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HMRC internal manual

VAT Finance Manual

Glossary of terms: F

Face Value The nominal amount shown on coins, bank notes etc.; the nominal value of securities.
Facility Fee A fee payable for a banking service - most commonly, but not exclusively, applied to lending. The bank will provide a loan facility letter which will set out all the conditions of the loan or credit made available to the customer.
FESE Federation of European Securities Exchanges.
FIBV World Federation of Stock Exchanges.
Final Dividend The dividend paid by a company at the end of the financial year.
Finance House A hire purchase and leasing finance company.
Financial Services Authority (FSA) The independent non-governmental body that replaced the Securities and Investments Board (SIB). It has been given its powers by the Financial Services and Markets Act 2000 and regulates the financial services industry in the UK.
Fixed Interest Loans issued by a company, the Government (Gilts or Gilt-Edged Securities) or a local authority, where the amount of interest to be paid each year is set on issue. Usually the date of repayment is included in the title.
Fixed Interest Rate Rate which is agreed at the outset of a loan, and does not vary during the period of the loan.
Fixed Interest Security A security paying a guaranteed interest rate, usually maturing in a specified period.
Floating Interest Rate Rate which is based on the current market rates such as the LIBOR; varies throughout the period of the loan.
Floating Rate Note (FRN) A loan stock (i.e. to be repaid at a known date) paying variable interest linked to a market rate such as the LIBOR. Also known as Floating Rate Securities.
Flotation The occasion on which a company’s shares are offered on the market for the first time.
Foreign Currency Option The right without obligation to buy (‘call’) or sell (‘put’) an agreed amount of currency against another at an agreed rate and within an agreed period. A premium is charged for writing the option. Foreign currency options can be traded or used to hedge against established risks.
Forfaiting A method of financing international trade whereby the forfaiting house agrees to buy a Bill of Exchange from an exporter at discount.
Forward Foreign Exchange Contracts A contract to pay and receive specific amounts of one currency for another at a predetermined exchange rate on a future date.
Forward Rate Agreement (FRA) An agreement granting the right to borrow at a predetermined interest rate, the FRA is a binding agreement guaranteeing the interest rate for a ‘borrowing’ (as opposed to the actual right to borrow). The customer with an FRA will know how much interest he will be required to pay under the FRA on a future loan.
Front End Fees A fee payable in advance of the service being supplied.
FTSE Indices Figures which show the performance of the UK and the European markets over a period of time. The FTSE indices are run by FTSE International Ltd and include:
  • FTSE 100;
  • FTSE 250;
  • FTSE Small Cap;
  • FTSE 350 Yield;
  • FTSE All-Share;
  • FTSE Fledgling;
  • FTSE Eurotrack 100; and
  • FTSE Eurotrack 200.    
      Fungible Term used to describe assets (usually securities) that can be exchanged with similar assets and are capable of being ‘loaned’. Such assets may be the subject of true Stock Lending.
      Futures Securities or goods bought or sold at a fixed price for future delivery. There may be no intention to take them up but to rely upon price changes in order to sell at a profit before delivery.
      Futures Contract A legally binding agreement on a recognised exchange, e.g. IPE, to make or take delivery of a specified instrument, at a fixed date in the future, at a price agreed upon at the time of dealing.