Glossary
This glossary is not a rule, regulation or circular of the Superintendencia Financiera de Colombia, has no legal force or effect: it does not alter or modify the applicable law and does not create new or additional obligations for any person, nor does it provide any legal advice.
The scope of the definition given to the terms stipulated is limited to present the common use of the terms set forth and at no time is intended to replace the legal or particular definitions that apply to them in each particular situation.
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Acceptance Letter |
A document signed by the member of the Board of Directors upon being elected or re-elected and which summarizes the commitments that the new member of the Board of Directors assumes with the company. This letter will address issues such as: term of appointment; duties and rights; estimated time commitments; Induction Program; remuneration; expenses; return of documents; termination of appointment; D&O policies; estimated meetings; conflicts of interest; acceptance of the company's internal regulations (Bylaws, regulations, corporate governance code). In the case of Independent Members, the Acceptance Letter will include their statement of independence and compliance with the requirements established by the company to join this category.
Taken from the Code of Best Corporate Practices, Country Code, available at: https://www.superfinanciera.gov.co/inicio/industrias-supervisadas/gobierno-corporativo/codigo-pais-61162
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Accredited investor |
Refers to an individual whose net worth, or joint net worth with a spouse, exceeds $1,000,000; or whose individual income exceeded $200,000 or whose joint income with a spouse exceeded $300,000 in each of the 2 most recent years and can be expected to meet that income in the current year.
https://www.nasdaq.com/glossary/a/accredited-investor
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Adjustable rate |
Applies mainly to convertible securities. Refers to interest rate or dividend that is adjusted periodically, usually according to a standard market rate outside the control of the bank or savings institution, such as that prevailing on Treasury bonds or notes. Typically, such issuances have a set floor or ceiling, called caps and collars that limits the adjustment.
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ADR |
ADRs allow U.S. investors to invest in non-U.S. companies and give non-U.S. companies easier access to the U.S. capital markets. Many non-U.S. issuers use ADRs as a means of raising capital or establishing a trading presence in the U.S. The non-U.S. company may sometimes be referred to as a “foreign private issuer.” The first ADR was created in 1927 by a U.S. bank to allow U.S. investors to invest in shares of a British department store.
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Agreement Proposal
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Text prepared by the Board of Directors that accompanies each of the points included in the Agenda of the General Shareholders' Meeting. The Proposed Agreement literally describes the issuance that the Board of Directors submits to the shareholders for a vote and may include a suggestion from the Board of Directors to the shareholders regarding the direction of voting.
Taken from the Code of Best Corporate Practices, Country Code, available at: https://www.superfinanciera.gov.co/inicio/industrias-supervisadas/gobierno-corporativo/codigo-pais-61162
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Angel Investor |
Angel investors are generally high-net-worth individuals who invest their own money directly in emerging businesses, typically in early funding rounds. Most angel investors are accredited investors […] and many are current or former entrepreneurs themselves.
https://www.sec.gov/education/glossary/jargon-a-z
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Annual meeting |
Meeting of stockholders held once a year at which the managers of a company report to the stockholders on the year's results.
https://www.nasdaq.com/glossary/a/annual-meeting
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Asset |
Any tangible or intangible item that has value in an exchange. A bank account, a home, or shares of stock are all examples of assets.
https://www.investor.gov/introduction-investing/investing-basics/glossary/a |
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Associative Work Company, EAT |
A productive economic organization, whose associated persons contribute their work capacity for an indefinite period and some, and in addition, contribute some technological skill or knowledge necessary to meet the company's objectives.
Taken from Law 10 of 1991 |
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Audit |
An audit is an examination by an independent accountant of a company’s financial statements. Among other things, audits are intended to help provide investors with additional assurance—beyond management's own assertions—of a company’s financial position at a given moment in time.
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Authorized share capital |
The largest number of shares that a company can offer for sale at a particular time.
https://dictionary.cambridge.org/us/dictionary/english/authorized-share-capital |
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Balance sheet |
Also called the statement of financial condition, it is a summary of a company's assets, liabilities, and owners' equity.
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Banker's acceptance |
A short-term credit investment created by a nonfinancial firm and guaranteed by a bank as to payment. Acceptances are traded at discounts to face value in the secondary market. These instruments have been a popular investment for money market funds. They are commonly used in international transactions.
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Basis point |
In the bond market, the smallest measure used for quoting yields is a basis point. Each percentage point of yield in bonds equals 100 basis points. Basis points also are used for interest rates.
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Beneficial or Industry Share/Stock
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That which compensates for contributions of services, work, technological knowledge, industrial or commercial secrets, technical assistance and, in general, any obligation to be carried out by the contributor.
