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HMRC internal manual

VAT Finance Manual

Glossary of terms: C

Call The amount due to be paid to a company by the buyer of new or partly-paid shares.
Call Deposit Loan (to a bank) repayable on demand.
Call Loan Similar to Call Deposit.
Call Option The right but not the obligation to buy stock, shares, commodities, index values etc., at an agreed price up to a date in the future.
Capital Adequacy Requirement for firms conducting investment business to have sufficient funds.
Capitalisation Issue Money from a company’s reserves is converted into issued capital, which is then distributed to shareholders in place of a cash dividend. Also known as a bonus or scrip issue.
Carrying Charges The costs incurred in warehousing the physical commodity generally including interest, insurance and storage.
Cash and Carry An arbitrage transaction involving the simultaneous purchase of a cash commodity with borrowed money and the sale of the appropriate futures contract.
Cash Market The physical market underlying a futures or options contract.
Cash Settlement When the physical delivery of futures or options is cumbersome then contracts are settled by attaching a monetary value.
Certificate of Deposit (CD) Is evidence of a deposit with a bank repayable on a fixed date, having an agreed rate of interest.
Clearing Houses Automated Payments System (CHAPS) Arrangements under which the main banks clear each other’s cheques.
Close Out A finalising transaction by which an equal and opposite trade closes an open position.
Commercial Lending Lending funds to corporate bodies, local authorities and governments.
Commercial Paper An unsecured obligation issued by a company or bank to finance its short-term credit needs. Available in a wide range of denominations, can be either discounted or interest-bearing, and usually have a limited or nonexistent secondary market. See also Euro Commercial Paper (Europaper), Euronotes, and Sterling Commercial Paper.
Commission Fees payable for services rendered, usually in procuring buyers for sellers and vice versa.
Commitment Fees A facility fee payable to the bank for the bank agreeing to make funds available at some future date (see Face Value and Facility Fee).
Commodity Any item that can be bought and sold. Taken to refer to Exchange-traded items, including sugar, wheat, coffee, tin etc.
Confirming House Agent in one country for buyer in another. The confirming house guarantees payment to the supplier, and acts as the buyer’s local agent.
Consideration The monetary values of a transaction (number of shares multiplied by the price) before adding or deducting commission, stamp duty etc.
Contract Note On the same day as a transaction takes place a London Stock Exchange member firm sends to the client a contract note detailing the transaction, including full title of the stock, price, stamp duty (if applicable), consideration, commission, time of deal etc.
Convertible Bond A security that can be converted into shares of the issuing company or its parent.
Correspondent Bank A bank in one country which acts, when required, for a bank in another country.
Counter Operations Generic term for a range of services provided by banks including cash and clearing services; cash cards and use of ATMs; cheque cards; cash receipts; credits and cheque encashment; night safe facilities etc.
Coupon On bearer stocks, the detachable part of the certificate exchangeable for dividends. Denotes the rate of interest on a fixed interest security - a 10% coupon pays interest of 10% a year on the face value of the stock.
Covered Warrants Covered Warrants allow the buyer the right - but not the obligation - to buy or sell an asset at a specified price on, or before, a specified date.
Crack Spread The buying of crude oil whilst taking the reverse position in refined products (for example Brent Crude and Gas Oil). Any combination of energy futures can be used, provided that the number of crude contracts equals the number of product contracts.
CREST The computerised securities settlement system used to settle traders on the London Stock Exchange. Developed by the Bank of England but now owned by Euroclear.
Cross Trade The simultaneous purchase and sale by the same broker in the pit for equal amounts of the same month of a contract at a single price.
Cum Latin for ‘with’ used in the abbreviations cum cap, cum div, cum rights etc. to indicate that the buyer of a security is entitled to participate in the forthcoming capitalisation issue, dividend or rights issue. The opposite of Ex.
Custodian Trustee A trustee who takes charge of the property etc. of a Trust and is responsible for its safekeeping.
Cylinder Option A single transaction involving the sale of a foreign currency option to, and the purchase of a ‘mirror image’ option from, the same counterparty.