- Day-count convention
- Convention regulating the number of days included in the calculation of interest on credits. The ESCB will apply the day-count convention Act./360 in its monetary policy operations.
- DAI
- Abbreviation for Deutsches Aktieninstitut [German Share Institution].
- Data protection
- The purpose of data protection, as defined by the Federal Data Protection Act (BDSG) is to counteract any adverse effects on natural living persons resulting from electronic data processing (protection of personal rights). The subject of the protection is any kind of access to personal data. This protection not only covers the storage, modification, transmission, disabling and deletion phases embraced by the term 'processing', but also the application and use of such data. The law governing data belonging to legal entities does not apply.
- DAX
- German abbreviation for Deutscher Aktienindex (German Share Index)
- Dealer
- Broker on the Anglo-American stock exchange who conducts securities transactions, not on his own behalf but under contract to other persons, in return for the payment of commission. In the USA and in England, banks should not buy any securities on the stock exchange. For this reason, purchases or sales are entrusted to private brokers.
- Debenture
- Bond issues, debenture bond. Term used to define a security which, as a general rule, attracts a fixed interest rate over the entire term. Generally, fixed-interest securities are referred to as fixed-interest bonds. By issuing debentures, the respective issuer acquires loan capital. Typical issuers on the capital market include central/local government, banks or industrial companies.
- Debenture bond
- see debenture, bond issues, security, fixed-interest
- Debit advice
- Debit entry advice by which a payee, by instructing a credit institution, can arrange for a sum to be debited from the account of the payer. Unlike the standing order, the payment is not executed by the payer but by the payee, who forwards the debit advice to his bank (first collection point), which credits the amount of the debit advice and debits the payer's bank (point of payment). The basis of a debit entry is either a debit advice mandate or a direct debiting mandate. The debit advice procedure is particularly suitable for regular recurrent payments of varying sums of money.
- Debit advice mandate
- Mandate, in writing and revocable at any time, by a debtor to his bank authorising it to pay all future debit entries to a specific payee (creditor); compared with the direct debiting mandate, this is a less common version of the debiting procedure. Used principally for payees who, over a long period, are owed different amounts of money, payable at irregular intervals, by specific customers.
- Defined benefit
- Principle of employer's pension commitment for pension funds.
- Defined contribution
- Principle of employer's pension commitment for pension funds.
- Deflation
- Deflation occurs when the overall macro-economic demand for goods and services exhibits a sustained decline without a simultaneous restriction of the products on offer. The opposite of deflation is inflation. Deflation policy includes restriction of the money supply in order to combat inflationary pressures.
- Delta
- Number which displays the dependency of the option value on the changes in the underlying spot price.
- Deposit
- Credit balances held by customers with credit institutions. They are created by inward payments of cash, credit entries in the context of bank transfers and/or cheque deposits to customers' accounts and represent an obligation on the part of the bank to its creditors.
- Deposit certificate
- see Certificates of deposit
- Deposit currency
- Also referred to as deposit money, bank money or deposit money. Customer credit balances on giro accounts or current accounts (demand deposits) with a bank, with access at any time without restriction of any kind. Deposit currency offers credit institutions the opportunity to earn money by granting credit. The counterpart of deposit currency is cash in the form of coins or banknotes, which can be physically held in the hand.
- Deposit facility (standing facility)
- A standing facility of the ESCB counterparties may use to make overnight deposits remunerated at a pre-specified interest rate.
- Deposit facility
- Securities can be deposited with credit institutions for safekeeping and administration. A Deposit facility (the counterpart of an account in money transactions) is set up for each customer and this must indicate the types, face values or quantities, numbers. etc. of the deposited securities, together with the name and address of the presenter (depositor). These regulations apply to individual safe-deposits and, in turn, to collective safe-deposits of negotiable securities.
For checking purposes, the banks maintain two types of safe-deposit ledger in parallel: the personal deposit facility and the property deposit facility. The first is arranged according to the name of the depositor, the latter according to the type of security. For the banks, the property deposit facility is of particular importance in terms of administration. Joint deposits of securities and trustee deposit facilities are maintained (lodged) as separate deposits. Collective safe-deposits of negotiable securities are more rational and cheaper than individual safe-deposits. The [German] Securities Deposit Act is the basis for the safekeeping and administration of securities by credit institutions. It contains a series of regulations to protect the depositor, particularly in the event of compulsory winding-up of the depositary bank.
- Deposit guarantee funds
- Used to safeguard customer investments with the credit banks. The funds in the deposit guarantee funds are transferred to the affiliated credit institutions in the form of contributions. If there is any likelihood of payments being suspended by an affiliated bank, the deposit guarantee fund should provide assistance in the interests of the investor and prevent any adverse effect on the level of trust in the private credit institutions. These funds are also used to secure investments by non-banking institutions against losses, up to a level of 30 % of the liable equity of the particular credit institution. In the case of credit institutions and cooperative banks regulated by public law, the term used is institution guarantee. Here, the existence of the individual institutions is safeguarded, with indirect security for the investor.
