Glossary (M – O)


Maintenance Call – See House Maintenance Call.

Make a Market – Refers to brokerage firms that buy and sell a particular over–the–counter stock for their own accounts at their own risk.

Management Company – The group of individuals responsible for managing a mutual fund's portfolio.

Margin – Purchasing Treasury and agency securities with money borrowed from a bank or brokerage.

Margin Account – An account in which the firm lends the customer money on purchases or securities on short sales. Customers must have enough equity in the account to pay for purchases by the third business day after trade or meet obligations that may be incurred immediately.

Margin Call – A demand upon a customer to deposit money or securities with the broker when the value of the securities purchased on margin falls.

Margin Department – The department of a brokerage firm that computes the balance their clients need to keep in order to avoid maintenance and margin calls.

Margin Requirement – The percentage of investment that may be financed using borrowed capital.

Mark–to–Market – Process by which security position values are brought up to their current value. The customer may request the excess equity, or the firm may call for the deposit of additional funds. Either request is a "mark" to the market.

Market Capitalization (MCAP) – Price per share multiplied by the total number of shares outstanding; also the market's total valuation of a public company.

Market Category – The market it trades on, either Nasdaq National Market(NNM) or Nasdaq SmallCap Market (SCM).

Market Close – An electronic entry by NASD Members to The Nasdaq Stock Market of the regular trading day's last reported trade. Investors may trade during the regular trading session from 9:30am – 4:00pm. Trades must be submitted to Nasdaq within 90 seconds of the execution of the trade by an NASD Member Firm.

Market Indicators – A variety of indices that give a value and usually a net daily change of a specific market.

Market Makers – The NASD member firms that use their own capital, research, retail and/or systems resources to represent a stock and compete with each other to buy and sell the stocks they represent. There are over 500 member firms that act as Nasdaq Market Makers. One of the major differences between The Nasdaq Stock Market and other major markets in the U.S. is Nasdaq's structure of competing Market Makers. Each Market Maker competes for customer order flow by displaying buy and sell quotations for a guaranteed number of shares. Once an order is received, the Market Maker will immediately purchase for or sell from its own inventory, or seek the other side of the trade until it is executed, often in a matter of seconds.

Market Maker Spread – The difference between the price at which a Market Maker is willing to buy a security and the price at which the firm is willing to sell it i.e., the difference between a Market Maker's bid and ask for a given security. Since each Market Maker positions itself to either buy or sell inventory at any given time, each individual Market Maker spread is not indicative of the market as a whole.

Market Not Held – Type of market order usually for a sizable amount of stock that gives the floor broker discretion with respect to price and/or timing on execution.

Market Order – An order that is executed as quickly as possible at the best price available. During market hours, this means orders for widely traded securities will usually execute at or close to the current quotation. Buy orders should execute at or close to the "ask" price and Sell orders should execute at or close to the "bid" price. This type of order may yield an undesirable execution price and should therefore be used only when necessary.

Market Surveillance – The department responsible for investigating and preventing abusive, manipulative, or illegal trading practices on The Nasdaq Stock Market. Considerable resources are devoted to surveilling The Nasdaq Stock Market. A vast array of sophisticated automated systems reviews each trade and price quotation on an on–line, real–time basis. Off–line computer–based analyses are conducted to evaluate trading patterns on a monthly, weekly and daily basis.

Whenever any of these automated systems indicate unusual price or volume in a stock, Nasdaq Market Surveillance analysts determine if this was the result of legitimate market forces or perhaps a violation of rules. Among other things, analysts review press releases, review historical trading activity, interview brokers, Market Makers, and Nasdaq–listed company officials. Market Surveillance continues its inquiries until unusual movements are adequately explained.

If legitimate market forces were at work the case is closed without action. If it appears rule violations have occurred, a disciplinary action is initiated. Where corporate insiders or members of the investing public are involved in a potential violation, the case will be referred to the SEC.

Market Value – The market price; the price at which buyers and sellers trade similar items in an open marketplace. The current market price of a security as indicated by the latest trade recorded.

Marry a Put – Form of hedging done by buying the stock and buying a put on the same day.

Maturity Date– The date on which the principal amount of a bond is to be paid in full.

Member – An individual who owns a membership (a seat) on an exchange.

Member Firm – A partnership or corporation that owns a membership on an exchange.

Merger – The combination of two or more companies into one through the exchange of stock.

Mini–refunding – Auctions of Treasury securities occurring in March, June, September, and December.

Minimum Maintenance – Established by the exchanges' margin rules, the level to which the equity in an account may fall before the client must deposit additional equity. It is expressed as a percentage relationship between debit balance and equity or between market value and equity.

Minus Tick – An execution price below the previous sale.

