Glossary of Terms

Undertaking for Collective Investments In Transferable Securities.

UK Pensions and tax.
Upper Earnings Limit.

The UK Corporate Governance Code - issued by the Financial Reporting Council - sets out standards of good practice for larger companies in relation to their board leadership and effectiveness, remuneration, accountability and relations with shareholders.

The Corporate Governance Code updates and replaces the former Combined Code.

Operating name of the Export Credits Guarantee Department (ECGD).

United Kingdom Generally Accepted Accounting Principles.

(UKPA). A UK trade organisation that acts as a service company for the payments industry. It also develops technical and procedural standards.

The UK Stewardship Code published by the Financial Reporting Council for the guidance of institutional investors.

Its aims are to enhance the quality of engagement between institutional investors and companies to help improve long-term returns to shareholders and the efficient exercise of governance responsibilities.

United Kingdom Financial Investments.

United Kingdom Listing Authority.

UK Payments Administration Ltd.
(Formerly known as APACS.)

Beyond the scope or in excess of legal power or authority of a person, official or body.

Pensions.
Industry wide scheme.

United Nations directories for Electronic Data Interchange For Administration, Commerce and Transportation.

UN/EDIFACT comprises a set of internationally agreed-upon standards, directories, and guidelines for the electronic interchange of structured data related to trade.

VAT which cannot be attributed directly either to exempt supplies nor to taxable supplies.

United Nations Commission on International Trade Law.

An uncommitted borrowing facility is one in which the potential provider of funds - commonly a bank - is not legally obliged to provide the funds.

1. In relation to a cover ratio, the situation where the cover ratio falls below 1.0.

2. In relation to a market position, the situation where the position taker is exposed to the risk of adverse changes in market rates or prices.

3. In relation to an operational exposure, an uncovered exposure is one which has not been hedged.

A speculative activity involving the switching of funds, for example, from a lower interest rate currency into a higher interest rate currency.

(It differs from Covered interest arbitrage, because no forward foreign exchange contact is transacted to cover the related foreign exchange risk.)

A security which has no definite maturity date, but may be redeemed at the discretion of the issuer.

Underhedging means hedging an amount less than the total related risk exposure, for example by the use of a derivative instrument with a principal amount of 50% (of the related risk exposure).
The effect of underhedging in this way is to reduce the variability of the net hedged exposure - for example by 50% in this case - but without fixing the whole of the related risk exposure.

1. Underlying asset.

2. Underlying price.

3. A risk exposure being hedged, often by the use of a derivative instrument.

In relation to options, the underlying asset, or the underlying, is the asset which the option holder has the right to require the option writer deal in (at the strike price specified in the option).

In relation to derivative instruments more generally, the underlying asset is the asset from which the cashflows, price and value of the derivative instrument are derived.

Sometimes known as the Physical.

1. Options.
The current market price of the (underlying) asset which the option holder has the right to require the option writer to deal in (at the strike price specified in the option).

2. In relation to derivative instruments more generally, the current market price of the (underlying) asset to which the derivative instrument relates.

A body corporate or partnership, or unincorporated association, carrying on a trade with or without a view to profit.

(UCITS). Generic term for any open-ended collective investment scheme involving investments in assets that are available under the form of transferable securities, for example, FCPs, OEICSs, SICAVs and unit trusts.

A security, rather than a market, whose price is considered to be lower than that indicated by fundamentals.

1. The process of committing to purchase any securities remaining unsold after an issue. The underwriter agrees to purchase any unsold securities.

2. More generally, providing guarantees or insurance, in return for a fee or for other consideration.

Bankers who receive a commission for underwriting a new issue.

Pensions.
A Defined Benefit (DB) pension scheme where assets are not accumulated in advance of the benefits commencing to be paid.

Most UK public sector DB pension schemes are unfunded. Corporate DB schemes in other jurisdictions may also be unfunded, for example in Germany.

Without any debt.

The beta value for a company which can be observed incorporates financial and business risk.
The ungeared beta is calculated from the observed beta; to reflect the beta value which would be observed if the company were all equity financed. It is therefore indicative of the business risk of the company.

The ungeared beta is also called the asset beta.

The recalculated cash flow from a firm or a project, assuming that it was all-equity financed. (Regardless of the actual or proposed capital structure.)

