insolvent insurer eligible for protection under the Protection and Compensation Fund Regulations; or
(ii) a person other than the policyholder to whom payment in respect of any sums falling due under the policy could have been made in accordance with the policy; or
(iii)a person to whom the insolvent insurer is liable to pay a sum or other consideration in respect of the insured's legal liability to such person under the policy of insurance.
Quote
(i) The highest bid to buy and the lowest offer to sell any security at a given time.
(ii) A price estimate given to the potential consumer as he/she decides to which company a formal application will be submitted.
R
Ratings
A grade given to bonds that indicates their credit quality. Private independent rating services such as Standard & Poor's, Moody's and Fitch provide these evaluations of a bond issuer's financial strength, or its ability to pay a bond's principal and interest in a timely fashion. Ratings are expressed as letters ranging from 'AAA', which is the highest grade, to 'C' (junk), which is the lowest grade. Different rating services use the same letter grades, but use various combinations of upper- and lower-case letters to differentiate themselves.
Recapitalisation
(i) Change of a company’s capital structure, such as exchanging the proportion of equity to debt.
(ii) In the EU a recapitalisation describes the injection of own funds into a solvent bank by the state when this is necessary to preserve financial stability. It is an exceptional measure that is conditional on final approval under the EU State aid framework and does not trigger the resolution of the bank.
Receiving money – Euro
(i) The consumer receives money in euros from euro account.
(ii) A customer can also transfer monies from a Non Euro account to Euro. In that case, the bank would convert the amount first and the customer would receive the amount in the currency of that account.
Receiving money - other currencies
The consumer receives money in non-euro currencies from non-euro account.
Recession
A period of economic decline marked by high unemployment, a contraction in the GDP and fall in retail sales.
Reconciliation
The process of analysing two related records and, if differences exist between them, finding the cause and bringing the two records into agreement. Example: Comparing an up-to-date cheque book with a monthly statement from the financial institution holding the account.
Redemption price
The price at which a bond may be redeemed before maturity, at the option of the issuing entity.
Refund
An amount paid back because of an overpayment or because of the return of an item previously sold.
Regulated Market
An exchange that is authorised as a regulated market by a competent authority. Most stock exchanges are considered to operate as regulated markets.
Regulated Person
For the purpose of this glossary, this shall refer to an entity licensed to carry out investment services (advisory, execution of orders), an entity licensed either as a credit institution (banks) or financial institutions, or an entity licensed to provide insurance related services (insurance intermediary and insurance undertaking).
Regulator
A body set up by law entrusted with overseeing the financial services sector. Sometimes it is also referred to as the Competent Authority. In Malta, the regulator or competent authority for banking, insurance, investment services, trustees, company service providers and retirement schemes is the Malta Financial Services Authority.
Re-inspection fee
Sometimes a bank will need to re-inspect the property after the original valuation, usually to check if the owner has made agreed repairs. For this inspection, the bank can charge a fee, usually called re-inspection fee.
Reinstatement
The term relates to (i) the restoration of the full sum insured after a claim is paid. This is usually done by payment of an additional premium or (ii) the option an insurer may choose to indemnify the insured by restoring damaged property to its pre-loss condition.
Reinsurance
The transfer of part or all of the risk accepted by an insurer (called the reinsured) to another insurer (the reinsurer).
Reinvest
Move profits back into a company to enhance its operations. An individual stockowner can also reinvest by choosing that dividends paid on stock will be used to purchase additional shares of that stock. The same applies in the case of collective investment schemes – an individual unitholder can also reinvest by choosing that dividends paid on units will be used to purchase additional units of that fund.
Renewal
The continuation of a policy or product beyond its original term.
Renewal fee
A fee charged by the bank that allows a person to whom a facility has been given to extend the facility term for a set period of time without having to re-submit further documentation in support of the original facility application. A renewal fee is contingent on facility payments being up to date and that no material changes have occurred that impact upon the original facility application. In the case of business facilities updated, supporting documentation will normally be required before renewal can be sanctioned
Renewal Notice
(i) The notice sent to the policyholder by the insurer to remind him/her that an insurance is due for renewal.
(ii)The notice sent to the bank to request the renewal of a product/service. Some contracts include a clause stating that if the customer does not inform the bank in opposite, the product will be automatically renewed.
Renewal Receipt
The written evidence that a renewal premium has been paid.
Replacing a card
The consumer requests a replacement of a card that was lost, stolen or damaged.
Repurchase
When, after a period of time, a customer calls again on his bank (the issuing bank) and informs it that he no longer requires the bank draft. The issuing bank buys back (repurchases) the bank draft from its customer.
Requesting statements
The consumer requests bank statements, in paper or on other durable medium, over and above those which the payment service provider is required to send by law.
Re-scheduling fee
Sometimes, a customer who has a facility with a bank may not keep up with his periodic payments. In such cases, the bank meets the customer and agrees to re-schedule such loan repayments to fit such customer’s requirements. The bank may charge a fee if additional processing work is required in respect of such re-scheduling.
Restructuring fee

