Glossary
A reference guide to key terms used across the Banking Operations Knowledge Base.
A
Accumulator — A structured product where the client is obligated to purchase shares at a discounted strike price periodically, as long as the spot price stays above a knock-out level.
AML (Anti-Money Laundering) — Policies, controls, and procedures designed to prevent criminals from disguising illegally obtained funds as legitimate income.
AUM (Assets Under Management) — The total market value of assets a bank or wealth manager manages on behalf of clients.
B
Basis Points (bps) — A unit of measure equal to 1/100th of 1% (0.01%). Used to describe changes in interest rates or yields. 100 bps = 1%.
BIC (Bank Identifier Code) — An 8- or 11-character SWIFT code that uniquely identifies a financial institution. Also known as SWIFT code.
Block Discounting — A financing arrangement where a bank purchases a block of hire purchase or lease receivables from a finance company at a discount.
C
Call Deposit — An interbank deposit repayable on demand (overnight or at very short notice).
CDD (Customer Due Diligence) — The process of verifying a customer's identity, understanding the nature of their business, and assessing the risk they pose.
CFT (Countering the Financing of Terrorism) — Controls designed to prevent funds from being used to finance terrorist activities.
Convexity — A measure of the curvature of the relationship between a bond's price and its yield. Positive convexity means price rises more than it falls for equal yield movements.
Correspondent Bank — A financial institution that provides services on behalf of another bank, typically in a foreign country. Used to facilitate cross-border payments.
CRS (Common Reporting Standard) — An OECD framework requiring financial institutions to automatically exchange account information with foreign tax authorities.
CTR (Cash Transaction Report) — A mandatory report filed with STRO for cash transactions of SGD 20,000 and above.
D
DCI (Dual Currency Investment) — A structured deposit where the principal may be repaid in an alternate currency at maturity, depending on the FX rate at expiry.
DSCR (Debt Service Coverage Ratio) — Net Operating Income ÷ Total Debt Service. Measures a borrower's ability to service debt. A ratio above 1.25x is typically required.
Duration (Macaulay) — The weighted average time (in years) to receive a bond's cash flows. Used to measure interest rate sensitivity.
DVP (Delivery vs Payment) — A settlement mechanism where the transfer of securities occurs simultaneously with the payment of cash, eliminating principal risk.
E
EDD (Enhanced Due Diligence) — A deeper level of KYC/CDD applied to higher-risk customers such as PEPs or clients from high-risk jurisdictions.
ELN (Equity-Linked Note) — A structured note whose return is linked to the performance of a single stock or basket of equities.
EMI (Equated Monthly Instalment) — A fixed payment made by a borrower each month that covers both principal and interest.
F
FAST (Fast And Secure Transfers) — Singapore's real-time interbank fund transfer system, available 24/7 for SGD transfers between participating banks.
FATCA (Foreign Account Tax Compliance Act) — US legislation requiring foreign financial institutions to report on accounts held by US persons to the IRS.
Floor Stock Loan — A revolving credit facility secured against a dealer's inventory of goods (e.g., vehicles, equipment).
Forward Rate — The agreed exchange rate for a currency transaction to be settled at a future date. Derived from spot rate and interest rate differentials.
FX Swap — A simultaneous spot purchase and forward sale (or vice versa) of a currency, used to manage liquidity across different settlement dates.
G
Gearing Ratio — Total Debt ÷ Equity. Measures financial leverage. Higher gearing indicates greater reliance on debt financing.
GIRO — Singapore's batch interbank payment system for recurring direct debits (bill payments) and direct credits (payroll, government disbursements).
GMRA (Global Master Repurchase Agreement) — The standard legal framework governing repo transactions between counterparties.
GPI (SWIFT Global Payments Innovation) — A SWIFT initiative providing real-time tracking, faster settlement, and transparency for cross-border payments.
H
Haircut — A percentage reduction applied to the market value of collateral to account for price volatility. E.g., a 2% haircut on SGD 10M collateral = SGD 200,000 reduction in usable value.
HQLA (High-Quality Liquid Assets) — Assets that can be quickly converted to cash with little or no loss of value. Used in LCR calculations. Includes government bonds and MAS bills.
I
IBAN (International Bank Account Number) — A standardised format for identifying bank accounts internationally, used in SWIFT payments and SEPA transfers.
ISDA Master Agreement — The standard contract used to govern OTC derivative transactions, including FX forwards and interest rate swaps.
