Glossary

Secondary market

This market trades in so-called "secondary" securities, off the Swiss Exchange (SWX). These are shares in companies not yet officially listed on the stock exchange.

 

Secondary stocks

Shares traded on the stock exchange are usually divided into "blue chips" and secondary stocks. The former are those of major companies, most heavily traded. They are considered to be particularly safe, though at times of serious market upheavals they too may be subject to substantial fluctuations . On the whole, however, they are less volatile than secondary stocks (see "secondary market").

 

Security

This term covers stocks, bonds, mortgage bonds, treasury bills, etc.

 

SEGA

SEGA is the SIX Swiss Exchange's "strong-box", since it physically keeps the securities (shares, bonds, etc.), settles transactions relating to Swiss securities and records them in Swiss francs or in euros. SEGA is connected to SIX Swiss Exchange's computer network via the SECOM system. It is an independent institution, closely linked to the Swiss exchange. Its administration is in Zurich, while the securities are deposited in Olten.

 

Share price

On stock exchanges the world over, the prices of all securities (shares, bonds, etc.) are always determined by the most famous principle of economic theory, namely the law of supply and demand: the trade price is the amount that the buyer agrees to pay and the seller agrees to accept for a particular stock.

A stock exchange transaction is executed (i.e. concluded) as soon as the seller's intentions coincide with those of the buyer with respect to both the price and quantity of a given security.

 

Shares

A share is a property right giving the holder certain rights in the company that has issued the share. These rights are of different types: company rights (e.g., right to vote in annual meetings of shareholders, right to be elected) and property rights (e.g., the right to receive a share of net profit in the form of a dividend, a share in the proceeds of liquidation of the company, and the preferential right to subscribe new shares in the event of a share capital increase).
There are two types of shares:

  • Bearer shares: the legitimate owner is the person who has possession of them
  • Registered shares: issued in the shareholder's name. The shareholder is listed in the register of shareholders and his name appears on the shares themselves.

 

Shares classified by sector

Shares may be classified according to the type of activity conducted by the company that has issued them. As a result, stock exchange commentaries refer to the following sectors:

  • Finance
  • Transportation
  • Petrochemicals
  • Health care
  • Food and beverage
  • Information technology

 

SPI and SMI

The main market indices in Switzerland are the Swiss Performance Index (SPI) and the Swiss Market Index (SMI).

Introduced on 1 June 1987 (with an initial basis of 1,000), the SPI is calculated continuously. It includes most of the stocks listed on the Swiss Electronic Exchange.
Introduced on 30 June 1988 (with an initial basis of 1,500), the SMI is also calculated continuously. It comprises 27 stocks representing the most highly capitalised companies.

 

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Software integrated in Internet browsers that encrypts messages, making them incomprehensible to any unauthorised person who intercepts them.

 

Standard & Poor's 500 (S&P 500)

This 500-share index comprises nearly 90% of all stocks traded on the New York Stock Exchange; it was introduced in 1957. Its reference period is 1941-43 = 10. The index expresses the daily market price as a percentage of the average value during the reference period, weighted according to market capitalisation.

 

Stock

In financial circles, the term "stock" is synonymous with "share".

 

Stock Exchange

A market, in the economic sense of the word, in which shares, bonds and other fungible assets owned by individuals, companies, pension funds, etc. are bought and sold, according to the law of supply and demand.

 

Stock indices

These are instruments used to measure variations in a market's share prices by giving their average values. The main stock indices are the SMI (Switzerland), SPI (Switzerland), Dow Jones Industrial (USA), Standard & Poor's 500 (USA), Nasdaq-100 (USA), CAC 40 (France), Nikkei (Japan).

These indices may refer to a whole market or to various sectors of activity. They make it possible to establish interesting comparisons between different stock exchanges or between sectors of activity.

The performance of stock indices can be illustrated in numerical tables or charted on graphs.

 

Stop-Loss

TradeDirect accepts all order types authorised by the Swiss Exchange (SIX Swiss Exchange), namely "At market", "Limit", "Stop-Loss" and "Stop-Limit" orders. Stop-Loss : Order to sell at a specific price to limit a foreseeable loss. When the trigger price is reached (paid), the order becomes an "at market" order and will be executed at the following price.

 

Stop-Limit

Identical to a Stop-Loss order, except that when the trigger price (Stop Level) is reached, the order is placed with a specific limit (i.e., it becomes a limit order).

 

Subscription

An undertaking to purchase, on the occasion of a securities issue, a certain number of shares or bonds.

 

Swiss Exchange

The Swiss Exchange (SIX Swiss Exchange) is one of the world's leading exchanges, both by its capitalisation (ranking sixth for the capitalisation of domestic shares) and transaction volume.
The number of companies whose stock is listed on SIX Swiss Exchange is rather high (around 500, roughly half of which are Swiss stocks). However, the 10 largest capitalisations represent more than three-quarters of the Swiss market's total capitalisation, which makes SIX Swiss Exchange one of the world's most concentrated stock markets.

 

Swiss Exchange prices

The prices published in newspapers or available from electronic media are the closing prices for securities traded on the Swiss Exchange (SWX) and date from the previous day's trading session. Each line contains codes, abbreviations and numbers, all of which have a very precise meaning.