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HMRC internal manual

VAT Finance Manual

Glossary of terms: S

Safe Keeping The secure storage/holding of securities, i.e. no ‘extras’ such as collective dividends or handling/control of coupons.
Safety Deposit Separate storage drawers or boxes within a strong room may be provided by banks to their customers to provide secure storage of the client’s valuables etc.
Scrip Dividend An alternative to payment of dividends in cash, it provides an advantage to companies in relation to advance corporation tax (ACT) (that is, they pay ACT on cash dividends, but not on scrip dividends). In paying Scrip Dividends, the company provides shares in the company rather then cash. (See also DRIP).
Scrip Issue See Capitalisation Issue.
SEAQ Automated Execution Facility (SAEF) Enables small trades in UK shares to be carried out automatically at a computer terminal instead of over the telephone.
SEAQ International The Exchange’s electronic price quotation system for non-UK equities. Similar to SEAQ it is part of the London Stock Exchange’s Sequence programme.
Seats Plus A service which supports the trading of listed UK equities in which turnover is insufficient for the market making system. It is distributed via a number of screen-based information services. it shows current orders, company information, historical trading activity for each stock and the sole market maker, where only one is registered. It is part of the London Stock Exchange’s Sequence programme.
Secondary Market Marketplace for trading in securities that are not new issues.
Securities General name for stocks and shares of all types. In common usage, stocks are fixed interest securities and shares are the rest.
Securities and Futures Authority (SFA) (Previously known as The Securities Association - responsibility transferred to the FSA on 01/12/01).
Securities and Investments Board (SIB) This was the agency appointed by the Government under the Financial Services Act to oversee the regulation of the investment industry, including the SROs, RIEs and clearing houses. Is now called the Financial Services Authority (FSA).
Self Regulating Organisation (SRO) An organisation recognised by the Financial Services Authority (FSA) and responsible for monitoring the conduct of business by, and capital adequacy of investment firms.
Sequence An integrated, reliable computer system developed by the London Stock Exchange to deliver a wider range of better quality trading and information services to market participants. The SEAQ, SEATS and SEAQ international trading service operate on the system.
SETS Stock Exchange Electronic Trading Service. The London Stock Exchange’s order driven trading system introduced in 1997 that is used (instead of SEAQ) for trading FTSE100, FTSE250, FTSE Small Cap Index constituents, Exchange Traded Funds, Exchange Trading Products as well as other liquid AIM, Irish and London Standard listed securities.
Settlement Once a deal has been made, the settlement process transfers stock from seller to buyer and arranges the corresponding movement of money between buyer and seller (see Sub Participated Loans).
Settlement Day Day on which bought stock is due for delivery to the buyer and the appropriate payment to the seller.
Short A sale of a contract to open a position.
Shorts See Gilts or Gilt-Edged Securities.
Society for Worldwide Interbank Financial Telecommunication (SWIFT) SWIFT is a co-operative based in Belgium, established by and for the financial industry as a global provider of secure financial messaging services.
Soft Commission An intermediary’s funding of a client’s costs in recognition of business levels received. Typically a broker paying for a fund manager’s information system expenses.
Spot Rate The normal rate of exchange quoted in foreign exchange markets. This is the rate applicable for transactions in which the funds are to be paid over in each centre on settlement day (two days later).
Spread An option trade in which two or more open positions are established in order to trade the differentials and offset risk. Option spreads may use different exercise prices and/or expiry dates. Also, the difference between buy and sell prices quoted by foreign exchange market makers.
Stag One who applies for a new issue in the hope of being able to sell the shares allotted to him/her at a profit as soon as dealing starts.
Stamp Duty A UK tax currently levied on the purchase of shares.
Sterling Commercial Paper Notes issued by companies in need of funds sold at a discount (i.e. below face value). See also Commercial Paper, Euro Commercial Paper (Europaper), and Euronotes.
Sterling Depository Receipt (SDR) Treated as an International Depository Receipt (IDR) but the underlying securities are issued in the UK.
Stockbroker A company or partnership dealing in securities as agent for its clients. Since the ‘Big Bang’ (October 1986) such firms have been allowed to act as principal. London Stock Exchange rules oblige traders to state on contract notes whether they are acting as an agent or a principal.
Stock Exchange Automated Quotations (SEAQ) The London Stock Exchange Automated Quotations system for UK securities. This is a continuously updated computer database containing price quotations and trade reports in UK securities. SEAQ carries the market makers’ bids and offers for the UK securities and is part of the Exchange’s Sequence programme.
Stock Exchange Pool Nominee (SEPON) An account into which stock is registered during the course of settlement.
Stock Lending A situation where one party obtains securities from another, usually in order to complete an order. The ‘lender’ actually sells the securities to the ‘borrower’ and they are replaced by equivalent stock later.
Stocks See Securities.
Sub Participated Loans Where the lender bank is unable or unwilling to lend the full amount of the borrower’s requirements, it can raise funds by borrowing money from other institutions (sub participants).
Sub Underwriting When an issue of securities is underwritten, the underwriter may spread the risk amongst sub-underwriters. If they agree to participate, the sub underwriters accept an obligation to underwrite a certain value of the securities. If all of the securities are sold, the sub underwriters receive a commission - self billed by the underwriter. If not, then the sub underwriters have to buy an agreed proportion of the unsold securities.
Syndicated Loans Loans made jointly to a borrower by a group or ‘syndicate’ of lenders.
Synthetic Securities These arise with the sale of a fixed yield bond to an investor coupled with an interest rate swap agreement. The bank sells the investor a fixed yield bond, who then has the right to receive the fixed rate interest thereon. The investor then enters into an interest rate swap agreement with the bank whereby he pays over the fixed rate interest, and receives in return floating rate interest from the bank. The bank is likely to enter into another interest rate swap agreement with a third party to hedge its risks.