- Face value
- In the case of fixed-interest securities, the face value is the interest-bearing outstanding sum and, in the case of shares, the proportional amount (par value) of the nominal capital indicated on the share certificate. According to German company law, the lowest face value amounts to DM 5.00.
- Factoring
- Continuous purchase by a factoring company of short-term debts arising from supplies and services. Factoring is used as a form of financing, enabling a company to purchase liquidity. To this end, a company or a customer assigns to the factoring company any debts arising from the supply of goods and, in return, receives a advance payment for the outstanding sum.
- Fair value
- Price at which a financial instrument would be traded freely between two parties. In the case of a warrant the fair value identifies the theoretically correct price of the option, taking into account all factors which may influence the price. There are various models for calculating the fair value.
- FBF
- German abbreviation for Fördergesellschaft für Börsen und Finanzmärkte in Mittel- und Osteuropa mbH
- Federal Banking Supervisory Board
- An independent Federal authority, subordinate to the Federal Ministry of Finance. Supervises and controls all credit institutions to ensure compliance with legal regulations ([German] Credit Services Act). Insurance companies are subject to control by the Bundesaufsichtsamt für das Versicherungswesen the 'Federal Insurance Supervisory Board', also based in Berlin, and, under the provisions of the Credit Service Act, building societies are controlled by the Federal Banking Supervisory Board.
- Federal bond
- Debenture bonds, traded on the stock exchange and issued by the Federal Government, with a term of 10 to 30 years. Federal bonds occupy a central position on the German capital market and in capital transactions with countries abroad. Their respective conditions are important factors for the overall market for DM instruments of indebtedness. Federal bonds, as well as federal bonds attract a fixed nominal interest and the issue prices are variable. The acquisition of Federal bonds is not subject to any kind of restriction. At the beginning of 1993, the minimum fragmentation limit was raised by DM 100 to DM 1,000.
- Federal bond consortium
- Former consortium which, under the direction of the Deutsche Bundesbank, was responsible for the floatation of federal bonds until 1997. Each associate undertakes, on his own account, to accept a partial amount equivalent to his share. Since 1991, the consortial shares have been re-calculated by the Bundesbank into roughly yearly intervals - depending upon the placement capability of the individual institutions. In Germany, members of the Federal bond consortium are resident credit institutions which conduct securities business and have a significant placement capability in Federal bonds. At the end of June 1995, the Federal bond consortium comprised 95 institutions, 48 of which are owned by foreign companies. Since 1998 it is replaced by the Bund Issues Auction Group.
- Federal bond issues
- Regular issues by the German Government, at a fixed rate of interest and an agreed term of five years. Federal bonds are eligible for stock exchange trading and, once the sale of a series of bonds has been concluded, they are introduced onto the stock exchange. The shares are subdivided into units of DM 100.00.
- Federal Debt Administration
- Administers the loans borrowed from the Federal Government and its special funds. The Federal Debt Administration is an independent Federal higher authority within the sphere of responsibility of the Federal Ministry of Finance. Its statutory duties include:
checking the level of borrowing;
notarial recording of the loans;
maintenance of the Federal Debt Register;
payment of the 'interest and capital sums payable'.Instead of deposit administration at a credit institution, every purchaser of Federal Government securities can request that his securities be entered in a current individual debtor account in his own name.
- Federal Debt Register
- see Registered debts
- Federal Government future
- Contract (future) for an ideal type of federal bond with a nominal interest of 6 % and a residual term of 8.5 to 10 years. The par value of a contract is DM 250,000.00. The terms are based upon the months of issue of the Federal Government future available at the same time. These are always the three months nearest to the cycle March, June, September and December. It is possible to exercise the option on each working day during official stock exchange business hours (American option).
- Federal Securities Trading Supervisory Board
- As an independent Federal authority, the Federal Securities Trading Supervisory Board is responsible for supervision in accordance with the Securities Trading Act. In the context of the tasks assigned to it, it must counteract any malpractice which could adversely affect the smooth operation of securities trading or which could represent significant disadvantages to the securities market. The Federal Supervisory Board can implement procedures which are designed to eliminate or prevent such malpractice.
- Federal State banks
- Also referred to as giro centres. They represent the regional central institutions of the savings banks and are therefore active as central clearing offices for cashless payment transactions with the affiliated institutions, as well as providing assistance with equalisation of liquidity.
