Plain-language definitions of the terms used across this volume. Use the letter links to move between the glossary pages.
A
Access person
An adviser’s employee who sees nonpublic client trades, holdings or recommendations, and so must report personal holdings and trades under the code of ethics (C.14).
Accrual accounting
Recording revenue when earned and expenses when incurred, regardless of when cash moves; required for audited US GAAP statements. (D.3)
Affirmation
The investment manager’s agreement to the broker’s trade details for an institutional trade; SEC Rule 15c6-2 requires brokers to have agreements or policies and procedures designed to achieve allocation, confirmation and affirmation by the end of trade date (E.6).
AI washing
False or exaggerated claims about the use of artificial intelligence; the SEC brought charges against two advisers for it in 2024 (G.2).
Appointed Actuary
The actuary an insurer names to its regulator to opine on reserves and solvency; in India, IRDAI approves the appointment. (B.4)
ARR bridge
A reconciliation of opening to closing annual recurring revenue through new, expansion, contraction and churn movements (C.9).
Articleship
The two years of practical training a CA student in India completes under a practicing chartered accountant before the Final exam (A.4).
ASC 606
The US GAAP standard on revenue from contracts with customers, which sets when and how much revenue is recognized. (D.3)
Assets under management (AUM)
The market value of the money an asset manager runs for clients; fee revenue is AUM multiplied by the fee rate. (B.7)
Associated person
In SEBI’s certification rules, a person employed or engaged by a securities-market intermediary in the functions SEBI specifies; such persons must hold the relevant NISM certificate. (H.2)
Authorized participant
A clearing-agency member with an agreement with an ETF that lets it create and redeem ETF shares in large blocks in exchange for a basket of securities. (B.7)
B
Back office
The functions that confirm, settle, reconcile and record transactions and service the assets. (0.2)
Back-testing
Comparing past valuation marks with the prices later achieved on exits to test the valuation method (C.13).
Basis point
One hundredth of one percent; fund fees and spreads are quoted in basis points (bp). (B.7)
Big R
SEC staff shorthand for a restatement that reissues prior financial statements because an error was material to them, with an Item 4.02 Form 8-K; a “little r” revision corrects an error immaterial to the prior period in the next filing (F.4).
Break
An unexplained difference between two records of the same number, such as the administrator’s NAV and the shadow NAV, investigated before release (C.12).
Break-even volume
The transaction volume at which two cost options are equal; for outsourcing, (in-house cost − outside base fee) ÷ fee per transaction. (D.1)
Business unit CFO
The finance head of one division or region, usually with a solid line to the group CFO and a dotted line to the division president. (B.1)
Buy-side
Firms that invest capital for owners or beneficiaries: asset managers, hedge funds, PE and VC, pensions, sovereign funds, insurers. (0.1)
C
Calibration
Setting a valuation model so it reproduces the transaction price at purchase, then carrying the implied assumptions forward (C.13).
Cap table
The capitalization table: a record of who owns which shares, options and convertible instruments in a company. (D.2)
Carried interest
The manager’s share of a fund’s profits, typically 20% above a hurdle, paid through the distribution waterfall. (B.3)
Case reserves
Amounts claims handlers set aside for individual reported claims, before actuaries add IBNR (C.11).
Cash runway
The number of months a company can operate before its cash runs out at the current burn rate. (D.3)
CASS resolution pack
The records a UK firm holding client assets must be able to retrieve within 48 hours of an insolvency so that client assets can be returned (E.4).
Central counterparty
A clearing house that becomes buyer to every seller and seller to every buyer, guaranteeing trades and collecting margin; also CCP. (0.1)
Central securities depository
The institution that holds securities in book-entry form and settles their transfer, such as DTC in the US or NSDL and CDSL in India; also CSD. (0.1)
Certified Equity Professional (CEP)
A three-level equity compensation credential awarded by the Certified Equity Professional Institute at Santa Clara University (C.10).