Taken from article 380 of the Commercial Code, available at: https://www.suin-juriscol.gov.co/viewDocument.asp?ruta=Decretos/1833376
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Beneficial Owner |
A beneficial owner holds stocks indirectly, for example, through a bank or broker-dealer. Beneficial owners are sometimes said to be holding shares in "street name."
https://www.investor.gov/introduction-investing/investing-basics/glossary/beneficial-owner |
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Beta |
The measure of an asset's risk in relation to the market (for example, the S&P500) or to an alternative benchmark or factors. Roughly speaking, a security with a beta of 1.5, will have move, on average, 1.5 times the market return. [More precisely, that stock's excess return (over and above a short-term money market rate) is expected to move 1.5 times the market excess return).] According to asset pricing theory, beta represents the type of risk, systematic risk, that cannot be diversified away. When using beta, there are a number of issues that you need to be aware of: (1) betas may change through time; (2) betas may be different depending on the direction of the market (i.e. betas may be greater for down moves in the market rather than up moves); (3) the estimated beta will be biased if the security does not frequently trade; (4) the beta is not necessarily a complete measure of risk (you may need multiple betas). Also, note that the beta is a measure of co-movement, not volatility. It is possible for a security to have a zero beta and higher volatility than the market.
https://www.nasdaq.com/glossary/b/beta
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Beta |
The measure of an asset's risk in relation to the market (for example, the S&P500) or to an alternative benchmark or factors. Roughly speaking, a security with a beta of 1.5, will have move, on average, 1.5 times the market return. [More precisely, that stock's excess return (over and above a short-term money market rate) is expected to move 1.5 times the market excess return).] According to asset pricing theory, beta represents the type of risk, systematic risk, that cannot be diversified away.
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Blue chip stocks |
Common stock of well-known companies with a history of growth and dividend payments.
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Bond |
A bond is a debt security, similar to an IOU. Borrowers issue bonds to raise money from investors willing to lend them money for a certain amount of time.
When you buy a bond, you are lending to the issuer, which may be a government, municipality, or corporation. In return, the issuer promises to pay you a specified rate of interest during the life of the bond and to repay the principal, also known as face value or par value of the bond, when it “matures,” or comes due after a set period of time.
https://www.investor.gov/introduction-investing/investing-basics/glossary/bonds
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Bonds Linked to Sustainable Performance
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Debt instruments whose characteristics may vary depending on compliance with the sustainable performance objectives defined by the issuer.
Taken from the Basic Legal Circular Letter issued by the SFC, Part III – Title I – Chapter II
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Book-entry securities |
Securities which are not represented by paper certificates but are maintained in computerized records at the Fed in the names of member banks, which in turn keep computer records of the securities they own as well as those they are holding for customers. In the case of other securities where a book-entry has developed, certificates reside in a central clearinghouse or are held by another agent. These securities do not move from holder to holder. |
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Break-even point |
Refers to the price at which a transaction produces neither a gain nor a loss.
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Broker |
A broker is a firm or individual that engages in the business of buying and selling securities – stocks, bonds, mutual funds, exchange-traded funds (ETFs), and certain other investment products – on behalf of its customer (as broker), for its own account (dealer), or both.
https://www.investor.gov/introduction-investing/investing-basics/glossary/broker
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Business trust |
A legal arrangement in which a person or organization controls property, investments, etc., for another person or business.
https://dictionary.cambridge.org/us/dictionary/english/business-trust |
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Capital |
Money invested in a firm.
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Cash flow |
Cash flow statements show the company’s inflows and outflows of cash over a period of time (such as over the company’s fiscal year).
https://www.sec.gov/education/glossary/jargon-a-z
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Central Securities Depository of the Bank of the Republic, DCV
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Entity in charge of managing the securities issued, guaranteed or managed by the Bank of the Republic and the securities that constitute forced or substitute investments by companies subject to the control and supervision of the Financial Superintendency of Colombia, SFC, other than shares.
Taken from the Glossary of the Financial Superintendency of Colombia, available at: www.superfinanciera.gov.co/jsp/Glosario/user/main/s/0/f/0/c/0
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Centralized Securities Depository of Colombia S. A., DECEVAL
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Specialized entity authorized by the SFC, which receives in deposit the titles registered in the National Registry of Securities and Issuers, RNVE, for their custody and administration through a high security computerized system, their compensation and settlement through the system of accounting records called "account entry".
Its objective is to eliminate the risk that handling physical securities represents for holders, streamlining transactions in the secondary market and facilitating the collection of capital and interest returns.
In the warehouse, the titles are immobilized in high-security warehouses, allowing their dematerialized management, through electronic records (transfers, redemptions, etc.).
Taken from the Glossary of the Financial Superintendency of Colombia, available at: www.superfinanciera.gov.co/jsp/Glosario/user/main/s/0/f/0/c/0
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Certificate of Deposit or Time Deposit |
A certificate of deposit (CD) is a savings account that holds a fixed amount of money for a fixed period of time, such as six months, one year, or five years. In exchange, the issuing bank or credit union pays you interest. When you cash in or redeemyour CD, you receive the money you originally invested plus any interest.
https://www.investor.gov/introduction-investing/investing-basics/glossary/certificate-deposit
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Chief Executive Officer (CEO) |
A title held often by the Chairperson of the Board, or the president. The person principally responsible for the activities of a company.