A customer with an outstanding loan may ask its bank to restructure its debt by altering the terms and provisions of its existing facility. For example, during lean periods of the year, a customer may prefer to pay a lower amount compared to other periods where a healthier cash-flow allows for higher repayments. If such restructuring involves additional processing work by the bank, it may charge the customer a restructuring fee.
Retail Client Agreement
This is also referred to as the Terms of Business Letter. It sets out rights and obligations of the firm and customer, including terms on which the firm will provide services to the customer.
Retail Investor
Also referred to as Non-Professional Investor. A person who buys or sells securities for his or her own account. A retail investor is dependant on the firm for information and assistance. Therefore the level of protection of a retail investor is higher than that given to a professional investor.
Retained Profits
Profits a company keeps for its operations, after paying taxes and dividends.
Return
Net income from an investment after deducting all expenses from the gross income generated by the investment. (“Net Return”). When expressed as a percentage, net return for an indicated period is calculated by dividing the change in a fund’s Net Asset Value, assuming reinvestment of all income and capital gains distributions, by the initial price.
Reversionary Bonus
An addition to the sum assured payable in the same circumstances as the sum assured and which is guaranteed. Regular additions are usually made to policies which have been effected as 'with profits' contracts, and the additions arise from 'surplus' funds not required by companies to cover their liabilities.
Revival
The resumption of cover under a policy which has lapsed, following the payment of the relevant premium.
Revolving Credit
See open-end credit.
Rider
A document that modifies the policy. It may increase or decrease benefits, waive a condition or coverage, or in any other way amend the original contract. Also known as Endorsement.
Rider Policy
A policy or benefit that operates alongside a main policy such as Whole Life with a critical illness rider.
Rights issue
An opportunity to existing shareholders of a company to buy more shares in the company at a discounted rate, without the need to buy through intermediaries.
Risk
(i) The possibility of losing money or not gaining value in an investment.
(ii) Any chance of loss. Also used to refer to the insured or to property covered by a policy. Also referred to as peril.
(iii) The chance of any negative consequence as a result of an investment.
Risk assessment
The means by which a firm evaluates the potential risks that may be involved in a projected activity or undertaking. This ensures that an informed decision is taken at all times.
S

Safe (or Safety) Deposit Box
A type of safe usually located in groups inside a bank vault and rented to customers for their use in storing valuable items.
Safekeeping
A service provided by banks where securities and valuables are held.
Salesperson
In the financial world, a person whose job is to sell securities for brokers, dealers and corporations.
Sanction letter or Credit Agreement
The terms of a standardised loan are formally presented in writing by way of a sanction letter to each party in the transaction before any money or property changes hands. If a bank requires any collateral, this will be stipulated in the sanction letter as well. Most loans also have legal conditions regarding the maximum amount of interest that can be charged, as well as other clauses such as the length of time before repayment is required. A sanction letter may also include references to fees and costs related to the loan facility.
Saving
The portion of income that is not spent on consumption of consumer goods but placed on deposit with a bank, or used to acquire financial and physical assets. Usually, people put the money in a savings account or investments until having enough to buy/invest in their objectives.
Searches fee
At certain intervals (normally between every four to five years) the bank will make a search into the public registry in order to enquire about fresh liabilities and transfers of immovable that have been registered against a debtor. The fee applied reflects the cost of such a search.
Secondary market
When stocks or bonds are traded or resold, they are said to be sold on the secondary market. The majority of all securities transactions take place on the secondary market.
Securitisation
The process of distributing risk by aggregating debt instruments in a pool and then issuing new securities backed by the pool.
Security or collateral
Immovable properties (land and buildings) or other assets (such as investments or insurance policies) used to secure a loan or other credit facility. Properties are hypothecated in favour of the bank whilst other assets are pledged as security in favour of the bank.
Security(ies)
The account provider transfers money, in Euros, on the instruction of the consumer, from the consumer's account to another account in a SEPA country.
Sending money in other currencies to any other account