Certified Internal Auditor
The IIA’s three-part exam credential (CIA) for internal auditors. (C.5)
Certified Management Accountant
The CMA credential awarded by the US Institute of Management Accountants, focused on planning, analysis and cost management (A.4).
Certified Treasury Professional
The CTP, the corporate treasury credential awarded by the Association for Financial Professionals (C.2).
Chargeback
A card payment reversed at the cardholder’s request through the card network, which the merchant or its processor may have to absorb if the merchant cannot pay. (B.8)
Chief accounting officer
Chief audit executive
The head of internal audit, reporting functionally to the board. (C.5)
Chief revenue officer
Client money requirement
Under the UK CASS 7 rules, the amount a firm must hold in client bank accounts, built client by client; each day it is compared with the client money resource, and any shortfall is funded the same day (E.4).
Comfort letter
A letter from the auditor to the underwriters in an offering, giving at most negative assurance on financial information after the latest audited or reviewed period, under PCAOB AS 6101 (F.3).
Common Admission Test (CAT)
The national entrance test the Indian Institutes of Management use to shortlist domestic applicants for their MBA programs. (H.2)
Common equity tier 1 (CET1)
The highest-quality bank capital, mainly common stock and retained earnings after deductions; the US minimum is 4.5% of RWA before buffers (C.15).
Company secretary
In India, a qualified member of the Institute of Company Secretaries of India who runs board and shareholder compliance; whole-time for companies above set thresholds. (D.6)
Compliance certificate
The annual certificate a listed Indian company’s CEO and CFO give the board under SEBI LODR Regulation 17(8), covering the financial statements and internal control over financial reporting (A.4).
Consensus model
IR’s running record of what covering analysts expect, usually the mean or median of their estimates; results are judged against it (C.4).
Contingency funding plan
A bank’s plan for raising cash in a liquidity stress: triggers, funding sources in order of use, and decision rights (E.9).
Contractual service margin
Under IFRS 17, the unearned profit on a group of insurance contracts, recognized as coverage is provided. (B.4)
Control deficiency
A control whose design or operation does not let staff prevent or detect misstatements on a timely basis; the lowest tier of the SOX deficiency taxonomy (F.1).
Country-by-Country Reporting (CbCR)
A large group’s yearly report of revenue, profit and tax by country; US Form 8975. (C.6)
Coverage team
Credit conversion factor (CCF)
The percentage that turns an off-balance-sheet item, such as an undrawn commitment, into an on-balance-sheet exposure before risk weighting (C.15).
Credit memo
The written case for a loan (ratios, downside case, rating, collateral, covenants, recommendation) on which credit decides (E.10).
Credit support annex (CSA)
The part of an ISDA Master Agreement that sets collateral terms: eligible assets, haircuts, threshold, minimum transfer amount and call timing (E.5).
CSEET
The Company Secretary Executive Entrance Test of the Institute of Company Secretaries of India, held three times a year; graduates are exempt. (H.2)
Custodian
A firm that safekeeps securities and cash for clients and services them (income, corporate actions). (0.1)
Customer protection rule
SEC Rule 15c3-3: a broker-dealer must keep customers’ securities in its possession or control and hold a reserve for net customer cash in a special bank account (E.4).
Cutoff
The time after which trades and capital activity belong to the next period’s books or NAV (C.12).
D
Deal desk
The team that approves non-standard pricing and contract terms before a deal is signed (C.9).
Debt service coverage ratio (DSCR)
Cash flow available for debt service divided by interest plus scheduled principal; below 1.0× the borrower cannot cover its payments (E.10).
Deferred offering cost
A specific incremental cost directly attributable to a securities offering, held as an asset until the offering and then charged against its proceeds (F.3).
Deficiency letter
The SEC examination outcome that lists potential violations and asks the firm for corrective action, typically with a written response within 30 days (C.14).
Delivery versus payment (DVP)
Settlement in which securities move only if the matching cash moves at the same time, so neither side can deliver and receive nothing (E.1).
