Clearing and Settlement of Derivatives

Glossary of

derivatives terms

Accrued Interest Interest due on a bond or other fixed income

security that must be paid by the buyer of a secur-

ity to its seller. Usual compensation: coupon rate

of interest times elapsed days from prior interest

payment date (i.e. Coupon date) up to but not

including settlement date. Is used in the calcula-

tion of the invoice amount for bond futures being

delivered.

Actuals An actual physical commodity someone is buying

or selling, for example, soybeans, corn, gold, silver,

Treasury bonds, etc.

Against Actuals A transaction generally used by two hedgers who

want