The account provider transfers money, in non-euro currencies, on the instruction of the consumer, from the consumer's account to another account.
SEPA
Single Euro Payments Area. Area where the general public, companies and other businessmen and stakeholders are able to effect and receive payments in Euro under the same conditions as if these were domestic payments irrespective of their location within the European Union.
SEPA countries
The 28 EU Member States, Iceland, Liechtenstein, Norway, Switzerland and Monaco.
Services linked to the payment account
All services related to the opening, operating and closing of a payment account.
Settlement
(i) Conclusion of a securities transaction when a customer pays a broker/dealer for securities purchased or delivers securities sold and receives from the broker the proceeds of a sale.
(ii) The cash amount that the insurance agrees to pay.
Shares
See Ordinary Shares.
Short-period rates
If the insured decides to terminate a policy prior to the expiration date, any refund of premium may be based on rates set by the company. The amount returned would be less than the pro-rata amount as it would include the costs borne by the insurer for early termination. Every insurer has a different short-period rate schedule which would be provided on request.
SICAV
See open-ended fund.
Simple interest
A fixed amount paid by the borrower to the lender over a set period of time. Simple interest is calculated only on the principal amount of a loan using this formula: Simple interest = principal x interest rate x term of the loan
To give an example, if one borrows EUR 1,000 over a period of 12 months, for which the bank charges 5% annual simple interest. After one year, the outstand balance would be EUR 1,050. Most banks move simple interest in line with the Bank's Base Rate.
Special Clearing
Some banks may occasionally send high value cheques for special clearance, charging an extra fee for this service. See also Inward and Outward Special Clearing.
Special Perils
The collective term for extra defined perils which are commonly added to a fire policy. Examples are damage by aircraft, earthquake, riot and civil commotion, burst pipes, storm, flood, impact by road vehicles, horses and cattle.
Speculative grade
A rating category signalling a high level of credit risk or that a default has already occurred.The terms speculative grade is a market convention.
Spot Market
A market where securities or commodities are traded for immediate delivery.
Spread
(i) The term spread is used with different meanings in the financial markets, but is generally applied to express the difference between two prices or between two rates.
(ii) The difference between the index (for example, the Euribor or Eurirs) and the interest rate agreed with the borrower."
Stamp Duty
An amount paid to the Inland Revenue on the production of a legal document such as an insurance policy. The amount payable is related to the premium charged.
Standing Order
(i) An instruction to a bank, on the instruction of the customer, to make a regular, fixed payment from the customer's account to another account. It is not possible to setup a Standing Order with another service provider (unlike a Direct Debit or a Continuous Payment Authority).
(ii) The account provider makes regular transfers, on the instruction of the consumer, of a fixed amount of money from the consumer's account to another account.
Statement
A summary of all transactions that occurred over the preceding month and could be associated with a deposit account or a credit card account. See also Bank Statement and Periodic Statement.
Statement of Fees
A document that provides the consumer, at least annually and free of charge, an overview of all fees incurred as well as information regarding the interest rates incurred in relation to the use of the payment account, thus allowing a consumer to understand what fee expenditures relate to and to assess the need to either modify consumption patterns or move to another provider.
Step-back
The partial protection of No Claim Discount so that if a claim is made the insured would lose only a part of it. For example, if the insured had a 50% No Claims Discount, it could be 'stepped back' to 20%. (T&Cs apply).
Different companies operate different step-back procedures. (See also No Claim Discount).
Stock Exchange
Organized and regulated financial market where securities (bonds, notes, shares) are bought and sold. The prices are controlled by the laws of supply and demand. Its basic function is to allow public companies and governments to raise capital by selling securities to investors. They perform valuable secondary functions in allowing those investors to buy and sell these securities, providing liquidity and reducing the risks attached to investment. Sometimes referred to as Stock Market.
Stock Index
A person or entity who buys and sells securities on a Stock Exchange on behalf of an investor and receives remuneration for this service in the form of a commission.

