Forex Glossary (M)

Here are some terms that used in FOREX trading with series of M. M0 Cash in circulation. Only used by the UK.

M1 Cash in circulation plus demand deposits at commercial banks. There are variations between the precise definitions used by national financial authorities.

M2 Includes demand deposits, time deposits and money market mutual funds excluding large CDs.

M3 In the UK it is M1 plus public and private sector time deposits and sight deposits held by the public sector.

M4 In the US it is M2 plus negotiable CDs.

Make a Market A dealer is said to make a market when he quotes both the bid and offer prices at which he stands ready to buy and sell.

Managed Float When the monetary authorities intervene regularly in the market to stabilise the rates or to push the exchange rate in a required direction. Also called a dirty float.

Margin Collateral that the holder of a position in securities, options, Forex or futures contracts, has to deposit to cover the credit risk of his counterparty. Other definitions to MARGIN, used in other areas are: (1) Difference between the buying and selling rates, also used to indicate the discount or premium between spot or forward. (2) For options, the sum required as collateral from the writer of an option. (3) For futures, a deposit made to the clearing house on establishing a futures position account. (4) The percentage reserve required by the US Federal Reserve to make an initial credit transaction.

Margin Call A demand for additional funds to cover positions

Marginal Risk The risk that a customer goes bankrupt after entering into a forward contract. In such an event the issuer must close the commitment running the risk of having to pay the marginal movement on the contract.

Mark - To - Market The profits and/or losses are tallied at the end of the session according to the closing prices of the security and the account is "marked to the market" daily. The party will be called upon to make good the losses if there has been an adverse movement in the prices and it can book the profits in case there has been a favorable movement in the prices.

Market Value Market value of a forex position at any time is the amount of the domestic currency that could be purchased at the then market rate in exchange for the amount of foreign currency to be delivered under the forex Contract.

Maturity Date for settlement of the transaction which is decided at the time of entering into the contract.

MITI Japanese Ministry of International Trade & Industry.

MM Money Markets

Money Supply The amount of money in the economy, which can be measured in a number of ways.

Mutual fund An open-end investment company. Equivalent to unit trust.