Banking Terms - Set 26 (UCommerce, Vantage Score, PSS Act, 2007, Prime Brokerage Fees)

UCommerce

Universal Commerce or UCommerce is the intersection of online, kiosk, and in-store payment enablement, incorporating social media and near-field communications..

Vantage Score

A credit score product launched in March 2006 by the three major credit bureaus (Equifax, Experian and TransUnion) as a competitor product to the FICO score. Like a FICO score, a Vantage Score is a three digit numeric value that assesses a borrower's credit risk. Vantage Scores range from 501 to 990, with a higher score representing a lower risk to the creditor.

Payment and Settlement Systems Act, 2007 (PSS Act, 2007)

The PSS Act, 2007 provides for the regulation and supervision of payment systems in India and designates the Reserve Bank of India. The Act also provides the legal basis for “netting” and “settlement finality”.

Prime Brokerage Fees

Prime brokers do not charge a fee for the bundled package of services they provide to hedge funds. Rather, revenues are typically derived from three sources: spreads on financing (including stock loan), trading commissions and fees for the settlement of transactions done away from the prime broker. The financing and lending spreads, which are charged in basis points on the value of client loans (debit balances), client deposits (credit balances), client short sales (short balances), and synthetic financing products such as swaps and CFDs (Contract for difference), make up the vast majority of prime brokerage revenue.

Therefore, clients who undertake substantial short selling or leverage represent more lucrative opportunity than clients who do less short selling and/or utilize minimal leverage. Clients whose market activities are principally fixed income-oriented will generally produce less prime brokerage revenue, but may still present significant economic opportunity in the repo, foreign exchange (fx), futures, and flow business areas of the investment bank.

Banking Terms - Set 25 (Smishing, TARGET2, Tiered Pricing, Token Based Authentication)

Smishing

Smishing is a technique used by criminals to steal bank or credit card information using text messages. In such an incident, the mobile device user receives a fake text message that appears to be from a bank. The text message may request that the consumer call a phone number to provide card or account information to a criminal posing as a bank employee.

TARGET2

TARGET2 is an interbank payment system for the real-time processing of cross-border transfers throughout the European Union and replaced TARGET in 2007. TARGET2 has to be used for all payments involving the Eurosystem, as well as for the settlement of operations of all large-value net settlement systems and securities settlement systems handling the euro and is operated on a single technical platform. The business relationships are established between the TARGET2 users and their National Central Bank.

It stands for Trans-European Automated Real-time Gross Settlement Express Transfer System 2.

Tiered Pricing

Tiered pricing is a merchant account rate structure that credit card processors use to assess charges. It is also referred to as bundled pricing because it allows processors to group interchange fees into general rate tiers of their choice. There are two types of Tier Pricing 3-Tier Pricing and 6-Tier Pricing.

Token Based Authentication

Allows cardholders to connect remotely to services by authenticating their identity through the use of a password that is not transmitted between the two parties. Often a password is generated by a device issued by the service provider, e.g., a bank or card issuer, to the customer or cardholder, and when prompted the password is entered by the customer and is recognised by the service provider.

Banking Terms - Set 24 (Upstairs, Sweetheart & Package Deal, Apple Pay)

Sweetheart Deal

A merger, a sale or an agreement in which one party in the deal presents the other party with very attractive terms and conditions. The terms of a sweetheart deal are usually so lucrative that it is difficult to justify turning the offer down.

This term can be used to describe a variety of deals, but in general, a sweetheart deal is a transaction that simply can't be passed up. For example, a merger may be a sweetheart deal for the top executives of the target firm because they get very healthy buyout packages. This kind of sweetheart deal is usually considered unethical, however, because it may not be in the best interests of shareholders.

Package Deal

An order that contains a number of exchange or deposit items that must be completed simultaneously, or not at all. Package deals allow traders to ensure specific prices or times to maturity for multiple assets.