- Depression
- In the national economy depression means a slump in economic activities expressed in particular by a significant contraction of the aggregate output (social product), deflation and high unemployment. In contrast the recession is a milder form of economic decline which is characterized by weakened, stagnating or slightly negative economic growth. The world suffered its last 'serious' depression at the beginning of the Thirties.
- Deregulation
- In general, the abolition of official regulatory procedures in the form of interventions in the market mechanism on economic-political grounds. In particular, the term is used to describe the liberalisation measures observed in recent years in many important financial markets (USA, England, Japan, Germany, etc.). The consequences of the deregulation process have included numerous forms of relief and reforms (such as successive abolition of interest rate regulation, new products or the creation or reduction of market access restrictions).
- Derivatives
- Products which are primarily valued on the basis of the price, price fluctuations and price expectations of a basic instrument (for example shares. loans, foreign currency, indices). Particular types of derivative include swaps, options and futures.
- Deutsche Börse AG
- Private enterprise company, formed in 1992, with its head office in Frankfurt am Main. The Deutsche Börse AG incorporates the Deutsche Börse Clearing AG, the Deutsche Börse Systems AG, the Fördergesellschaft für Börsen und Finanzmärkte in Mittel- und Osteuropa mbH (FBF), the Deutsche Terminbörse (DTB) and the Frankfurter Wertpapierbörse (FWB).
- Deutsche Börse Clearing AG
- Deutsche Börse Clearing plays a specialist role in the Deutsche Börse Group: it provides fast and cost-effective settlement of exchange and over-the-counter transactions, efficient securities' administration and secure custody. Deutsche Börse Clearing is Germany's central depository for domestic securities. Deutsche Börse Clearing's core business is secure custody and services - alongside the settlement of securities transactions.
- Deutsche Börse Systems AG
- Deutsche Börse Systems AG is responsible for information technology within Deutsche Börse Group. The systems house commenced operations in May 1997 under the legal form of a small-sized stock corporation. Systems develops, maintains and operates trading, settlement and information systems used in clearing and settlement in the cash and derivatives market. Front-end systems developed for market participants represent a new business segment. The main projects are the implementation of the new Xetra electronic trading system for the cash market and extensions of the DTB system for the derivatives market.
- Deutsche Bundesbank
- Germany's central bank, based in Frankfurt am Main. It regulates the circulation of money (the right to issue banknotes) and the credit supply to the economy, with the aim of ensuring stable monetary value. It is not constrained by directives from the Federal Government, although it is obliged to support official economic policy. It was formed on 1st August 1957 by merging the Federal State central banks with the Bank deutscher Länder [the Bank of the German Federal States] by the Act dated 26.7.1957. The nominal capital of DM 290 million is retained by the German Government. It has sole claim to the profits. Elements of the Bundesbank include the Central Bank Council, the Board of Governors and the management boards of the Federal State central banks.
The Bundesbank assumes financial control of payment transactions at home and abroad. For the most part, it regulates its objectives and its policy by means of the discount rate, the lombard rate and the minimum reserve rates. It operates an open-market policy. Since 1988, the Bundesbank has used the M3 money supply as its central point of reference. The Chairman of the Bundesbank is appointed by the President of the Federal Republic of Germany, on the recommendation of the German Government. The current Chairman is Hans Tietmeyer.
- Deutsches Aktieninstitut (DAI) [German Shares Institute]
- Institute, with its head office in Frankfurt am Main, for the promotion of equity culture in Germany. The purpose of the association is to promote the concept of the share, in the interests of better financing for companies and a wider distribution of share ownership.
- Deutscher Rentenindex (REX) [German Capital Annuities Index]
- Consists of an index of 30 ideal types of loans, weighted according to market share, with whole-number terms ranging from 1 to 10 years and three types of coupon for each, at 6 %, 7.5 % and 9 %. The weighting is checked once a year.
- Differential
- Discount, the opposite of premium. The difference between the face value of a security or a debt (credit) and its lowest market price or of the amount paid in credit transactions. Usually expressed as a percentage of the face value.
- Direct brokerage
- Securities service operated by a direct bank without individual investment advice. Of interest, since it offers a cost-effective alternative for the investor who already has experience in the securities business.
- Direct clearing member
- Clearing house member entitled to clear its own transactions and those of its direct customers, but not the transactions of floor brokers.
- Direct debiting mandate
- In comparison with the debit advice mandate, the direct debiting mandate is the more common form of mandate in debit advice transactions. The direct debiting mandate procedure is intended for arranging the payment of typical bulk transactions on the basis of standardised long-term contractual relationships. The debtor authorises the payee to withdraw written payments as they fall due by means of a debit entry in the debtor's account. The direct debiting mandate may be cancelled at any time.
