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FINANCIAL
GLOSSARY : S
Scrip dividend
Where a company
distributes dividends in the form of shares.
Scrip issue
A free issue of
extra shares to shareholders by a company. This is often done when the
share price has risen so high that they become too expensive to buy
for the smaller investors. This is also known as a 'bonus' or 'capitalisation'
issue.
Secondary
market
The secondary market
is a place where an investor can buy or sell existing securities. Shares
will be traded in the secondary market once they have been issued in
the primary market.
Securities
Term used to cover
all stocks and shares.
Securities
& Exchange Commission (SEC)
The primary regulator
for all the securities industry in the US. Its responsibility is to
promote full disclosure and to protect investors against fraudulent
and manipulative practices in the securities markets.
Securities
and Futures Authority (SFA)
The self-regulating
organisation (SRO) which has responsibility for regulating all firms
engaged in the Securities and Futures sector of the financial services
market. However, since December 2001 all regulatory functions of the
SFA has been absorbed into the Financial Services Authority.
Self-invested
Pension Plan (SIPP)
A personal pension
where the person saving for their retirement is given the flexibility
to make their own investment decisions
Self-select
Individual Savings Account
Self-select Individual
Savings Account is a type of ISA which gives the investor the freedom
to choose the investments that go in it. They are not restricted to
the stocks and shares of one particular ISA manager.
Self -Regulating
Organisation (SRO)
Organisations that
were set up under the Financial Services Act 1986 to be directly responsible
for policing investment businesses.
Selling
short
The practice of
selling securities which are not at present owned, in the hope that
they can be bought at a lower price, once the price has fallen to settle
the contract.
Settlement
The payment for
the securities and the delivery of the securities in return for the
payment.
Share
Shares represent
a slice in the ownership of a company.
Shareholder
The owner of shares
in a company. Shareholders supply what is known as the risk capital
and share in the success of the company. If the company is a success
and makes a profit, shareholders receive the rewards of increasing dividend
income and capital gains on the price of their shares. If the company
is a failure, shareholders stand to lose the whole of their investment.
Share certificate
This is the legal
proof of ownership of shares in a company. However, with the increase
of electronic trading and settlement systems such as Crest, share certificates
are gradually being phased out. If an investor insists on having a share
certificate then he/she will have to pay more for their share deals.
Share exchange
A facility that
is offered by investment trusts to take your shares and convert them
into shares in the investment trust cheaply and easily.
Split-capital
trust
An investment trust
that offers different types of share: high income shares that provide
no capital growth, for example, or pure capital growth shares that provide
no income. This type of investment gives the private investor the opportunity
to choose the type of investment needed. Investors who just want income
can choose to invest in income shares, while investors who want growth
can opt for capital shares.
Stagging
The process of buying
shares when they are intially offered to the general public and then
selling them immediately to retail investors once trading has begun
- with a view to making a quick profit.
Stamp duty
Stamp duty is a
tax levied on share dealings and house purchases. The current rate levied
on share dealings is 0.5%.
State Earnings-Related
Pension Scheme (SERPS)
A top-up pension
scheme to boost the state basic pension. Employees can build up an entitlement
to SERPs by paying National Insurance Contributions on part of their
earnings.
SERPS was replaced
by the State Second Pension (SP2) in April 2002, which is designed to
provide a better pension than SERPs for people on a low income. People
on moderate to high incomes will be encouraged to contract out of the
SP2 scheme.
Standard
& Poor's Stock Index (S&P500)
US performance index
of a basket of 500 stocks that are considered to be widely held.