Money Market Fund – Open–ended mutual fund that invests in commercial paper, banker's acceptances, repurchase agreements, government securities, certificates of deposit, and other highly liquid and safe securities, and pays money market rates of interest. The fund's net asset value remains a constant $1 a share, only the interest rate goes up or down.

Money Market Instruments – Short–term debt instruments (such as U.S. Treasury bills, commercial paper, and banker's acceptances) that reflect current interest rates and that, because of their short life, do not respond to interest rate changes as longer–term instruments do.

Mortgage–Backed Securities – A collection of mortgages bundled into a single security and retailed to private or institutional investors as a single security.

Mortgage Bond – A debt instrument issued by a corporation and secured by real estate owned by the corporation (such as factories or office buildings).

Muni – Short for municipal bond.

Municipal Bond – A long–term debt instrument issued by a state or local government. It usually carries a fixed rate of interest, which is paid semiannually.

Municipal Note – A short–term debt instrument of a state or local government. Most popular are revenue, bond, and tax anticipation notes.

Municipal Securities Rule Making Board (MSRB) – Establishes rules and regulations to be followed in the trading, dealings and customer relationships concerned in municipal securities.

Mutual Fund – A pooling of many investors' money for specific investment purposes. The fund is managed by a management company, which is responsible for adhering to the purpose of the fund.


Naked Call – Occurs when an investor sells a call(s) without owning the underlying securities and is not selling to close out a position.

NASD (National Association of Security Dealers) – A self–regulating authority whose jurisdiction includes the over–the–counter market.

NASDAQ (National Association of Securities Dealers Automated Quote System) – A communication network used to store and access quotations for qualified over–the–counter securities.

NASDAQ Composite Index – The Nasdaq Composite Index measures all Nasdaq domestic and non–U.S. based common stocks listed on The Nasdaq Stock Market. The Index is market–value weighted. This means that each company's security affects the Index in proportion to it's market value. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index.

NASDAQ National Market Securities – The Nasdaq National Market consists of over 3,000 companies that have a national or international shareholder base, have applied for listing, meet stringent financial requirements and agree to specific corporate governance standards. To list initially, companies are required to have significant net tangible assets or operating income, a minimum public float of 500,000 shares, at least 400 shareholders, and a bid price of at least $5. The Nasdaq National Market operates from 9:30 A.M. to 4:00 P.M. EST, with extended trading in SelectNet from 8:00 A.M. to 9:30 A.M. EST and from 4:00 P.M. and 5:15 P.M. EST.

NASDAQ SmallCap Market Securities – The Nasdaq SmallCap Market comprises of over 1,400 companies that want the sponsorship of Market Makers, have applied for listing and meet specific and financial requirements. Once a company is approved and listed on this market, Market Makers are able to quote and trade the company's securities through a sophisticated electronic trading and surveillance system. The Nasdaq SmallCap Market operates from 9:30 A.M. to 4:00 P.M. EST., with extended trading in SelectNet from 8:00 A.M. to 9:30 A.M. EST and from between 4:00 P.M. and 5:15 P.M. EST.

NASDAQ SmallCap Market Securities – The Nasdaq–100 Index includes 100 of the largest non–financial domestic companies listed on the Nasdaq National Market tier of The Nasdaq Stock Market. Launched in January 1985, each security in the Index is proportionately represented by its market capitalization in relation to the total market value of the Index.

The Index reflects Nasdaq's largest growth companies across major industry groups. All index components have a minimum market capitalization of $500 million, and an average daily trading volume of at least 100,000 shares.

The number of securities in the Nasdaq–100 index makes it an effective vehicle for arbitrageurs and securities traders. In October 1993, the Nasdaq–100 Index began trading on the Chicago Board Options Exchange. On April 10, 1996 the Chicago Mercantile Exchange began trading futures and futures options on the Nasdaq–100 Index.

National Association of Security Dealers (NASD) – A self–regulating authority whose jurisdiction includes the over–the–counter market. The NASD operates under the authority granted it by the 1938 Maloney Act Amendment to the Securities Exchange Act of 1934.

National Securities Clearing Corporation (NSCC) – A major clearing corporation offering many services to the brokerage community, including comparison of NYSE, AMEX, and over–the–counter transactions.

Negotiable – A feature of a security that enables the owner to transfer ownership or title. A non–negotiable instrument has no value.

Net Asset Value (NAV) – The difference between today's last trade and the previous day's last trade. The difference between today's closing Net Asset Value (NAV) and the previous day's closing Net Asset Value (NAV).

New Income – Income after all expenses and taxes have been deducted, and used in calculating a variety of profitability and stock performance measures.

New Issue – A company coming to the market for the first time or issuing additional shares.