Stockbroker
A person or entity who buys and sells securities on a Stock Exchange on behalf of an investor and receives remuneration for this service in the form of a commission.
Stolen & Forged Cheques
Cheques that were stolen, forged or subject to any fraud before reaching the payee.
If a cheque presented to a bank is found to be have been stolen, forged or fraudulent, the bank will probably charge the payee an additional fee, especially if this is raised by the foreign bank during cheque clearing."
Stop payment
A request made to a bank not to pay a specific cheque. If requested soon enough, the cheque will not be debited from the drawer's account. The bank charges a nominal amount (fee) for this service (see also Stopping a cheque).
Stopping a cheque
The consumer asks the account provider to stop the encashment of a cheque issued by that consumer.
Strong Customer Authentication (SCA)
It is an authentication process that validates the identity of the user of a payment service or of the payment transaction (more specifically, whether the use of a payment instrument is authorised). Strong customer authentication is based on the use of two or more elements categorised as knowledge (something only the user knows, e.g. a password or a PIN), possession (something only the user possesses, e.g. the card or an authentication code generating device) and inherence (something the user is, e.g. the use of a fingerprint or voice recognition) to validate the user or the transaction.
Subrogation
Process by which the insurer under a policy of indemnity, after having indemnified the insured, assumes the rights and remedies that the insured is entitled to in order to minimise or recover his loss.

Subscribing and renewing internet, mobile and telephone banking
The account provider provides the consumer with access for banking services using the internet, mobile or telephone.
Suitability Test
A test that is done by the investment firm where it asks the client some questions to reach an understanding of the types of investments that will be suitable for the client. Typically questions would revolve around the client`s investment objectives, financial situation, knowledge and experience.
Sum Assured
The cash benefit guaranteed by a Life assurance policy. The maximum amount for which an insurer is liable under a policy of indemnity or the sum payable as a benefit in policies such as Life assurance or Personal accident.
Surplus
That part of the Life Insurance Fund over and above the sum of its present and future liabilities as calculated by actuaries on a given date. Holders of 'with-profits' policies are entitled to a share in the surplus, usually in the form of a Reversionary Bonus added periodically to and payable with the sum assured.
Surrender Charge
An amount retained by the insurer when a policy is cancelled, typically assessed only during the first five to ten years of a policy.
Surrender Value
Cash value of a 'whole of life' or 'endowment' assurance policy when discontinued. Surrender values are small in the early years of a policy - usually Nil over the first year or two. This is because expenses are highest at the beginning of the term of a policy and in the first few years there has been little time for interest to accrue. Certain contracts such as Term assurances do not acquire a surrender value.
Surveyor
An official who inspects property proposed and makes recommendations as to rating and loss reduction. See Adjuster.
SWIFT
SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication. It runs a worldwide electronic network by which messages concerning financial transactions are exchanged among banks and other financial institutions. SWIFT is owned by its member financial institutions with offices around the world and its headquarters are located near Brussels. The official website is www.swift.com.
T


Terms of Business Letter
This is a document which sets out in detail the investment services agreement between the intermediary and the investor. It should specify, amongst other things, whether the intermediary will provide investment advice or not, and the type of fees and commissions which the intermediary will charge.
Third Party
So called because the person making the claim is not one of the two parties (insured and insurer) to the insurance contract.
Third Party Claim
A demand made by a person against a policyholder and any payment that will be made by that company.
Third Party Liability
Liability incurred by the insured to another party but excluding contractual liability.
Time Deposit
A time deposit (also known as a term deposit) is a money deposit at a bank that cannot be withdrawn for a certain "term" or period of time. When the term is over it can be withdrawn, or it can be held for another term. The longer the term, the better the yield on the money. Generally, there are significant penalties for early withdrawal. See also Certificates of Deposit.
Time On Risk
When an insurance cover is terminated, the insurer uses this period of time to calculate the premium due for cover granted until the date of termination.
Token
An electronic device used to generate the security code required for online services.
Tort
A civil breach of a personal duty owed to one's fellow citizens in general, as opposed to a breach of contract. The injured person has a right to sue for damages from the wrongdoers.
Total Loss
The complete loss or destruction of the property insured beyond economic repair.
Total Return
See Return.
Trader
A professional who purchases and sells securities for brokers, dealers, and his or her own accounts.
Transaction
Any  activity performed by the account holder or at his/her request to place money in the account (deposit), taking money out (withdrawal), paying a bill or transferring money.
Trustee
A licensed entity that manages the trust.
Typical APR
Each bank in Malta will calculate the APR in the same way. However, the components which are used to calculate the APR differ from person to person. If you intend using the APR to compare between different cards, make sure that the credit limit (as applicable to you) is consistent. The interest rate and annual card fee will be different for each bank. Take account of the government levy, unless this is included in the annual fee.
U

