Bank Glossary - I

Abbreviation for International Accounting Standards
Abbreviation for International Accounting Standards Committee
German abbreviation for Integriertes Börsenhandels- und Informations system (Integrated Stock Exchange Trading and Information System - ISETIS)
Abbreviation for International Depositary Receipt
Abbreviation for International Monetary Fund
Immediate-or-cancel order
Order type in the Xetra system requiring that all or part of the order be executed as soon as brought to the market and that the portion not executed be cancelled automatically. Such stipulations usually accompany large orders.
Immovable property
Immovable object, real estate, item of property. Includes premises and property rights (for example, heritable building right), houses and associated goods and chattels.
Implied volatility
The value of the underlying asset price volatility that would equate option price and fair value.
In the money
With an in-the-money call the price of the base value is greater than the base price, and below the base price with an in-the-money put.
The International Commercial Terms are international regulations which have been drawn up for the interpretation of supply clauses in international trade and commerce. They embrace the fundamental contractual obligations on the part of both the exporter and the importer, with particular reference to the transportation of goods and the transfer of costs and perils form the exporter to the importer. Two variations of this arrangement are CIF and FOB.
Increase of share capital
Method of financing a company by increasing the proprietary capital. There are two possibilities for a joint-stock company:
  1. Increase of capital by issuing new shares (subscription right).
  2. Increase of capital from the company's own resources (stock dividends).

In addition, there is 'qualified' capital, which can be used for financing with the issue of bond issues with share Subscription rights or conversion rights (option bond, convertible loan), together with 'approved' capital. The latter is a form of stock capital, in other words, under the terms of the articles of association, the management board is authorised to increase the capital up to a specific amount by issuing new shares against deposits, without the need for a separate resolution by the stockholders' meeting.