Development triangle
A table of claims by accident year against years of development, used to project ultimate claim costs (C.11).
Direct method
Forecasting cash from actual receipts and payments rather than from accrual profit; used in treasury’s 13-week forecast (C.2).
Disclosure committee
A management committee that reviews filings and the sub-certifications behind them before the CEO and CFO certify (F.3).
Divisional CFO
The finance head of a business unit or region, usually with a solid line to the group CFO and a dotted line to the division’s general manager (see Business unit CFO); a common last rung before the group CFO chair (A.4).
Draft red herring prospectus
The offer document an Indian IPO issuer files with SEBI, made public for comments for at least 21 days (Part F India Lens).
Drift
The decline in a model’s accuracy when the data it sees changes from the data it was built on (G.2).
Dunning
The process of retrying failed payments and contacting customers to recover overdue subscription charges (C.9).
Duration gap
Asset duration minus liability duration scaled by liabilities over assets; it shows how surplus moves when rates move (C.16).
DV01
The change in a position’s value for a one-basis-point move in interest rates; the starting point of a rates desk’s P&L explain (E.7).
E
Effective challenge
Critical review of a model by objective experts with the independence and standing to force changes, a core idea of US bank model risk guidance (G.2).
Election deadline
The cutoff by which a holder must instruct its choice on a voluntary corporate action; each link in the custody chain sets an earlier one (E.3).
Emerging growth company (EGC)
A US IPO issuer with annual revenue under $1.235 billion (as of 2026) that gets reduced disclosure, two years of audited statements and an exemption from the SOX 404(b) auditor attestation (F.3).
Employee stock option scheme (ESOS)
SEBI’s term for a scheme granting options to employees directly or through a trust; what Indian readers usually call an ESOP (C.10).
Employee stock ownership plan
In the US, a tax-qualified retirement plan that must invest primarily in the employer’s stock; not the same as the Indian ESOP (C.10).
Enhanced due diligence
Extra checks on higher-risk clients, such as source of funds, beyond standard KYC (E.11).
Enterprise performance management (EPM)
Software for budgeting, forecasting, scenario planning and often consolidation, typically owned by FP&A (G.1).
Enterprise resource planning (ERP)
The core system holding the general ledger and the modules that feed it, such as payables, receivables and fixed assets (G.1).
Error-correction policy
A fund manager’s written rule for when a published NAV error is corrected and whether investors are compensated (C.12).
Exit price
The price that would be received to sell an asset in an orderly transaction between market participants; the basis of fair value (C.13).
F
Fails charge
A daily charge the failing seller pays the buyer on a late Treasury or agency debt delivery, set by Treasury Market Practices Group practice at 3% a year minus the reference rate, floored at 1% (E.1).
Fair value hierarchy
The three-level ranking of valuation inputs under ASC 820 and IFRS 13: unadjusted quoted prices in active markets for identical assets (Level 1), other observable inputs (Level 2) and unobservable inputs (Level 3) (C.13).
Fast close
Closing the monthly books quickly and accurately, often within 3–5 business days; treated as a marker of finance-function maturity (C.1).
Flux
A month-on-month or budget movement in an account above a set threshold, which must be explained before the close is signed off (C.1).
Form 3CEB
An Indian accountant’s report on related-party international transactions. (C.6)
Form 8-K
The SEC current report a US-listed company files for material events, including a principal officer’s departure or appointment, generally within four business days (A.3).
Form PF
The confidential SEC report filed by registered advisers with at least $150 million of private fund assets; quarterly for large hedge fund and large liquidity fund advisers, annually for others, plus event reports. (B.3)
Forward pricing
The rule that a mutual fund order is priced at the NAV next computed after it is received, never at a NAV already struck (SEC Rule 22c-1) (E.8).
Front office
The revenue-earning, risk-taking part of a financial firm: bankers, traders, sales, portfolio managers. (0.2)
Front-running
Trading for yourself ahead of a client or fund order you know is coming, to profit from its price impact (C.14).
