Glossary



A

Agility

Used in software development to describe a step-by-step (“incremental”) approach involving repeating steps or loops (“iteration”) based on working in self-organising, open teams

AI

Artificial intelligence (AI). The attempt to simulate functions of human intelligence using computer operations

Asset allocation

Investing assets in various financial instruments. This is how companies compile their investment portfolios. Deutsche Börse Group optimises its shareholding structure by investing in companies which match the strategic aims of its portfolio and by divesting those which do not – or no longer – match them.

B

Big data

Technical term for data packages which are so big that they cannot be processed in a regular way. Big data is subjected, for instance, to computer-based scans in order to uncover patterns and repetitions, which are then correlated with certain events. These correlations may result in predictions or early-warning systems.

Blockchain

Public transfer protocol originally developed to trade the digital currency bitcoin. It basically consists of an electronic, decentralised and fully disclosed ledger of all transactions, i.e. “blocks” which continually validated each other. Jointly with Deutsche Bundesbank, Deutsche Börse Group showcased a blockchain prototype for securities settlements in November 2016. The Group is also invested in Digital Asset Holdings LLC, a blockchain pioneer.

C

Capital Markets Union

The Capital Markets Union (CMU) is a flagship initiative of the European Commission. Its central aim is to enhance economic growth in the EU by strengthening the role of capital markets and further integrating financial markets. For more information on the CMU, please visit our website (www.deutsche-boerse.com).

C7

IT infrastructure for Eurex Clearing that carries out the settlement of listed and OTC products (both for derivatives and cash) on a uniform architecture. Customers are supported at the time of clearing by various transaction- and EMIR-compliant segregation models, based on configurable account structures. C7® is part of 7 Market Technology®.

CCP

Central counterparty; also: clearing house. Institution that acts as a legal intermediary between the trading partners as a buyer or seller after a transaction has been completed, facilitating netting, minimising the default risk of a contracting party (margining and collateralisation), and carrying out all process steps necessary for clearing.

CEINEX

China Europe International Exchange. Sino-German joint venture of the Shanghai Stock Exchange, Deutsche Börse and China Financial Futures Exchange, founded in 2015. The new market venue is the first and only authorised trading platform outside of China for financial instruments in Renminbi (RMB).

Clearing

The netting (offsetting of buy and sell positions over a given period of time) of receivables and liabilities arising from securities and derivatives transactions in order to achieve efficient risk management. Clearing thus contributes to reducing risk positions. It is also used to determine the bilateral net debt of buyers and sellers. Central clearing takes place via a CCP.

Cloud computing

The cloud offers a scalable and flexible infrastructure with a high level of automation. It allows short-term access to technical resources for various applications. Efficient use of computational power and easy connectivity give the cloud a considerable cost advantage. Exchanges face particular data security and regulatory requirements in this context.

CMU

Collateral

Collateral, in particular in the form of cash or securities, such as equities or bonds, is deposited in order to meet specified collateral requirements (margin).

Content Lab

Innovation laboratory, where Deutsche Börse is developing and testing new ideas based on data analysis and processing with the intention of turning them into marketable products and services – amongst others solutions based on artificial intelligence. The Content Lab was created in mid-2016 with a “think tank” concept. It is set to be expanded into a “Data & Analytics Centre” in March 2017.

CRD IV/CRR

Capital Requirements Directive IV and Capital Requirements Regulation (CRR II package). The CRR II package is the fourth revision of the original CRD for credit institutions and investment firms of 2006. The CRD’s key aim is to strengthen the resilience of the EU banking sector by ensuring that institutions’ capital is of sufficient quantity and quality.

CSD

Central securities depository. Clearstream Banking AG acts as the officially recognised German bank for the central deposit of securities under the Depotgesetz (German Securities Deposit Act). In this function, it offers a wide range of post-trade services relating to securities issued in Germany and other countries, both as a CSD for securities eligible for collective safe custody and as a custodian for other securities.

CSDR

Central Securities Depository Regulation. CSDR aims to achieve harmonisation of securities settlement systems and supervisory rules for CSDs in Europe.

Cyber attack

Targeted attack on an IT infrastructure from an external source. Many attacks are directed at financial services providers; governments and public administrations are also often the focus of criminal attention.

