Public Debt Market Glossary

Public Debt Market Glossary

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Banco de España direct accounts 
Book entry securities accounts belonging to third parties that have chosen the Banco de España as their managing entity. The operation of these accounts is limited.
Banco de España Settlement System (SLBE) 
Payment system managed by the Banco de España, whereby interbank market deposit operations, FRA market trades and the cash of public debt market operations, among others, are settled among account holders. In this network, the communication of the two contracting parties is required for each operation, except in the case of the blind government debt market where, due to the unawareness of the counterparty, communication is threefold, as the communication of the blind broker which has mediated the operation is required.
Basis point 
The minimum percentage price quotation unit in financial markets. This concept may make reference to prices or profitabilities and is equivalent to the least significant decimal of a standard price quotation.
Blind market 
Trading floor where participants and debt traders, whether market makers or aspiring market makers, make firm purchase/sale price quotes through a group of brokers specialised in book-entry debt which offer the best purchase/sale prices. Therefore, transactions are performed without the knowledge of the transaction counterpart.
Bond  
Fixed-income asset issued on a long-term basis by a company, public agency or government. In Spain, it differs from an obligation in that the issuance deadline is shorter than that of the latter. It is normally an instrument quoted on the secondary market, due to which its profitability, if sold prior to maturity, will depend not only on the accrued interest but also on the net worth variation produced by its sale, based on its quotation price at a given time.
Book entry 
Accounting record that represents a set of financial rights associated with a security. The person accredited in the entry records is presumed to be the holder of said security, third parties not being able to claim in good faith that they have acquired it against payment. The transmission of a book entry takes place by accounting transfer, without requiring the involvement of a notary public. Registration of the transfer is enforceable as to third parties and produces the same outcome as the traditional physical movement of certificates or documents. The legal standing for the transmission and for exercising the rights deriving from securities represented by book entries can be accredited by presenting certificates issued by the institutions responsible for the records. The only function of said certificates, unique for the same securities and for exercising those rights, is to accredit legal standing and they cannot be used as a traditional trading document.
Borrowing requirement 
A cash accounting concept that reflects the magnitude of the net appeal made by the government to external financial resources for the purpose of fulfilling the requirements imposed by the balance of its non-financial transactions and by the net variation in its financial assets. A negative net appeal is referred to as "debt capacity ratio."
Brokers 
Agents whose sole activity consists of contacting and advising the members of the public debt market, without their brokerage interposing in the operation. A group of brokers, such as the brokers of the Banco de España Settlement System, conducts its operations in the second tier of the market, while a subgroup of the former deals with trading on the blind market.