FINANCIAL GLOSSARY : S
Scrip dividend
Where a company distributes dividends in the form of shares.
Scrip issue
A free issue of extra shares to shareholders by a company. This is often done when the share price has risen so high that they become too expensive to buy for the smaller investors. This is also known as a 'bonus' or 'capitalisation' issue.
Secondary market
The secondary market is a place where an investor can buy or sell existing securities. Shares will be traded in the secondary market once they have been issued in the primary market.
Securities
Term used to cover all stocks and shares.
Securities & Exchange Commission (SEC)
The primary regulator for all the securities industry in the US. Its responsibility is to promote full disclosure and to protect investors against fraudulent and manipulative practices in the securities markets.
Securities and Futures Authority (SFA)
The self-regulating organisation (SRO) which has responsibility for regulating all firms engaged in the Securities and Futures sector of the financial services market. However, since December 2001 all regulatory functions of the SFA has been absorbed into the Financial Services Authority.
Self-invested Pension Plan (SIPP)
A personal pension where the person saving for their retirement is given the flexibility to make their own investment decisions
Self-select Individual Savings Account
Self-select Individual Savings Account is a type of ISA which gives the investor the freedom to choose the investments that go in it. They are not restricted to the stocks and shares of one particular ISA manager.
Self -Regulating Organisation (SRO)
Organisations that were set up under the Financial Services Act 1986 to be directly responsible for policing investment businesses.
Selling short
The practice of selling securities which are not at present owned, in the hope that they can be bought at a lower price, once the price has fallen to settle the contract.
Settlement
The payment for the securities and the delivery of the securities in return for the payment.
Share
Shares represent a slice in the ownership of a company.
Shareholder
The owner of shares in a company. Shareholders supply what is known as the risk capital and share in the success of the company. If the company is a success and makes a profit, shareholders receive the rewards of increasing dividend income and capital gains on the price of their shares. If the company is a failure, shareholders stand to lose the whole of their investment.
Share certificate
This is the legal proof of ownership of shares in a company. However, with the increase of electronic trading and settlement systems such as Crest, share certificates are gradually being phased out. If an investor insists on having a share certificate then he/she will have to pay more for their share deals.
Share exchange
A facility that is offered by investment trusts to take your shares and convert them into shares in the investment trust cheaply and easily.
Split-capital trust
An investment trust that offers different types of share: high income shares that provide no capital growth, for example, or pure capital growth shares that provide no income. This type of investment gives the private investor the opportunity to choose the type of investment needed. Investors who just want income can choose to invest in income shares, while investors who want growth can opt for capital shares.
Stagging
The process of buying shares when they are intially offered to the general public and then selling them immediately to retail investors once trading has begun - with a view to making a quick profit.
Stamp duty
Stamp duty is a tax levied on share dealings and house purchases. The current rate levied on share dealings is 0.5%.
State Earnings-Related Pension Scheme (SERPS)
A top-up pension scheme to boost the state basic pension. Employees can build up an entitlement to SERPs by paying National Insurance Contributions on part of their earnings.
SERPS was replaced by the State Second Pension (SP2) in April 2002, which is designed to provide a better pension than SERPs for people on a low income. People on moderate to high incomes will be encouraged to contract out of the SP2 scheme.
Standard & Poor's Stock Index (S&P500)
US performance index of a basket of 500 stocks that are considered to be widely held.
Stepped preference shares
Stepped preference shares are preference shares whose fixed percentage dividend will rise annually at a pre-set rate.
Stockbroker
A stockbroker is a member of the London Stock Exchange who buys and sells shares on your behalf for a brokerage fee.
Stock Exchange
A main place of trading for stocks, shares and other securites.
Stock Exchange Automated Quotations (SEAQ)
THE SEAQ is a computerised price display and recording system for prices of gilts and of shares. SEAQ requires all competing market makers to quote buying and selling prices along with the number of shares they are prepared to deal with at that price. These quotes can also be viewed on screens in brokers' offices.
Stock Exchange Electronic Trading Service (SETS)
An automated trading system that was introduced in 1997 in the London Stock Exchange. It matches the orders of buyers and sellers automatically, thus cutting out the need for a market maker.
Subsidiary company
A company that has the majority of its voting shares owned by a holding company.
Surrender value
The cash amount received if an insurance policy is cancelled before its maturity date.