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Circulation Law |
Mechanism or form through which ownership of a security is transferred. There are three ways: 1. To bearer: with single delivery. 2. To order: by endorsement and delivery. 3. Nominative: endorsement, delivery and registration with the issuer.
Taken from the Glossary of the Financial Superintendency of Colombia, available at: www.superfinanciera.gov.co/jsp/Glosario/user/main/s/0/f/0/c/0
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Closing price |
Price of the last transaction of a particular stock completed during a day's trading session on an exchange.
https://www.nasdaq.com/glossary/c/closing-price
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Commercial paper |
Short-term promissory notes either unsecured or backed by assets such as loans or mortgages issued by a corporation. The maturity of commercial paper is typically less than 270 days; the most common maturity range is 30 to 50 days or less. They are usually sold, like Treasury bills, at a discount.
https://www.nasdaq.com/glossary/c/commercial-paper
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Commissions |
You will likely pay a commission when you buy or sell a stock through a financial professional. The commission compensates the financial professional and his or her firm when it is acting as agent for you in your securities transaction.
https://www.investor.gov/introduction-investing/investing-basics/glossary/commissions
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Commodity |
A commodity is food, metal, or another fixed physical substance that investors buy or sell, usually via futures contracts.
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Common Stock |
All publicly traded companies issue common stock. If you hold common stock, you're in a position to share in the company's success or feel the lack of it. The share price rises and falls all the time—sometimes by just a few cents and sometimes by several dollars—reflecting investor demand and the state of the markets.
The issuing company may pay dividends, but it doesn’t have to. If it does, the amount of the dividend isn't guaranteed, and the company can cut the amount of the dividend or eliminate it altogether.
https://www.finra.org/investors/investing/investment-products/stocks#types
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Comprehensive Stock Market Information System, SIMEV
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Set of human, technical and management resources arranged to allow and facilitate the provision of information to the securities market.
The SIMEV is made up of the RNVE, RNAMV, RNPMV.
Taken from articles 5.1.1.1.1 and 5.1.1.1.2 of Decree 2555 of 2010 |
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conflict of interest |
a situation in which someone’s private interests are opposed to that person's responsibilities to other people
https://dictionary.cambridge.org/dictionary/english/conflict-of-interest |
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Conglomerate |
A conglomerate is one very large corporation or company, composed of several combined companies, that is formed by either takeovers or mergers. In most cases, a conglomerate supplies a variety of goods and services that are not necessarily related to one another.
https://corporatefinanceinstitute.com/resources/valuation/conglomerate/ |
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Consolidated financial statement |
A financial statement that shows all the assets, liabilities, and operating accounts of a parent company and its subsidiaries.
https://www.nasdaq.com/glossary/c/consolidated-financial-statement |
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Control Architecture
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Complice
Comprehensive concept that brings together everything related to the control environment, risk management, internal control systems, information and communication, and monitoring. It allows the company to have a structure, policies and procedures exercised by the entire organization (from the Board of Directors and Senior Management, to the employees themselves), that provide reasonable security in relation to the achievement of the company's objectives.
Taken from the Code of Best Corporate Practices, Country Code, available at: https://www.superfinanciera.gov.co/inicio/industrias-supervisadas/gobierno-corporativo/codigo-pais-61162
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Control stock |
The shares owned by the controlling shareholders of a corporation. Sometimes refers to stock that has voting rights rather than stock that carries no voting rights. In a situation where all stock has voting rights, it sometimes refers to the shareholdings of one investors or a group of investors that effectively control the firm.
https://www.nasdaq.com/glossary/c/control-stock
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Convertible notes
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Collaborative financing securities that confer on their holders the future right to be totally converted into shares issued by the Recipient under the terms and subject to the conditions of the Issuance. |
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Convertible Securities |
A "convertible security" is a security—usually a bond or a preferred stock—that can be converted into a different security—typically shares of the company's common stock. In most cases, the holder of the convertible determines whether and when to convert. In other cases, the company has the right to determine when the conversion occurs.
https://www.investor.gov/introduction-investing/investing-basics/glossary/convertible-securities |
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Corporate Governance |
A framework which may include rules and regulations, corporate charter and bylaws, formal policies, as well as customs and other processes, that determines the leadership, organization, and direction of a company.
https://www.investor.gov/introduction-investing/investing-basics/glossary/corporate-governance |
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Corporation |
A legal entity that is separate and distinct from its owners. A corporation is allowed to own assets, incur liabilities, and sell securities, among other things.
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Counterparty risk |
The risk that the other party to an agreement will default. In an options contract, the risk to the option buyer that the option writer will not buy or sell the underlying as agreed.
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Country risk |
The general level of political, financial, and economic uncertainty in a country which impacts the value of the country's bonds and equities.
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Coupon |
The contractual interest obligation a bond or debenture issuer covenants to pay to its debtholders.
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Credit Exposure of a Derivative Financial Instrument
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Measures the maximum potential loss for a derivative financial instrument in the event of default by the counterparty, incorporating guarantees and/or other credit risk mitigants in its calculation if available. It corresponds to the sum of the replacement cost and the potential future exposure.