D

DB1 Ventures

Deutsche Börse’s corporate venture capital arm established in June 2016. DB1 Ventures’ goal is to provide capital to trend-setting companies from our sector – to enable them to develop viable concepts, and to create growth. Our focus lies on early- to growth-stage fintech businesses.

Deutsche Börse Venture Network

Platform for bringing together young innovative growth companies in the pre-IPO sector and international investors. Deutsche Börse Venture Network® has mobilised more than €1 billion for funding innovative ideas since its foundation. At the end of September 2016, the first Venture Network company went public. Introduced in 2016, Venture Match is a service provided by the network that matches investors and participating companies.

Distributed ledger

A public ledger, allowing transactions to be recorded and verified on a peer-to-peer basis. The blockchain is the distributed ledger for transactions in bitcoin, a digital currency. Applications for transactions involving other objects are being developed.

E

EMIR

European Market Infrastructure Regulation. EMIR regulates OTC derivatives, central counterparties (CCPs) and trade repositories; it aims to improve security and integrity within the OTC derivatives market by promoting transparency and reducing risk. Among other things, this is to be achieved by introducing a clearing obligation for eligible OTC derivatives and measures to reduce counterparty credit risk and operational risk for OTC derivatives not cleared via CCPs, as well as disclosure requirements for all derivatives. EMIR also establishes general requirements for CCPs and trade repositories.

ESG criteria

ESG = environment, social, governance. The composition of ESG indices such as the STOXX® ESG Global Leaders Index reflects these three selection criteria.

ETP

Exchange-traded product. ETPs comprise exchange-traded funds (ETFs), exchange-traded commodities (ETCs) and exchange-traded notes (ETNs).

Exchange 4.0

Exchange 4.0 consists of three main pillars: expanded data and analytics intelligence, a leading technology platform and a new digital ecosystem. It will thus support long-term growth across Deutsche Börse Group’s entire value chain.

F

Fintech

Portmanteau combining the terms “financial” and “technology”. Describes novel solutions for application systems that constitute innovations or advancements in the financial services sector

FX

Foreign exchange. Receivables in foreign currencies consisting of assets or cheques in said currencies

G

Global Liquidity Hub

Integrated risk and liquidity management solution in Deutsche Börse Group’s GSF business field at Clearstream. It offers integrated financing services, including securities lending and collateral management services for a range of major asset classes including fixed-income securities and equities. Through the Global Liquidity Hub, customers can, for example, fulfil their margin obligations towards central clearing houses (CCPs) and cover their global exposures.

I

ICSD

International CSD

IPO

Initial public offering. An IPO marks the time when a company first offers its shares for sale to the general public and launches them on the equity market.

ISA Direct

ISA = individual segregated account. ISA Direct is aimed at small and medium-sized credit institutions, insurance and reinsurance companies, pension funds and investment funds and is a service for buy-side clients to become direct participants with Eurex Clearing. In this way, buy-side clients can significantly reduce their counterparty risk. This access model is currently available for repo transcations as well as for OTC interest rate swaps transactions, and is planned to be expanded to include securities lending and exchange-traded derivatives transactions.

L

Latency

Time delay, e.g. during the transmission of market data. The term “low latency” thus refers to processes which involve minimal delays. Developing low-latency products is part of the work of Deutsche Börse Group’s Content Lab.

Liquidity

Market situation in which a security can be bought or sold, even in larger quantities, without substantially affecting its price. Important criterion for assessing the quality of a securities market in securities trading, and thus a decisive factor in the competition between marketplaces.

Listing

Quotation of a security or issuer on the exchange. Issuers at the Frankfurt Stock Exchange can choose from four transparency standards for their listing: Prime Standard, General Standard, Scale and Basic Board.

M

Machine learning

Describes the analysis of patterns and “experience” by computers, resulting in a learning system which is not limited to pre-programmed responses and capable of continuously integrating and processing new data

MAR

Market Abuse Regulation. EU regulation on combating market abuse. The new MAR will help improve market integrity and strengthen investor protection. The existing rules are being extended to new trading centres, financial instruments and trading strategies and will also apply to transactions taking place outside regulated markets (OTC). Deutsche Börse Group has reliable procedures for monitoring trading activity and therefore welcomes the Europe-wide move to create uniform rules on combating market abuse and insider dealing. The new rules came into effect in July 2016.

