Common Acronyms of the Investment World

The investment world is a bit like the medical one; we’ve got lots of acronyms! While shortening long terms to their first letters makes it easier to get through a conversation or email, it can have the opposite effect if you don’t know what those acronyms actually mean. We’ve all found ourselves tripping over multiple collections of letters and feeling like we’re reading a different language. In today’s blog, we want to take the time to review some of our industry’s acronyms and explain just what they mean.

ADR

This stands for an American Depositary Receipt. It allows investors in the U.S. to trade shares with non-U.S. companies without having to go through their local exchanges.

CFD

This acronym stands for Contracts for Difference. It is a form of financial derivative that facilitates speculation on financial markets

CPI

This stands for Consumer Price Index. It is an average of several consumer services and goods that gets used to indicate inflation.

DFB

DFB stands for a daily funded bet, a tool used in spread betting.

DMA

This acronym stands for Direct Market Access. It offers higher transparency and flexibility for advanced traders who want to break out of traditional dealing.

EBITDA

This mouthful stands for “Earnings Before Interest, Taxes, Depreciation, and Amortisation.” It is a figure calculated by eliminating the above amounts from a company’s total revenue. By doing this, one can get a view of profit the company made before taxes and other financial factors entered the picture.

ECB

ECP refers to the European Central Bank, which is the central bank for the eurozone.

EDSP

This acronym stands for Exchange Delivery Settlement Price. It is the price at which exchanges are settled on derivative contracts.

ETC

When you see this acronym, you’re actually seeing Exchange Traded Product. These products can include the two following acronyms below!

ETF

An ETF is an Exchange Traded Fund. This is a type of investment security bought and sold on exchanges.

ETP

An ETP is any Exchange Traded Product. These are financial tools traded throughout the day on national exchanges.

FCA

FCA stands for Financial Conduct Authority, and it refers to the United Kingdom’s financial regulatory body. It was preceded by the FSA, which stands for the Financial Services Authority.

FOMC

This stands for the Federal Open Market Committee. It is a branch of the Federal Reserve bank, and is in charge of both short- and long-term policy decisions.

GDP

You’re probably familiar with this one! GDP stands for Gross Domestic Product. This refers to the total value of services and goods produced in a country over a certain period of time. It is often used to assess the health and size of a country’s economy.

IPO

Initial Public Offering refers to the process of a company going public. It is also known as floating or floatation.

ISA

When you see this acronym, you’re actually seeing Individual Savings Account. It is used in the United Kingdom and is tax exempt.

LIBOR

This acronym stands for the London Interbank Offered Rate. This is a benchmark dictating daily interest rates on loans and other financial tools around the globe.

Well, that’s all we have time for today! We have over 20 years of experience in the financial sector, and that is what led us to create our elite asset allocation software. Learn how it can boost your investments and protect them from market fluctuations today!