Taken from article 2.35.1.1.1 of Decree 2555 of 2010 |
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Credit Exposure of a Structured Product
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Regardless of each of the cases to which it applies, the credit exposure of a structured product may never be less than zero (0), according to the determination of the events indicated in Section 6, article 2.35.1.1.1, Decree 2555 of 2010.
Taken from article 2.35.1.1.1 of Decree 2555 of 2010 |
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Credit institution |
A credit institution means a bank or other corporation whose business activity is to acquire deposits and other re-payable funds from the public and to grant credit for its own account
https://www.lawinsider.com/dictionary/a-credit-institution
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Credit Ratings |
Credit rating agencies use rating scales, symbols, and definitions to express credit risk. Most use a scale of letters and/or numbers, and these symbols are defined by the particular credit rating agency issuing those ratings. A typical credit rating scale, as shown in the table below, has a top rating of ‘AAA’ and may have a lowest rating of ‘D’ (indicating default). Some credit rating agencies’ scales distinguish between investment grade and non-investment grade (i.e., “speculative” or “high yield”) ratings and they draw this distinction between the ‘BBB’ and ‘BB’ rating categories (in other words, a rating that is ‘BBB-’ or higher is investment grade and a rating that is lower than ‘BBB-’ is non-investment grade).
https://www.sec.gov/oiea/investor-alerts-and-bulletins/ib_creditratings |
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Crowdfunding |
Crowdfunding refers to a financing method in which money is raised through soliciting relatively small individual investments or contributions from a large number of people.
If a company would like to offer and sell securities through crowdfunding, they must comply with the federal securities laws. Under the federal securities laws, any offer or sale of a security must either be registered with the SEC or meet an exemption.
https://www.investor.gov/introduction-investing/investing-basics/glossary/regulation-crowdfunding
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Custody services |
Custody services provided by a bank typically include the settlement, safekeeping, and reporting of customers' marketable securities and cash. Securities lending can allow a customer to make additional income on custody assets by loaning securities to approved borrowers on a short-term basis.
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Date of issuance |
Used in the context of bonds to refer to the date on which a bond is issued and when interest beings to accrue to the bondholder. Used in the context of stocks to refer to the date trading begins on a new stock issued to the public.
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Date of issuance |
Used in the context of stocks to refer to the date trading begins on a new stock issued to the public.
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Debt/equity ratio |
Indicator of financial leverage. Compares assets provided by creditors to assets provided by shareholders. Determined by dividing long-term debt by common stockholder equity.
https://www.nasdaq.com/glossary/d/debt-equity-ratio
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Demandable Dividends
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Those whose demand by the shareholder can be made effective immediately, either because the general assembly did not establish a deadline for its demand or because having been established, it has expired or culminated, resulting in its collection. The demandability of dividends is not affected in any way if the holder of the dividends does not attend to his claim on the day scheduled for the corresponding payment.
Taken from the Basic Legal Circular Letter issued by the SFC, Part III – Title I – Chapter II |
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Dematerialized Issuances
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Those securities offerings that do not require the issuance of physical titles to support the individual placement; instead, the issuance is supported through a global title (macro titles), from which the primary placement of the securities is carried out. through book entries, for each of the buyers. Some securities, such as those originating from securitization or mortgage securities and bonds, must necessarily be dematerialized. |
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Democratization of Capital
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It is the process by which the ownership of a closed company is transferred, totally or partially, to a large number of people other than the group controlling the company's shares.
Taken from the Glossary of the Financial Superintendency of Colombia, available at: www.superfinanciera.gov.co/jsp/Glosario/user/main/s/0/f/0/c/0
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Derivatives |
Financial instruments whose performance is derived, at least in part, from the performance of an underlying asset, security or index. For example, a stock option is a derivative because its value changes in relation to the price movement of the underlying stock.
https://www.investor.gov/introduction-investing/investing-basics/glossary/derivatives |
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Derivatives |
Financial instruments whose performance is derived, at least in part, from the performance of an underlying asset, security or index. For example, a stock option is a derivative because its value changes in relation to the price movement of the underlying stock.
https://www.investor.gov/introduction-investing/investing-basics/glossary/derivatives |
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Digital asset |
A digital representation of value or contractual rights which can be used for payment or investment purposes.
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Dilution |
Dilution occurs when a company issues new shares of stock, leaving the existing stockholders with a smaller percentage ownership interest in the company.
https://www.sec.gov/education/glossary/jargon-a-z
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Disclosure |
Information about a company’s financial condition and business that it makes public. Investors can use this information to make informed investment decisions about the company’s securities.
https://www.investor.gov/introduction-investing/investing-basics/glossary/disclosure |
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Disintermediation |
The situation in which sellers and buyers of financial products deal directly with each other, rather than using banks, etc.
https://dictionary.cambridge.org/us/dictionary/english/disintermediation |
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Diversification |
Diversification is an investment strategy to reduce the impact of any single loss by allocating investments across multiple asset classes, categories, or companies.