Instrument, based on statistics, for graphically representing the fluctuations in price and volume of commodities and securities (share index) over a specific period of time. This is usually achieved by converting the values under consideration into a percentage or relative basic parameter set at 100 %.
Indexed bonds
With this financial instrument, investors are guaranteed a fixed real rate of interest.
Process for expanding the money supply within a currency area, the consequence of which is rising prices (currency devaluation). For years, virtually every Western industrialised country has suffered from currency devaluation. The preferred way of combatting devaluation is to apply monetary restrictions, which have consistently had negative effects on the securities exchanges. Good conduct and discipline where official budgets and employer/employee relationships are concerned can help to contain inflation. The opposite of inflation is deflation. The classic consequences are falls in prices and recession, culminating in economic crises.
Initial margin
Security service which is to be deposited when accepting a futures transaction (options & futures) - also known as 'first margin'.
Initial Public Offering (IPO)
In particular: initial utilisation of the domestic share market in the wake of an increase in share capital or reallocation, i.e. shares in a company are offered for the first time for purchase by interested investors. With an IPO, in general, a stock exchange admission of the share capital is associated with adoption of the stock exchange quotation. From the company's standpoint, an IPO signifies the acquisition of risk capital from outside by using the share as a financing instrument.
An insider is anyone who, as a member of the management or of the supervisory board, on the basis of his participation or on the basis of his profession, becomes aware of unpublished facts which could have a significant effect on market prices (§ 13 of the WphG Securities Trading Act). An insider is not allowed to buy or sell insider securities, either on his own behalf or on behalf of others. Moreover, he may not divulge insider facts to any other person or recommend a third party to buy or sell insider securities (§ 14 of the WpHG). Failure to comply with the bans may result in criminal proceedings against the insider.
Insider rules
see Insider
Long-term inability of a debtor to repay the debt. In terms of an individual enterprise, insolvency almost always results in collapse of the economic entity of the debtor.
Integrated Stock Exchange Trading and Information System (ISETIS)
Fully-electronic market (computerised stock exchange) for shares and annuities (ISETIS-A). Subscribers to ISETIS can be any credit institution and any broker which/who is a member of a German stock exchange. The participants in the stock exchange enter orders from their respective offices and trading premises into the stock exchange system. Each subscriber has the opportunity to access the published offers or to suspend purchase or sales orders. The system is available throughout the day and, therefore, provides continuous information and trading opportunities. At present, trading in ISETIS covers the 30 DAX [German Share Index] shares, together with other high-turnover shares, subscription warrants and bond issues in the public domain. It operates on each stock exchange day, from 8:30 a.m. until 17:00 p.m.
Means exchangeable. Interchangeable items are objects which, in terms of size, quantity or weight, are quantifiable and, therefore, interchangeable. Interchangeable goods or securities can only be traded on the stock exchanges, i.e. they are not mutually exchangeable or interchangeable. Banknotes, for example: a 50 Deutschmark note is interchangeable with any other. Goods can be rendered interchangeable by standardisation.
Remuneration for the provision of money and capital. There are numerous economic authorities for clarifying the meaning of interest. One of the most realistic is that interest consists of a remuneration for the provision of liquidity, a currency depreciation quota and a risk premium.
Interest calculation method
Method used to define the number of days for the calculation of interest (Act./Act., Act./360, Day-count convention)
Interest discount paper
Security for which the purchase price is calculated on the date of purchase by discounting the interest on the nominal amount to be repaid at a later date. The interest (and the interest on the interest) are only paid out with the settlement until the end of the term. Typical interest discount papers include zero bonds, Federal Treasury notes, etc. The opposite of an interest discount paper is an accrued interest paper.
Interest payment date
Dates specified in the bond issue conditions for the payment of interest. In Germany, interest is normally paid annually.
Interest rate
The interest rate determines the amount of interest. It is the price which must be paid by the debtor in return for borrowing money; alternatively, it is the money that a creditor receives for the surrender of capital.
Interest rebate tax
Special form of capital gains tax. An interest rebate of 30 %, or 35 % in the case of over-the-counter business, is deducted from the interest on documented and non-documented capital claims. It is allowable against income tax or corporation tax. However, in the context of an exemption order for capital gains, the customer can arrange suspension of this interest rebate up to a figure of DM 6,100 (DM 12,200 for married couples), with the exception of the over-the-counter business.
Interest return
Regular interest, varying from the nominal interest, because securities are purchased at a flexible market price, which can be higher or lower than the face value. Since the interest is always paid on the face value, the following calculation is applied: (interest x 100) ¸ market rate = regular interest; also return.
Interest tender
Bidding procedure, in particular for tendering for securities repurchase credit transactions. The bidding credit institution must specify both the interest rate it wishes to apply and the volume it is prepared to pay for. Whereas the credit institution applying the American procedure is allocated according to the interest rate offered by it, the Dutch procedure uses a unified rate of interest which corresponds to the most favourable allocated interest rate and which is applied to all the participating institutions. Another form of interest tender is the quantity tender.
Interest warrant
(Coupon), the receipt form which accompanies fixed-interest securities, against which the outstanding interest is paid on the interest payment date. A renewal certificate, talon, is dependent upon the interest warrant schedule, on which several interest warrants are listed.
Interest-rate convergence
One year before the convergence inspection the mean long-term nominal interest rate in a Member State may not exceed the level of the corresponding rate in the three most price-stable EU countries by more than 2 percentage points. Betreuer Intermediaries act on behalf of companies admitted to trading on the Frankfurt stock exchange. Persons authorized to assume intermediary functions for the company must be authorized stock exchange traders. Intermediaries should be available at the exchange to handle transactions in the stocks they cover.
International Accounting Standards (IAS)
Regulations governing the submission of accounts, with a numerical designation (IAS 1 to IAS 32), which are to be issued by the IASC after a development process of around three years. The ultimate objective of submitting accounts is to present decision-related information for a broad range of parties involved in the submission of annual statements of account, while maintaining the basic principles of 'comprehensibility', 'relevance to decision-making', 'comparability' and 'reliability'.
International Accounting Standards Committee (IASC)
Voluntary, private association of over 100 professional associations from 80 countries dealing with questions relating to the submission of accounts, with the aim of formulating, publishing and promoting wordlwide acceptance of principles and regulations governing the submission of accounts which are to be observed during the preparation of annual statements of account, and of accelerating the international harmonisation of standards, accounting principles and methods for the preparation of annual statements of account.
International Depositary Receipt (IDR)
Represents a further development of the American Depositary Receipts (ADR) intended only for use in the USA, in the context of an international application. IDR's were introduced in 1970 by the Morgan Guaranty Trust Company and are only used outside the USA.
International Monetary Fund (IMF)
International organisation, the member nations of which are contractually obliged to comply with agreed regulations and in close collaboration with regard to international monetary policy.
International Primary Market Association (IPMA)
Founded in 1984, the IPMA is an association of leading issuing houses in the field of share issues and bond issues (Flotation). The IPMA publishes general guidelines and recommendations, which are designed to contribute to standardisation and improved transparency in the primary market (business). More than 100 leading issuing houses in America, Asia and Europe have already become affiliated to the IPMA (1994 figures).
International Securities Market Association (ISMA)
Formerly the AIBD. Umbrella organisation, formed in 1969, composed of institutions and dealers which/who are active in the Eurobond (market); the head office is in Zürich. More than 900 leading banks and investment houses are members of the ISMA (1995 figures). The principal task of the ISMA is the compilation of commercial usages for regulating Euromarket transactions.
International Society of Securities Administrators (ISSA)
Umbrella organisation, formed in 1979 on the initiative of Citibank, Deutsche Bank and the Swiss Banking Federation, with the objective of harmonisation (standardisation) and further development of handling techniques and procedures in the securities business. Today, the ISSA has more than 1,500 members (1995 figures).
Internet banking
Facility for customers to use the Internet, a decentralized electronic network with worldwide access, to obtain account/ custody account information and place payment and securities orders. Safe data transmission channels protect the confidentiality of the information conveyed. Internet banking is one form of Home banking.
Inventory value
Total value of the assets of an investment fund. The inventory value, divided by the number of fund shares in circulation, denotes the inventory value per share; in the case of open funds, the term used is the redemption price.
Investment banks
Financial institutions in the US system of functional separation primarily specializing in emissions and securities transactions.
Investment company (investment trust)
Institution for the management of investment funds which are made up of securities (security funds) or even real estate (property funds). The shares in the funds and referred to as investment share certificates (investment share certificates) which are sold on the open market. The legal relationships of the investment companies are regulated in the KAGG ([German] Investment Trust Act).
Investment fund certificates
Shares in a security or property fund. They can be sold at any time at the redemption price. However, no organised market exists for shares in closed investment funds (property funds).
Investment saving
Investment of savings in 'investment certificates' (investment saving), fixed-interest securities and shares.
Abbreviation for International Primary Market Association
Abbreviation for Initial Public Offering
Abbreviation for Integrated Stock Exchange Trading and Information System
Abbreviation for International Securities Market Association, formerly the AIBD
Abbreviation for International Society of Securities Administrators
Issue price
The price at which investment companies in Germany sell their investment fund share certificates. The issue price is the redemption price (share price) plus, as a general rule, an issue surcharge.
Issue surcharge
As a general rule, when investment shares are purchased, an issue surcharge is charged in order to cover the selling costs. This issue surcharge is expressed as a percentage of the redemption price. The redemption price plus the issue surcharge = the issue price.
Corporate body under private law (usually a joint-stock company or under private law, which issues securities, e.g. in the case of federal bonds the Federal Government and in the case of shares the joint-stock company.