Nowadays, as Universal banks, the Federal State banks offer the full range of banking products and services but, in many cases, private customers are served by the savings banks. As a general rule, a significant number of Federal State banks belong to the respective regional savings bank association. The controlling institution is the Deutsche Girozentrale [German Giro Centre], based in Frankfurt am Main. The largest Federal State banks are the WestLB, the Bayerische Landesbank, the SüdwestLB and the Hessisch-Thüringische Landesbank.
- Federal State Central Bank
- Administrative centre for the Deutsche Bundesbank at the Federal State level (§ 8 of the Bundesbank Act). Operates as a Federal Government authority, conducts payment transactions between the banks and monitors the minimum reserves. The presidents of the Federal State Central Banks are members of the Central Bank Council.
- Federal Treasury note
- Bond issue by the Federal Government. The interest is paid annually (Type A, 6-year term) or compound interest is added when the face value is redeemed (Type B, 7-year term). They are not introduced in to stock exchange trading.
- Federal Treasury warrant
- see Treasury bonds
- FIBOR
- Abbreviation for Frankfurt Interbank Offered Rate. It refers to an interest rate, determined at the Frankfurt Banking Centre, at which the banks are prepared to invest Deutschmark deposits with other banks for a period of 3 to 6 months, in the form of fixed or time deposits (interbank interest rate).
- Financing bills
- Constant issues which are issued by the German Government with terms of approximately 12 and approximately 24 months. Financing bills are issued as discount bills, i.e. face value is discounted by the offered rate at issue. They can be acquired by anyone with the exception of credit institutions. Investments in these bills are restricted to a maximum value of DM 500,000 per person and business day. The smallest denomination is DM 1000. Financing bills are not introduced to stock exchange trading due to their short term.
- Fine tuning operation (ECB)
- A non-regular open market operation executed by the central bank mainly to deal with unexpected liquidity fluctuations in the market.
- Fiona swap market
- Swap market which exchanges variable overnight rates against fixed forward rates and is based on the Frankfurt-Interbank-Overnight Average Index, an indicative Fibor rate for overnight money. Maturities range from between two days to twelve months. Swaps are used to finetune interest rate risks in the money market.
- Fixed deposit
- Temporarily surplus sums of money which are invested with a bank in a fixed deposit account for at least 30 days, in order to attract a higher rate of interest. The date of maturity of the fixed deposit is established when the contract is concluded. The interest rate is dependent upon the amount of the investment and upon the agreed term of the fixed deposit. As well as fixed deposits, 'notice deposits' are also a form of time deposit.
- Fixed-interest security
- Term applied to all securities which attract an unchanging interest rate throughout their entire term. These include, for example:
bond issues;
local authority bonds;
mortgage bonds.These contrast with equity stock (shares), for which the income (may) vary from year to year, or with investment certificates, the income from which also fluctuates. Fixed-interest securities are also referred to as fixed-interest security bonds.
- Fixed-price procedure
- Placement procedure (placement) in which the selling price of the shares is established at the beginning of the selling period. The price is based upon an in-depth analysis and evaluation of the company, with simultaneous consideration of the stock market valuation of comparable companies and the general state of the market.
- Fixing
- Calculation and quotation of stock exchange or market prices; price fixing, stock exchange quotation.
- Floating rate note
- Variable-interest rate bond issues which, as a general rule, are re-assessed every three or six months on the basis of short-term Euro-market interest rates (LIBOR or FIBOR)
- Floor
- The interest floor is the opposite of the cap. The floor buyer is guaranteed a fixed interest rate floor (strike) against payment of a premium. If the current interest rate falls below this floor at each point the interest is fixed for the next interest period, the floor seller automatically pays the difference.
- Floatation
- Issue and placement of securities on the capital market by public sale. Usually by the intermediary of a bank (bank of issue) or a consortium of banks. The issue price of shares should not fall below the face value. The issued document is also referred to as a floatation
- Floatation consortium
- see Consortium
- FOB
- Free On Board. In international trade, FOB is a facility for distributing the cost and perils component between the importer and exporter in the context of Incoterms. With FOB, the transfer of costs and perils between the exporter and the importer takes place when the merchandise is loaded aboard the ship in the port of embarkation. In