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Dividend |
A portion of a company's profit paid to shareholders. Public companies that pay dividends usually do so on a fixed schedule although they can issue them at any time. Unscheduled dividend payments are known as special dividends or extra dividends.
https://www.investor.gov/introduction-investing/investing-basics/glossary/derivatives |
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Dividend income |
Distribution of earnings to shareholders that may be in the form of cash, stock, or property.
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Dividend income |
Distribution of earnings to shareholders that may be in the form of cash, stock, or property. Mutual fund dividends are paid out of income, usually on a quarterly basis, from interest generated by a fund's investments. Also known as a dividend distribution.
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DTF
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An indicator that includes the weekly average of the deposit rate of 90-day term deposit certificates (CDTs) of banks, financial, savings and housing corporations and commercial financing companies and is calculated by the Bank of the Republic (also for 180 and 360 days).
Taken from the Glossary of the Financial Superintendency of Colombia, available at: www.superfinanciera.gov.co/jsp/Glosario/user/main/s/0/f/0/c/0
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Due Diligence |
Prospective investors typically evaluate an investment opportunity by conducting a due diligence review of legal and financial disclosures. Investors may solicit information using a standardized due diligence checklist, request access to relevant information, and host meetings with management to ask questions.
: https://www.sec.gov/education/glossary/jargon-a-z
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Early Dissolution
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Possibility that the associates have of carrying out, for reasons other than those legally established, the procedure aimed at the liquidation of the company, for which the external liability must be paid and then distribute the remainder. The decision to resort to Early Dissolution is made following the procedure established by the company in its bylaws or the law.
Taken from the Code of Best Corporate Practices, Country Code, available at: https://www.superfinanciera.gov.co/inicio/industrias-supervisadas/gobierno-corporativo/codigo-pais-61162
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Earnings before interest and, taxes (EBIT) |
A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. In other words, operating and nonoperating profit before the deduction of interest and income taxes.
https://www.nasdaq.com/glossary/e/earnings-before-interest-and-taxes
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Earnings before interest, taxes, depreciation, and amortization (EBITDA) |
A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. In other words, operating and nonoperating profit before the deduction of interest and income taxes. Depreciation and amortization expenses are not included in the costs.
https://www.nasdaq.com/glossary/e/earnings-before-interest-taxes-depreciation-and-amortization |
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Entrepreneurship |
skill in starting new businesses, especially when this involves seeing new opportunities
https://dictionary.cambridge.org/dictionary/english/entrepreneurship |
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Equity crowdfunding |
Equity crowdfunding is a unique way to raise capital for your business without taking on new debt. It’s a form of fundraising that attempts to attract investors who are willing to contribute funds toward your business goals in return for a financial stake in the company.
https://www.forbes.com/advisor/business-loans/equity-crowdfunding/ |
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Exchange Traded Funds (ETF) |
Also known as ETF. A basket of stocks similar to an index mutual fund. However, there are a number of important differences between ETFs and mutual funds. The ETF can be traded within the day, they can be shorted, purchased on margin and there even exists options on some ETFs.
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Exit Strategy |
The way an equity investor (See Angel Investor, Venture Capital) plans to cash-out of the company in which they invest so they can realize relatively short-term profits rather than waiting for the company to make substantial profits from sales revenue. An exit strategy could be: an IPO (Initial Public Offering) where a company goes public and shares now have value on the open market; or the sale of the company to a public or private entity.
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Extension |
Voluntary arrangements to restructure a firm's debt, under which the payment date is postponed.
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Financial analysts |
Analysis of a company' financial statements, often by financial analysts.
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Financial consumer |
Financial consumer means a party who acquires or intends to acquire financial services or products from a financial services provider
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Financial intermediaries |
Institutions that provide the market function of matching borrowers and lenders or traders. Financial intermediaries facilitate transactions between those with excess cash in relation to current requirements (suppliers of capital) and those with insufficient cash in relation to current requirements (users of capital) for mutual benefit.
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Financial leverage |
Use of debt to increase the expected return on equity. Financial leverage is measured by the ratio of debt to debt plus equity.
https://www.nasdaq.com/glossary/f/financial-leverage
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Financial market |
An organized institutional structure or mechanism for creating and exchanging financial assets.
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Financial Services Companies
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Trust companies, general deposit warehouses, pension and unemployment fund management companies, and foreign exchange intermediation and special financial services companies.
Taken from article 1.1.1.1.1 of Decree 2555 of 2010 |
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Financial Statements |
Financial statements are written records that communicate information about a company’s business activities and financial position. They provide important insights to investors into where a company’s money came from, where it went, and where it is now.
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Fixed cost |
A cost that is fixed in total for a given period of time and for given production levels.
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Fixed-income securities |
Investments that have specific and fixed interest rates or dividend rates, such as bonds.