Fund administrator
A third party that keeps a fund’s books, calculates its NAV and handles investor records. (0.1, C.12)
Funds transfer pricing (FTP)
Internal rates at which treasury charges businesses for funding their assets use and credits them for funding their deposits bring (E.9).
G
Global capability center
A multinational’s own operations or technology unit in another country, common in India; also GCC, GBS center or captive. (Part 0 India Lens)
Global process owner
The person accountable for one process end to end across all locations, not for one center’s part of it. (H.2)
GRNI
Goods received not invoiced: an accrual for goods or services received before the supplier’s invoice arrives (F.1).
H
Hallucination
Fluent output from a language model that is not supported by its source data (G.2).
High-quality liquid assets (HQLA)
Cash, central bank reserves and securities that can be sold or pledged quickly in stress, counted in the LCR after haircuts and caps (E.9).
High-water mark
The highest NAV per share at which a performance fee was last paid; a fee is earned only on gains above it (C.12).
Human in the loop
A control design in which a named person reviews and approves an automated output before it takes effect (G.3).
I
IBNR
Incurred but not reported: a P&C reserve for claims that have happened but have not yet been reported to the insurer. (B.4)
ICITSS
ICAI’s Integrated Course on Information Technology and Soft Skills, taken before practical training; an advanced version follows it. (H.2)
Independent price verification (IPV)
Industrial training
A period of 9-12 months in the last year of a CA student’s practical training that may be served in an approved company instead of a CA firm. (H.2)
Initial margin
Collateral posted up front against the loss that could build while a defaulted counterparty’s positions are closed out, usually held by a third-party custodian (E.5).
Input tax credit
Under India’s GST, the credit a business takes for tax paid on its purchases against tax due on its sales. (D.6)
Interest rate risk in the banking book (IRRBB)
The risk to a bank’s earnings and economic value from rate moves on loans, deposits and other non-trading positions (E.9).
Intracompany transferee
Under US L-1 rules, an employee with one continuous year abroad in the same employer group within the prior three years who transfers to a US managerial, executive or specialized-knowledge role. (H.2)
Investment committee
The board committee that approves an insurer’s investment policy and monitors the portfolio against it; required for Indian insurers by IRDAI (C.16).
Investment policy statement (IPS)
The board-approved document that sets an investment portfolio’s objectives, permitted assets, limits and exception process (C.16).
Investor Relations Charter
The IRC, NIRI’s credential for IR professionals, earned by exam plus education and IR experience (C.4).
Invoice Registration Portal (IRP)
The Indian GST portal to which businesses above a turnover threshold report B2B invoices, receiving an Invoice Reference Number in return (G.3, India Lens).
Iron curtain
The SAB 108 method that sizes an error by the total misstatement in the year-end balance sheet; the rollover method uses only the current year’s income-statement effect, and both must be assessed (F.4).
IT general controls (ITGCs)
Controls over access, change management and computer operations that support the reliability of every automated control (G.3).
K
Key managerial personnel
Under India’s Companies Act, 2013, the whole-time officers (CEO or MD, company secretary and CFO) that listed and larger public companies must appoint. (Part B India Lens)
Knowledge process outsourcing (KPO)
A third-party firm doing skilled back-office work, such as reconciliations or fund accounting, for several clients, unlike a captive GCC. (H.2)
L
LDTI
Long-duration targeted improvements: the FASB’s ASU 2018-12, which changed US GAAP measurement of long-duration insurance contracts (C.11).
Legal-entity controller
A controller responsible for the books, capital and regulatory returns of one licensed subsidiary or branch. (B.2)
Letter of Intent (LOI)
A non-binding offer setting price, structure and exclusivity. (C.8)
Liquidity coverage ratio (LCR)
High-quality liquid assets divided by net cash outflows over a 30-day stress; must be at least 100% (E.9).
Long-term practical training
The 21 months of supervised training ICSI requires of company secretary students after they pass the Executive stage. (H.2)