Uncollected or unclaimed funds
A portion of a deposit balance that has not yet been collected by the depository bank.
Under-insurance
The situation which arises where the sums insured represent less than the total value of property at risk.
Underwriter
(i) an insurance company that receives the premiums and accepts responsibility for the fulfilment of the policy contract;
(ii) the company employee who decides whether or not the company should assume a particular risk.
Underwriting
(i) An arrangement by which a company is guaranteed that an issue of shares will raise a given amount of cash. The underwriters undertake to subscribe for any of the issue not taken up by the public. They charge commission for this service.
(ii) The process of selecting risks for insurance and determining in what amounts and on what terms the insurance company will accept the risk.
Uninsurable Risk
A risk that is not acceptable for insurance.
Usury
Charging an illegally high interest rate on a loan.
Usury Rates
Any rate above the maximum rate of interest that lenders may charge borrowers. The usury rate is generally set nationally. See also Usury.
Utmost Good Faith
A duty imposed on both parties to an insurance contract. It is of greater force than ordinary good faith. The legal duty implies full disclosure of all facts material to the contract during negotiations for the contract.
V

Valuation fee
Fee that a bank can charge for a valuation of a property by the bank’s appointed architect to assess whether it is appropriate security for the home loan. This varies from bank to bank, and depends on the value of the property. The fee may be part of “legal fees” which the bank may charge on a loan application.
Valuation Statement
A report showing the extent to which investments have increased or decreased from all the various gains and losses registered in a specific period.
Value date
(i) Date on which a transaction actually takes place.
(ii) Date on which allocated, budgeted, or contracted funds are paid, received, or used.
(iii) Date on which an account holder can use the funds from deposited cheques that have passed through the bank's clearing cycle.
(iv) Date from which funds begin to earn interest. This may be one or more business days prior to the 'cleared date'.
(v) Date on which the item that was bought or sold must be delivered.
(vi) Date of settlement of a transaction. In the case of deposits and transfers, this is the date from which the amounts can be moved by the beneficiary and from when the possible interest counting on the accounts balances begins
Variable Rate
Any interest rate or dividend that changes on a periodic basis.
Virtual currency
An electronic representation of monetary value issued, managed and controlled by private issuers. Unlike regular money, it is not issued by a central bank and is prone to wide swings in valuations.
Virtual debit card
A virtual visa debit is a card used for online purchases when you don’t have a credit card. Purchases made with your virtual visa debit are taken from your current account.
Voluntary Arbitration
A clause in an insurance policy that provides for a means of resolution, an unbiased third party if an insurer and an insured cannot agree on the amount of a claim payment. Such an arrangement is not regulated by arbitration legislation and parties might not have the same rights as those enjoyed by parties who refer their case to the Malta Arbitration Centre.
VP
Abbreviation for Vice President.
W

Warrant
A derivative security that gives the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame.
Warranty
A stipulation in the policy which the policyholder must strictly comply with and which if breached will normally entitle the insurer to avoid the contract.
Wear and Tear
The amount of depreciation as a result of usage. This is deducted from an indemnity claim settlement unless a 'reinstatement' or 'new for old' condition applies.
Whole Life Assurance
A type of assurance under which benefit is payable on death whenever it occurs. Premiums can continue throughout life or can be limited in number. Can be 'with' or 'without profits'.
With Profits
A type of Life assurance policy which participates in the distribution of surplus in the form of bonuses. Such policies are termed 'with profits'.
Withdrawal
To take money out of one`s account. The account balance goes down after a withdrawal.
Write-off
A term usually used in Motor insurance to denote that the vehicle has been damaged beyond economic repair. This depends on the ratio of the repair costs to the replacement value of the vehicle.
Y


Yield
The return (money) earned on an investment taking into account the annual income. There are a number of different types of yield, and in some cases different methods of calculating each type.
Yield to Call
A yield on a security calculated by assuming that interest payments will be paid until the call date, when the security will be redeemed at the call price. The Yield to Call is calculated in the same way as yield to maturity but assumes that a bond purchased at a premium will be called and that the investor will receive the amount of the face value at the call date.
Yield to Maturity
The total return earned on a bond if it is held until it matures. The yield-to-maturity is the best measure of the return rate, since it includes all aspects of the investment (coupons and capital). The tax payable on the interest and the capital repayments is ignored.
Z


Zero Coupon Bond
An asset which does not pay coupon interest, and the return on which is achieved by capital appreciation because the asset is issued or bought at a discount