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Foreign corporation |
A corporation conducting business in another country from the one it is chartered in and that abides by the laws of another country.
https://www.nasdaq.com/glossary/f/foreign-corporation
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Foreign exchange risk |
The risk that a long or short position in a foreign currency might have to be closed out at a loss due to an adverse movement in exchange rates. In general, the risk of an adverse movement in exchange rates.
https://www.nasdaq.com/glossary/f/foreign-exchange-risk
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Free float |
Free float, also known as public float, refers to the shares of a company that can be publicly traded and are not restricted. In other words, the term is used to describe the number of shares that is available to the public for trading in the secondary market.
https://corporatefinanceinstitute.com/resources/career-map/sell-side/capital-markets/free-float/ |
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Free-standing Trust Fund
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Set of assets that are transferred to a Trustee under a commercial trust contract, with which a universality or legal fiction is constituted, which is separate and independent from the assets of the Trustee, who represents and manages it in its capacity as spokesperson, and that may be subject to rights and obligations.
Source: Capital Market Promotion and Development Group, GPDMC of the SFC |
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Fund of funds |
A fund of funds is an investment vehicle that invests in mutual funds, exchange-traded funds or even hedge funds. When you invest in a fund of funds, you get an entire diversified investment portfolio at once, featuring broad exposure to many different asset classes with less risk involved.
https://www.forbes.com/advisor/investing/what-is-fund-of-funds/
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Fundamental analysis |
Security analysis that seeks to detect misvalued securities through an analysis of the firm's business prospects. Research often focuses on earnings, dividend prospects, expectations for future interest rates, and risk evaluation of the firm. In macroeconomic analysis, information such as interest rates, GNP, inflation, unemployment, and inventories is used to predict the direction of the economy, and therefore the stock market. In microeconomic analysis, information such as balance sheet, income statement, products, management, and other market items is used to forecast a company's imminent success or failure, and hence the future price action of the stock.
https://www.nasdaq.com/glossary/f/fundamental-analysis
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Fundamental Information |
Information relating to the economic state of a company or economy.
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Going long |
The investor's purchase of a security for investment or speculation that the price will rise resulting in a profit once the security is sold.
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Going short |
Selling stock that an investor does not own by borrowing shares from a broker. The assumption is that the price will fall. The investor anticipates buying (covering the short) the shares back at a lower price than what they were sold for, recognizing the difference as a profit. Antithesis of going long.
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Grant
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Money, time or something of value that is awarded for a particular purpose. Generally, grants do not need to be paid back unless the recipient does not perform to the specifications of the grant.
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Green bonds |
Green bonds, where the funds raised are exclusively applied to environmental projects.
https://www.imf.org/-/media/Files/Publications/WP/2023/English/wpiea2023058-print-pdf.ashx
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Hedge Funds |
Like mutual funds, hedge funds pool investors’ money and invest the money in an effort to make a positive return. Hedge funds typically have more flexible investment strategies than mutual funds. Many hedge funds seek to profit in all kinds of markets by using leverage (in other words, borrowing to increase investment exposure as well as risk), short-selling and other speculative investment practices that are not often used by mutual funds.
Unlike mutual funds, hedge funds are not subject to some of the regulations that are designed to protect investors. Depending on the amount of assets in the hedge funds advised by a manager, some hedge fund managers may not be required to register or to file reports with the SEC. Hedge funds, however, are subject to the same prohibitions against fraud as are other market participants, and their managers owe a fiduciary duty to the funds that they manage.
https://www.investor.gov/introduction-investing/investing-basics/glossary/hedge-funds
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Horizontal analysis |
The process of dividing each expense item of a given year by the same expense item in the base year. It allows assessment of changes in the relative importance of expense items over time and the behavior of expense items as sales change.
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Income statements |
Income statements show how much money a company made and spent over a specific period of time (such as over the company’s fiscal year).
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Index futures |
A futures contract on an index (such as a foreign stock index) in the futures market.
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Inflation |
The rate at which the general level of prices for goods and services is rising.
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Information Prospectus |
Formal written document to sell securities that describes the plan for a proposed business enterprise, or the facts concerning an existing one, that an investor needs to make an informed decision. Prospectuses are used by mutual funds to describe fund objectives, risks, and other essential information.
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Initial Public Offering (IPO) |
An initial public offering, or IPO, generally refers to when a company first sells its shares to the public.
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Insolvency Regime |
The procedure by which a natural person, a merchant or a company, can agree with their creditors on payment methods for their overdue obligations, thus protecting their businesses and sources of income; or they can liquidate their business or partnership through a process. Taken from the document Glossary of Used Terms, Promotion of Companies in Economic Reactivation, Superintendency of Companies, available at: www.supersociedades.gov.co/documents/80312/2740454/Glosario.pdf
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Insolvency risk |
The risk that a firm will be unable to satisfy its debts. Also known as bankruptcy risk.
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Insolvent |
A firm that is unable to pay debts (its liabilities exceed its assets).
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Institutional Investor |
An institutional investor is an entity that invests capital. Examples of institutional investors generally include banks, mutual funds, hedge funds, pension funds, insurance companies, some investment advisers, and university endowments.
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insurance company |
A company whose business is providing and selling insurance
https://dictionary.cambridge.org/us/dictionary/english/insurance-company |
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Interest |
The price paid for borrowing money. It is expressed as a percentage rate over a period of time. Interest rates may be fixed, meaning the rate is set and will not change, or may be variable or "floating," meaning the rate may move higher or lower over time.
https://www.investor.gov/introduction-investing/investing-basics/glossary/interest
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Interest rate risk |
The chance that a security's value will change due to a change in interest rates.