New Shares – Shares newly issued by a company; these shares can usually be transferred on Renounceable Documents.

New York Stock Exchange (NYSE) – Located at 11 Wall Street, New York, New York, a primary market for buying and selling the securities of major corporations.

Nil Paid – A new issue of shares, usually as the result of a rights issue on which no payment has yet been made.

No–Load Fund – Mutual Fund offered by an open end investment company that imposes no sales charge (load) on its shareholders. Investors buy shares in no–load funds directly from the fund companies, rather than through a broker as is done in load funds. Many no–load fund families allow switching of assets between stock, bond, and money market funds. The listing of the price of a no–load fund in the newspaper is accompanied by the designation NL. The net asset value, market price and offer prices of this type of fund are exactly the same, since there is no sales charge.

Nominal Yield – The interest rate stated on the face of the bond.

Nominee Name – Name in which a security is registered and held in trust on behalf of the beneficial owner.

Noncallable – A note or bond that cannot be called prior to maturity. Many Treasury and most agency securities are noncallable.

Noncompetitive Tender – A method of purchasing Treasury bills, notes, and bonds directly from the Federal Reserve at the average price during an auction of new securities.

Noncumulative Preferred Stock – A type of preferred stock that does not pay back dividends to its holders.

Not Held (NH) – An indication on an order that the execution does not depend on time; the broker or trader should take whatever time is necessary to ensure a good execution.

Note – The general name for a Treasury or agency security with an initial maturity of fewer than 10 years.

NSCC (National Securities Clearing Corporation) – A major clearing corporation offering many services to the brokerage community, including comparison of NYSE, AMEX, and over–the–counter transactions.

NYSE – New York Stock Exchange

NYSE Maintenance Requirement – This is the minimum amount of equity that the margin customer must have in his account. However, since the house requirements are usually higher, it is the house maintenance that is used.


OCC (Options Clearing Corporation) – A clearing corporation owned jointly by the exchanges dealing in listed options. OCC is the central or main clearing corporation for listed options. Options traded on any SEC–regulated exchange can be settled through OCC.

OCC Prospectus – A prospectus published by the OCC and available to option traders upon request. It contains information on trading options and the risks involved.

Odd Lot – A quantity of securities that is smaller than the standard unit of trading, which is usually 100 shares.

Offer – The price at which the market maker will sell shares to investors.

Offer for Sale – A method of bringing a company to the market. The public can apply for shares directly at a fixed price. A prospectus containing details of the sale must be printed in a national newspaper.

Offer Price – The price at which the market maker will sell shares to investors.

Open–End Fund – A mutual fund that makes a continuous offering of its shares and stands ready to buy its shares upon surrender by the shareholders. The share value is determined by net asset value of the fund.

Open–End Management Company – A management company that is constantly issuing new shares.

Opening Transaction – Refers to a customer either buying or selling an option contract to open a new position.

Option – A contract that entitles the buyer to buy (call) or sell (put) a predetermined quantity of an underlying securities for a specific period of time at a preestablished price.

Option Adjustments – Changes made in the terms of an option contract on ex–dividend date when the underlying stock pays a cash or stock dividend or when there is a stock split, etc.

Option Agreement – The agreement the customer must sign to trade options in which the customer agrees to abide by the rules of the listed option exchanges.

Option Class – The group of options, put or call, with the same underlying security.

Option Series – The group of options having the same strike price, expiration date, and unit of trading on the same underlying stock.

Options Clearing Corporation (OCC) – A clearing corporation owned jointly by the exchanges dealing in listed options. OCC is the central or main clearing corporation for listed options. Options traded on any SEC–regulated exchange can be settled through OCC.

Order Book Official (OBO) – An employee of certain exchanges who executes limit orders on behalf of the membership.

Order Department – The department within a brokerage firm that is responsible for sending the customers' orders to the proper market for execution.

Ordinary Shares – The most common form of share. Holders receive dividends which vary in amount in accordance with the profitability of the company and recommendations of the directors. The holders are the owners of the company. Also known as Common Stock.

Original Issue Zeros – Zero–coupon securities originally issued by a corporation, government, or governmental subdivision as zeros. A zero–coupon security not created by severing interest and principal payments from a preexisting bond.

OTC Bulletin Board – An electronic service that provides selected quotes on over–the–counter stocks.

OTC Options – Options created by OTC firms.

Out–of–the–Money – Options with no intrinsic value such as a call when the market price is below the strike price of the call or a put when the market price is above the strike price of the put.

Over–The–Counter Market (OTC) – Comprised of a network of telephone and telecommunication systems over which unlisted securities and other issues trade.

Overlying Order – The offer or offers that are listed on the Nasdaq Level II market but are not the best (lowest) offer price.

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