K
KYC (Know Your Customer) — The process of verifying the identity and assessing the risk profile of a client before and during the business relationship.
L
LCR (Liquidity Coverage Ratio) — Stock of HQLA divided by total net cash outflows over a 30-day stress period. The applicable minimum and scope depend on current regulatory requirements.
LEI (Legal Entity Identifier) — A 20-character alphanumeric code that uniquely identifies a legal entity participating in financial transactions.
LTV (Loan-to-Value) — Loan Amount ÷ Collateral Value. Used to assess collateral adequacy. E.g., SGD 800K loan against SGD 1M property = 80% LTV.
M
Mark-to-Market (MTM) — The revaluation of financial instruments at current market prices. Used daily for bonds, FX, derivatives, and structured products.
MEPS+ (MAS Electronic Payment System) — The real-time gross settlement (RTGS) system in Singapore for large-value SGD interbank transfers, operated by MAS.
MT103 — A SWIFT message type used for single customer credit transfers (cross-border wire payments).
MT320 — A SWIFT message type used for confirmation of fixed-term interbank deposits and placements.
N
NDF (Non-Deliverable Forward) — A cash-settled FX forward used for currencies with exchange restrictions (e.g., CNY, INR). Settled in USD based on the fixing rate at maturity.
Nostro Account — A bank's account held at a foreign correspondent bank in that country's currency. Used to settle cross-border payments.
NPL (Non-Performing Loan) — A loan where the borrower has not made scheduled payments for 90 days or more. Also referred to as NPA (Non-Performing Asset).
NSFR (Net Stable Funding Ratio) — Available Stable Funding divided by Required Stable Funding. The applicable minimum and scope depend on current regulatory requirements.
O
OFAC (Office of Foreign Assets Control) — US Treasury agency that administers and enforces economic and trade sanctions.
OTC (Over-The-Counter) — Financial transactions conducted directly between two parties, not through an exchange. Includes FX, interest rate swaps, and repo.
P
pacs.008 — The ISO 20022 FI-to-FI Customer Credit Transfer message used between financial institutions for customer credit transfers.
PayNow — Singapore's proxy-based funds-transfer service, operating over FAST. Supported proxy types depend on the customer and participating institution.
PEP (Politically Exposed Person) — An individual who holds or has held a prominent public position. Subject to enhanced due diligence under AML regulations.
PV01 — The change in present value of a bond or portfolio for a 1 basis point (0.01%) decrease in yield. Used to measure interest rate risk.
R
Repo (Repurchase Agreement) — A short-term secured borrowing where securities are sold with an agreement to repurchase them at a higher price on a future date.
Reverse Repo — The counterpart to a repo — the cash lender buys securities with an agreement to sell them back at maturity.
Revolving Credit — A credit facility allowing repeated drawdowns and repayments up to an approved limit. Interest is charged only on the amount drawn.
S
SHA (Shared Charges) — A SWIFT charge instruction where each bank in the payment chain deducts its own fees. The beneficiary receives the amount minus intermediary charges.
SORA (Singapore Overnight Rate Average) — The volume-weighted average rate of unsecured overnight interbank SGD transactions in Singapore, administered and published by MAS.
STR (Suspicious Transaction Report) — A mandatory report filed with STRO when a bank suspects that a transaction may be related to money laundering or terrorism financing.
STRO (Suspicious Transaction Reporting Office) — Singapore's financial intelligence unit, operating under the Commercial Affairs Department (CAD), responsible for receiving STRs.
Structured Product — A pre-packaged investment combining a conventional security with a derivative component to achieve a specific risk-return profile.
STP (Straight-Through Processing) — The automated end-to-end processing of a transaction without manual intervention.
T
Term Loan — A loan for a fixed amount, repaid over a set period in regular instalments at a fixed or floating interest rate.
TMS (Treasury Management System) — Software used by banks to manage treasury operations including FX, money market, repo, and fixed income deals.
U
UETR (Unique End-to-End Transaction Reference) — A 36-character UUID used to identify and track eligible Swift payment messages across the correspondent-banking chain.
W
Watchlist — A list of individuals, entities, and countries subject to sanctions or regulatory restrictions. Banks screen all customers and transactions against watchlists.
Wealth Management — A holistic advisory service combining investment management, financial planning, and other financial services for HNW/UHNW clients.
Y
Yield to Maturity (YTM) — The total annualised return anticipated on a bond if held until maturity, assuming all coupon payments are reinvested at the same rate.