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Investment |
The creation of more money through the use of capital.
https://www.nasdaq.com/glossary/i/investment
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Investment Adviser |
An investment adviser is an individual or firm that is engaged in the business of providing investment advice to others or issuing reports or analyses about securities for compensation. Investment advisers may include money managers, investment consultants, financial planners, general partners of private funds, and others who are compensated for providing advice about securities. Investment advisers are required to register with the SEC or applicable state securities regulators as a registered investment adviser unless they are exempt from applicable registration requirements (for example, as an exempt reporting adviser).
https://www.sec.gov/education/glossary/jargon-a-z
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Investment Advisers |
Advisers typically provide ongoing advice about buying, selling and/or holding investments and will monitor the performance of your investments and their alignment with your overall investment objectives.
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Investment advisory service |
A business that specializes in providing investment advice for a fee. All advisers of an advisory service must be registered with the Securities and Exchange Commission.
https://www.nasdaq.com/glossary/i/investment-advisory-service
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Investment Banking |
Activity developed by a specialized consultant or a financial market intermediary, which may include the diagnosis of companies, the organization of potential buyers, the advice of investors in the creation of new companies and even the obtaining of resources for such operations.
Taken from the Glossary of the Financial Superintendency of Colombia, available at: www.superfinanciera.gov.co/jsp/Glosario/user/main/s/0/f/0/c/0
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Investor |
The owner of an asset.
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Issuance Administrator
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Financial intermediary responsible for the processes related to the issuance, placement and redemption of securities issuances.
Taken from the Glossary of the Financial Superintendency of Colombia, available at: www.superfinanciera.gov.co/jsp/Glosario/user/main/s/0/f/0/c/0
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Issuance and Placement Program
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Plan through which the same entity, through a global quota, structures the execution of several issueances of one or more securities, through public offering, during an established term.
Taken from article 6.3.1.1.1 of Decree 2555 of 2010 |
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issued capital |
Money that a company has already raised from shareholder.
https://dictionary.cambridge.org/us/dictionary/english/issued-capital |
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Issuer |
An entity that puts a financial asset in the marketplace.
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Issuer risk |
means the probability of incurring losses due to changes in the value of the financial instrument arising from changes in the financial condition of the issuer of the instrument
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Joint venture |
An agreement between two or more firms to undertake the same business strategy and plan of action
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Legal Representative of Bondholders
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The main objective of the legal representative of bondholders is to provide the maximum possible protection to their clients, which is why they must ensure at all times their rights and carry out all acts that are necessary to defend their interests, exercising, among others, the functions expressly indicated in art. 6.4.1.1.9 of Decree 2555 of 2010.
Taken from the Basic Legal Circular Letter issued by the SFC, Part III – Title I – Chapter I |
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Legal risk |
The risk associated with the impact of a defect in the documentation on cash flow or debt service.
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Leverage ratios |
Measures of the relative value of stockholders, capitalization, and creditors obligations, and of the firm's ability to pay financing charges. Value of firm's debt to the total value of the firm (debt plus stockholder capitalization).
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Liability |
A financial obligation, or the cash outlay that must be made at a specific time to satisfy the contractual terms of such an obligation. |
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Lien |
A security interest in one or more assets that lenders hold in exchange for secured debt financing.
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Limited partnership |
A partnership that includes one or more partners who have limited liability.
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Liquidity |
Liquidity generally refers to how easily or quickly a security can be bought or sold in a secondary market. Liquid investments can be sold readily and without paying a hefty fee to get money when it is needed.
A stock’s liquidity generally refers to how rapidly shares of a stock can be bought or sold without substantially impacting the stock price. Stocks with low liquidity may be difficult to sell and may cause you to take a bigger loss if you cannot sell the shares when you want to.
https://www.investor.gov/introduction-investing/investing-basics/glossary/liquidity-or-marketability
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Liquidity ratios |
Ratios that measure a firm's ability to meet its short-term financial obligations on time, such as the ratio of current assets to current liabilities.
https://www.nasdaq.com/glossary/l/liquidity-ratios
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Liquidity risk |
The risk that arises from the difficulty of selling an asset in a timely manner. It can be thought of as the difference between the "true value" of the asset and the likely price, less commissions.
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Loan Term
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Term indicated for the fulfilment of a debt instrument. Period during which the debtor-creditor relationship is in force.
Taken from the Glossary of the Financial Superintendency of Colombia, available at: www.superfinanciera.gov.co/jsp/Glosario/user/main/s/0/f/0/c/0
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Long-term |
In the context of accounting, more than 1 year.
