Safekeeping: Holding securities in a bank’s vaults for protection. This is a service banks offer to customers for a fee.
Sallie Mae: Trade name for the Student Loan Marketing Association (SLMA).
Scale: The terms on a serial bond issue that is reoffered to the public; the scale shows the prices or yields offered for each maturity in the issue.
Seasoned Securities: Recognized securities that are generally accepted by the investing public.
Secondary Distribution, or Offering: The redistribution of a large block of securities previously sold by the issuer or underwriting group in an initial or primary offering. See Primary Distribution.
Secondary Market: The market in which previously issued securities are traded, as compared to the new issue market. Also, the purchase or sale of securities in a special offering or through a means other than the regular channel of trading.
Secured Deposit: Bank deposits of state or local government funds that, under the laws of certain jurisdictions, must be secured by the pledge of acceptable securities.
Secured Loan: A loan that is secured by marketable securities or other marketable valuables. Secured loans may be either time or demand loans.
Securities: Investment instruments such as stocks and bonds.
Securities and Exchange Commission (SEC): An agency created by Congress to regulate securities issuance and trading. The SEC enforces various securities acts that are intended to protect investors.
Security Dealer: An individual or firm who buys and sells securities for his or her own account, acting as principal and taking title of the securities until they are sold to someone else. See Dealer.
Self-Liquidating Bonds: Bonds that are paid for from the earnings of a municipally owned enterprise, usually a utility. The earnings of the enterprise must be sufficient to cover the debt with a reasonable margin of protection in order for the bonds to be regarded as entirely self-liquidating.
Self-Supporting Debt: Debt that requires only the support of taxes that have been designated specifically for its repayment and for no other purpose.
Selling below the Market: A security that is currently quoted at a price less than that quoted for similar securities.
Senior Securities: Securities that have priority over other obligations for claims on the issuer’s assets and earnings.
Serial Bonds: Bonds of the same issue that have different maturities over a number of years. This allows the issuer to retire the issue in small amounts over a long period of time.
Short Covering: Buying back securities that were previously sold, to make delivery on a short sale.
Short Sale: The sale of a security that is not owned by the seller on the expectation that the security can be bought or borrowed from a broker in time to be delivered to the buyer. The short seller’s intent is to profit by buying the security at a lower price than it sold for.
Sinking Fund: A reserve fund set aside over a period of time for the purpose of liquidating or retiring an obligation, such as a bond issue, at maturity. Special Assessment Bonds: Bonds that are paid back from taxes on a property that is being improved with funds financed by the bonds. The issuing governmental entity agrees to make the assessments and to earmark the tax proceeds to repay the debt on these bonds.
Special Tax Bond: A bond secured by a special tax, such as a gasoline tax. Spread: The difference between two figures or percentages. For example, the difference between the bid and asked prices of a quote or between the amount paid when a security is bought and the amount received when it is sold.
Stop Out: The lowest price that the US. Treasury will accept for a new issue of bills, notes, or bonds in a particular auction. Subscription: An agreement to purchase a certain offering for a specific price. The offer is not binding unless it is accepted by the properly authorized representatives of the issuer. Also refers to the order made for the purchase of new securities.
Swap: The sale of a block of securities and the purchase of another block with similar market value. May be made to achieve many goals, including establishing a tax loss, upgrading credit quality, or extending or shortening maturity.
Syndicate: A partnership of banks or brokers that join together in enterprises that are too large for any member to handle individually. An investment banking syndicate is headed by a manager who has made a successful bid for the wholesale purchase of a securities lot. The syndicate members agree to distribute a specified amount of the securities. The manager may allot the securities to them on a pro-rata or other agreed-upon basis. On final distribution of all securities, the syndicate is broken, and the obligation of all members to the terms of the agreement is terminated. See Underwriter.