A trader may want to participate in a package deal to properly execute an investment strategy. For example, let’s say an investor wants to enter into a long-short strategy, where he or she purchases one stock and short sells another. Making this order a package deal will protect the investor in case either stock is not immediately available for purchase or sale. The investor may not want the exposure of being only long or short for the period of time required to complete the second transaction.

Apple Pay

Apple Pay is a mobile payment service that lets certain Apple mobile devices make payments at retail and online checkout.  It intends to digitize and replace the credit or debit magnetic stripe card transaction at credit card terminals. The service lets Apple devices wirelessly communicate with point of sale systems using a near field communication (NFC) antenna, a "dedicated chip that stores encrypted payment information" (known as the Secure Element), and Apple's Touch ID and Passbook.

Upstairs Deal

A business agreement that is made by upper management, and is generally unknown to lower-level employees until it is publicly announced. The deal is referred to as an "upstairs deal" because executives typically have their offices in the higher floors of an office building. In mergers and acquisitions, an upstairs deal between two companies is more likely to result in a friendly takeover, as opposed to a hostile takeover.

E.g. Keeping word of a potential merger quiet allows executives to operate with a reduced risk of outside parties profiting from the deal by driving up share prices. Once a takeover offer is announced, share prices will react by either moving up or down to the indicated target price. For example, a deal in which a company tenders an offer of $15 per share with shares currently trading at $10 per share will likely result, when announced, in shares adjusting to $15.

Banking Terms - Set 22 (Deal Blotter, Pre-Authorization, No Dealing Desk, Deal Slip)

Deal Slip

A record of the essential details of a transaction entered into by a forex dealer. It is the primary source of record-keeping for a dealer. Deal slips are generally required to be archived for a certain number of years stipulated by the regulatory authority where the deal is recorded. Also known as deal ticket.

A deal slip is generally time-stamped to record the date and time of the transaction. It contains all of the information pertinent to a transaction, including but not limited to the amount of the transaction, whether it was a purchase or sale, the counterparty to the transaction, settlement date, transfer price, customer price and so on.

Deal Blotter

A trader's record of all the transactions executed on a given day. The deal blotter contains basic information pertinent to a transaction, with additional information included on the deal slip. The deal blotter for a forex trader would include both opening and closing currency positions initiated by the trader.

In a forex trading firm with several traders, the sum of the positions on all the traders' deal blotters at the end of the trading day will indicate the change in the firm's net position at close. While deal blotters were paper-based before the advent of computerization, they are now increasingly computer-based, enabling traders to analyze and monitor their currency trades more rapidly and efficiently.

Pre-Authorization

Pre-authorization is a banking term describing a practice where money is not taken from the payee’s account at the moment the transaction is made. The amount charged is instead made unavailable on that customers’ account – this is also known as authorization hold. Pre-authorisation is normally valid for 1- 5 days on debit cards, while credit card pre-auth periods can be longer and vary between issuers. This pre-auth period is usually used by retailers to make additional security checks on the card and the cardholder, to make sure that the transaction is not fraudulent. It also allows them time to make sure that the item being sold is in stock and ready to be shipped. Consumers near their credit or debit limits need to watch their available balances carefully, or the hold amount could push them over the limit, triggering a fee. Holds, also called blocks, are usually released within minutes or hours, but can sometimes last days.

No Dealing Desk

A way of forex trading that provides immediate access to the interbank market. The interbank market is where foreign currencies are traded. This is different than trading through the dealing desks that are found in many banks and financial institutions. By using a dealing desk, a forex broker who is registered as a Futures Commission Merchant (FCM) and Retail Foreign Exchange Dealer (RFED) can offset trades. If a no dealing desk system is used, positions are automatically offset and then transmitted directly to the interbank.

Forex brokers who use this system work directly with market liquidity providers. When trading through a no dealing desk, instead of dealing with one liquidity provider, an investor is dealing with numerous providers in order to get the most competitive bid and ask prices. An investor using this method has access to instantly executable rates.