A uniform set of laws governing commercial transactions enacted separately and sometimes differently by each state.

An unincorporated business is one which is not structured as a company. Examples include partnerships and sole traders.

In relation to risk, an uninsurable risk is one for which insurance cannot normally be bought in the market (because the providers of insurance are unwilling to offer contracts of insurance against such risks).

(UKFI). Organisation set up in 2008 to manage the UK Government's investments in financial institutions.

(USAID). US Government Agency which provides economic and humanitarian assistance worldwide.

The same as Ungeared.

Near enough the same as Ungeared.

Abbreviation for Unlimited liability company.
An unlimited liability company is a company where the members may be called upon to pay any amount if the company goes into liquidation. In other words the liability of the members of the company is unlimited.

The company, though, is still a separate legal person.
In an unlimited UK company, there is no obligation to file accounts.
Such a company can only be registered as a private company.

Not having a credit rating.

Accounting.
From the group’s perspective, profit may be unrealised as the goods have not yet been sold external to the group, even if they have been sold from one group company to another.

An unrewarded risk is one which is not associated with any benefit for the party accepting the risk.
So it is never rational - in terms of profit maximisation - to accept an unrewarded risk.

Unsecured debt has no additional backing beyond the general credit of the issuer.
All other things being equal, unsecured debt is riskier for the lender than secured debt.

In relation to credit ratings, a credit rating which has not been requested by the issuer of the obligation being rated, and which is generally not paid for by the issuer.
The informational basis of an unsolicited credit rating is normally muchless than that of a solicited credit rating, generally excluding - for example - in depth meetings with the issuer's management.

In the Capital asset pricing model, near enough the same as Specific risk.

A procedure followed in certain clearing and settlement systems in which transfers of securities or funds are settled on a net basis, at the end of the processing cycle, with all transfers provisional until all participants have discharged their settlement obligations.

If a participant fails to settle, some or all of the provisional transfers involving that participant are deleted from the system and the settlement obligations from the remaining transfers are then recalculated.

Such a procedure has the effect of transferring liquidity pressures and possible losses from the failure to settle to other participants, and may, in an extreme case, result in significant and unpredictable systemic risks.

1. A betterment in a credit rating assessment.

2. More generally, a betterment in any assessment including (but not necessarily) a credit assessment.

(UEL). UK Pensions and tax.
The level of income determined by the Treasury for calculating the amount of National Insurance contributions payable by employers and employees.
Different rates may apply above and below this limit.

1. The top quarter of an ordered distribution divided into four equal parts in terms of the number of items.

2. The boundary between the top quarter - as defined above - and the remaining three quarters of the distribution.

1. In relation to guarantees, an upstream guarantee is one given by a subsidiary company in relation to the obligations of its parent company.

2. An upstream loan is a loan made by a subsidiary company to its immediate or ultimate parent company.

3. In the oil and gas industry the upstream business refers to finding and extracting crude oil and gas.
Contrasted with the downstream business of distribution and sales of refined and synthetic oil and gas products.

Uniform Resource Locator.
For example a website address or web page address.

(USCP). US domestic commercial paper is issued, traded and quoted on a discount basis.
The day count convention is actual days per 360 day conventional year.

United States Generally Accepted Accounting Principles.

United States Act, now defunct, that separated retail and investment banking.

The rate of interest at which a commercial bank offers to lend money in the US domestic market to its most credit-worthy customers.
The approximate average of prime rates quoted by the major US banks on a given day.

Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act, 2001.
This law has formed the basis of anti-terrorism regulations and has strengthened the anti-money laundering rules in the US.

US. United States Agency for International Development.

Tenor.

US domestic Commercial Paper.

SWIFT currency code for the United States Dollar.

Accounting.
The period over which the present owner of an asset will derive economic benefits from its use.

Accounting.
The length of time an asset is in use. The asset should be depreciated over its useful life.

Utility.

A borrowing fee payable in relation to the amount of a facility which has been drawn down.
The amount of the utilisation fee is usually calculated based on the average utilisation of the facility exceeding a specified amount or percentage.

1. An economic measure of satisfaction gained from consumption of goods or services, measured in 'utils'.

2. A firm providing necessity goods and services, such as water supplies.