Glossary

A B C D E F G H I L M N O P R S T V

EQUITY FINANCE: The exchanging of Equities for other Securities (e.g. Cash, Government Bonds or Convertible Bonds) via Repos, Swaps or any other method as agreed between the counterparts to the transaction. This business allows firms to fund their inventory of equity products that they hold for proprietary or Hedge Fund customers.
EQUITY REPO: Any purchase agreement in which equities rather than bonds are given as collateral against cash.
EQUITY SWAP: Any equity swap is the exchange of a equity return for an interest rate return. For equity financing the cash lenders actually buys the equity from the cash borrower and then transacts the swap. During the term of the swap the cash lender received interest and pays the equity return to the borrower. At the end of the swap, which is typically transacted under 1992 International Swaps & Derivative Association master agreement, the cash lender sells the equity.
EQUIVALENT (SECURITIES OR COLLATERAL): A term denoting that the securities or collateral returned must be of an identical type, nominal value, description and amount to those originally provided. If, during the term of a loan, there is a corporate action in relation to loaned securities, the lender is normally entitled to specify at that time the form in which he wishes to receive equivalent securities or collateral on termination of the loan. The legal agreement will also specify the form in which equivalent securities or collateral are to be returned in the case of other corporate events.
ERISA: The 1974 Employee Retirement Income Security Act. A law governing US Pension plan activity, which was amended in, 1981 to allow US pension funds to lend securities in accordance with specific guidelines.
ESCROW / TRIPARTY: The provision of collateral management services by a third party. This may include custody, marking to market, margin calls and delivery.