- Dirty price
- 'Dirty price' describes the price to be paid when buying a bond. It is made up of the bond price plus the 'accrued interest'.
- Discipline in public spending
- Member States should avoid excessive budget deficits; in particular, a) the ratio of public deficit to GDP should not exceed 3% (exception: the ratio is considerable and has reached a value in the region of the reference value of 3% or the reference value is exceeded temporarily and the ratio remains in the region of 3%), and b) the ratio of public debt to GDP does not exceed 60% (exception: the ratio is dropping at a satisfactory rate and is broadly close to the reference value of 60%).
- Discount
- Stock exchange term, no longer in general use, for events occurring in advance of price movements. As a result, when the event actually takes place on the stock exchange, the price is not affected, or only affected to a minor degree.
- Discount rate
- Interest rate at which the central bank purchases bills of exchange which conform to certain requirements. Variations in the discount rate and the rediscount quota (restrictions on volume) are some of the conventional measures employed in central bank policy. Since, to a greater or lesser extent, the credit institutions rely on refinancing with the central bank, any variation in the discount rate can affect the operating conditions of the banks. The discount rate acts as an indicator for the other debtor interest rates.
- Distributions
- Collective term for payments such as dividends, bonuses, stock dividends, etc., which are distributed to the shareholder of an enterprise. In the broader sense, interest can also be paid on the distributions.
- Dividend
- The amount of balance sheet profit of a joint-stock company allocated to each share. The dividend is expressed either as a percentage of the face value or in units of currency per item. The stockholders meeting decides how the dividend is to be distributed. In Germany, the dividend is paid annually, while in the USA and other countries it is usually paid every quarter (quarterly dividend).
- Dividend certificate
- Also referred to as the dividend coupon, it entitles the holder to payment of the annual dividend and is an accessory to the share. Each share is assigned a Coupon sheet with 10 to 20 dividend warrants. On the date of maturity, the dividend warrant is 'cut' from the coupon sheet and redeemed in the form of a dividend.
- Dividend yield
- The dividend income of an investment in shares, expressed as a percentage of the share price. The dividend yield is an important index in assessing the return on a share investment.
- DME
- Abbreviation for Voucher-less data medium exchange
- Documentary acceptance credit
- This credit is an instrument of foreign trade financing and is principally granted as a documentary acceptance credit on the basis of a letter of credit. The importer's bank assumes liability for the acceptance and redemption of the draft drawn by the exporter on his credit institution, provided that all the conditions implicit in the letter of credit are fulfilled.
- Documentary letter of credit
- see Letter of credit
- Double taxation agreement
- International agreements which are normally concluded between two - or sometimes more - nations. They serve to eliminate or alleviate the effects of double taxation in transnational capital transactions.
- Dow Jones Index
- Before the turn of the century, the publishers Dow Jones & Co. published indices on behalf of the New York Stock Exchange relating to 30 industrial shares, 20 railway company shares, 15 power company shares and an overall index of all 65 company shares. Due to its rapid circulation, the industrial index, in particular, attracted worldwide attention and became generally known as the 'Dow Jones Index'. The indices issued by Standard & Poor (500 company shares) and the New York Stock Exchange are more comprehensive. The Tokyo stock exchange also issues an index of 225 Japanese company shares.
- Dow Jones STOXX
- Cooperation between Deutsche Börse, Dow Jones, SBF - Bourse de Paris and Schweizer Börse aimed at establishing an European Index family Dow Jones STOXX. It consists of a benchmark index, a blue-chip index and 19 sector indices for pan-Europe (Europe) and for the member states of European economic and monetary union (euro zone).
- Draft
- Bill of exchange which, although drawn, has not yet been accepted by the drawee. For this reason, it is already a payment instruction which incorporates all the legal characteristics of the bill of exchange.
- DTB
- German abbreviation for Deutsche Terminbörse; (German Futures Exchange)
- Dual-currency bond
- Special form of bond issues for which the capital and interest are repaid in different currencies. In certain cases, the issuer or the investor is granted voting rights.
- Duration, modified
- The modified duration gives the percentage price alteration of a bond depending on a change in the current interest rate.
- Duration, simple
- Index which displays average minimum lockup period of the capital employed.
- DVFA result
- Method of determining profits, used by the 'Deutsche Vereinigung für Finanzanalyse und Anlageberatung e.V.' the German Federation for Financial Analysis and Investment Advice, an association of banking and economic experts. The DVFA has concentrated on share analysis and has developed a formula which reflects the annual profit of a business enterprise solely on the basis of the object of the business, adjusted to take account of special influences; usually referred to as 'result per share as defined by the DVFA'. It can be used to calculate the market price/profit ratio. Nowadays, all major joint-stock companies publish their DVFA results on the basis of this system. It facilitates comparisons between companies and types of business.
- DWZ
- German abbreviation for Deutsche Wertpapierdaten-Zentrale GmbH