Margin

Collateral requirements determined by a CCP for all types of transactions for which it acts as a central counterparty, used to cover risk from open positions in case a participant defaults.

MiFID

Markets in Financial Instruments Directive. The EU directive establishes a regulatory framework for the provision of investment services in financial instruments (such as brokerage, advice, dealing, portfolio management, underwriting) by banks and investment firms and for the operation of regulated markets by market operators (stock exchanges among others). The objective is to promote the integration, competitiveness and efficiency of EU financial markets.

MiFID II

Refers to the revision of the Markets in Financial Instruments Directive (MiFID). The revised directive was introduced in June 2014 and will become applicable as of January 2018. The directive contains guidelines for the activities of investment firms – in particular for so-called market maker (liquidity providers) and participants in algorithmic trading – and regulated trading venues, precautionary measures regarding the specification and supervision of position limits for commodities derivatives as well as regulation for data reporting services.

MiFIR

Markets in Financial Instruments Regulation. A supplementary EU regulation to MiFID II that will come into effect from January 2018. It will see the introduction of comprehensive reporting obligations to increase transparency in the stock, bond and derivatives markets and close existing loopholes in off-exchange transactions. The introduction of mandatory on-venue trading for shares and derivatives ensures that a larger number of transactions will be executed on regulated trading venues. The new regulations also cover the accessibility of central counterparties, trading venues and benchmarks as well as provisions governing the activities of companies from third countries.

O

OTC

Over the counter, off-exchange. Describes transactions between two or more trading parties that are not conducted on a regulated market

P

Pre-IPO

Young high-growth companies’ preparatory phase before going public (IPO)

R

Regtech

Portmanteau combining the terms “regulatory” and “technology”. Describes technology specifically designed to meet regulatory mandates

Repo

Short for “repurchase transaction”. Agreement between the buyer and the seller of a security in which the seller promises to buy back the security on a specified date. Repos are typically used by banks as a temporary source of liquid funds.

Robo advisors

An electronic system compiling investment portfolios in an automated way, e.g. based on a user’s previously generated risk profile. Robo advisory is one of the most important branches in the fintech industry.

S

Scale

New exchange segment on Frankfurter Wertpapierbörse (FWB®, the Frankfurt Stock Exchange) since 1 March 2017, designed to enhance access to investors and growth capital for small and medium-sized companies. As a segment of the exchange-based Regulated Unofficial Market, Scale has replaced the Entry Standard for equities and corporate bonds. Companies must meet minimum prerequisites for defined key performance indicators (KPIs) and collaborate with a Deutsche Börse Capital Market Partner in order to be eligible for inclusion. Requirements also include mandatory research reports commissioned and paid for by Deutsche Börse.

Securities lending

Transfer of securities by a lender for a fee – and usally collateral – and on condition that the borrower returns securities of the same kind, quality and amount to the lender at the end of a fixed term. With GSF, Clearstream offers a service for securities lending.

Settlement

The completion of an exchange transaction, i.e. the transfer of money and traded securities from the seller to the buyer and vice versa. Within Deutsche Börse Group, Clearstream is responsible for this post-trading function.

T

360T

OTC trading platform for financial instruments such as foreign exchange, money market or interest rate products from 360T

T2S

TARGET2-Securities. Platform for securities settlement in central bank money, allows banks to reduce cross-border settlement costs and pool collateral. Clearstream migrated to T2S in February 2017. “TARGET” is short for “Trans-European Automated Real-Time Gross Settlement Express Transfer System”.

T7

IT architecture used for the trading systems of Deutsche Börse Group’s futures exchanges (Eurex Exchange). It is also utilised at BSE, the Bombay Stock Exchange. T7® is based on a high-performance messaging architecture that combines minimal latency with maximum reliability. T7 is part of 7 Market Technology®.

U

Underlying

Entity used as a basis for a derived financial instrument, e.g. a bond based on DAX®

V

Volatility

Measure of the extent to which the price of a security or an index fluctuates around a mean value during a certain period of time