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Main Market
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To which the securities issuer turns when it decides to offer its securities registered in the National Registry of Securities and Issuers, hereinafter RNVE, to the general public or where said public can buy or sell securities. |
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Management Agent
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In securitization processes, the spokesperson for the free-standing trust fund. It is responsible for collecting the resources from the issuance and interacts with investors by virtue of such spokesperson, in accordance with the rights incorporated in the titles. The management agent must ensure the safe and efficient management of the resources that enter the estate. In Colombia, trust companies and other financial entities authorized to enter into trust contracts are authorized to act as management agents in securitization processes. Stock brokerage companies can also be management agents through securities funds managed by them.
Taken from the Glossary of the Financial Superintendency of Colombia, available at: www.superfinanciera.gov.co/jsp/Glosario/user/main/s/0/f/0/c/0
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Market Capitalization |
Market capitalization—often referred to as market cap—is the market value of a public company’s shares. Generally, market cap is calculated by multiplying the total number of outstanding shares by the market price of one share.
https://www.sec.gov/education/glossary/jargon-a-z
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Market Capitalization
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The value given to a company on the Stock Market. It is calculated by multiplying the price by the number of shares that make up the capital of said company. The capitalization of securities listed on the stock market is obtained by adding all the prices of said securities at a given time. This is used to compare stock markets.
Taken from the Glossary of the Financial Superintendency of Colombia, available at: www.superfinanciera.gov.co/jsp/Glosario/user/main/s/0/f/0/c/0
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Market Depth |
The ability of the market to sustain a substantially larger order without making an impact on the security’s market price.
https://corporatefinanceinstitute.com/resources/capital-markets/market-depth/ |
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Market price |
The last reported price at which a security was traded on an exchange.
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Market risk |
Risk that cannot be diversified away.
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Marketability |
A negotiable security is said to have good marketability if there is an active secondary market in which it can easily be resold.
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Materiality |
The importance of an event or information in influencing a company's stock price
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Maturity |
For a bond, the date on which the principal is required to be repaid. In an interest rate swap, the date that the swap stops accruing interest.
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Medium-sized enterprise
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One that has:
Staff between fifty-one (51) and two hundred (200) workers;
Total assets worth between five thousand one (5,001) and fifteen thousand (15,000) current legal monthly minimum wages.
Taken from article 2 of Law 590 of 2000 |
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Microbusiness |
A very small company, especially a family-owned company employing only a few people
https://dictionary.cambridge.org/dictionary/english/microbusiness |
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Minority-shareholder |
A person or organization that owns fewer shares in a company than the controlling shareholder.
https://dictionary.cambridge.org/us/dictionary/english/minority-shareholder |
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Municipal bonds |
Municipal bonds (or “munis” for short) are debt securities issued by states, their political subdivisions […], their agencies and instrumentalities […]. Municipal bonds are issued for a variety of purposes, including to finance public infrastructure projects, such as schools, highways, and water systems; to provide funds for day-to-day government needs; and to finance qualifying projects by private entities, such as hospitals, colleges, multi-family housing, and power and energy infrastructure.
https://www.investor.gov/introduction-investing/investing-basics/glossary/bonds-municipal
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Municipal bonds |
Municipal bonds (or “munis” for short) are debt securities issued by states, their political subdivisions […], their agencies and instrumentalities […]. Municipal bonds are issued for a variety of purposes, including to finance public infrastructure projects, such as schools, highways, and water systems; to provide funds for day-to-day government needs; and to finance qualifying projects by private entities, such as hospitals, colleges, multi-family housing, and power and energy infrastructure.
https://www.investor.gov/introduction-investing/investing-basics/glossary/bonds-municipal
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Mutual fund |
Mutual funds are pools of money that are managed by an investment company. They offer investors a variety of goals, depending on the fund and its investment charter. Some funds, for example, seek to generate income on a regular basis. Others seek to preserve an investor's money. Still others seek to invest in companies that are growing at a rapid pace. Funds can impose a sales charge, or load, on investors when they buy or sell shares.
https://www.nasdaq.com/glossary/m/mutual-fund
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National Registry of Securities and Issuers, RNVE |
Records information on the classes and types of securities, as well as their issuers and the issuances they make.
Taken from article 5.1.1.1.2 of Decree 2555 of 2010 |
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National Registry of Securities Market Agents, RNAMV
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Registers information on entities authorized to carry out activities in the securities market.
Taken from article 5.1.1.1.2 of Decree 2555 of 2010 |
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National Registry of Securities Market Professionals, RNPMV
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Registers information on persons authorized to carry out securities market activities.
Taken from article 5.1.1.1.2 of Decree 2555 of 2010 |
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Net assets |
The difference between total assets on the one hand and current liabilities and noncapitalized long-term liabilities on the other hand.
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net profit
Net income |
the money made by a company or part of a company for a particular period after all costs, taxes, etc. have been paid
https://dictionary.cambridge.org/dictionary/english/net-profit
The company's total earnings, reflecting revenues adjusted for costs of doing business, depreciation, interest, taxes and other expenses.
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Net profit margin |
Net income divided by sales; the amount of each sales dollar left over after all expenses have been paid.
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New Issuance |
Securities that are publicly offered for the first time, whether in an initial public offering or as an additional issuance of stocks or bonds by a company that is already public.
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Nominal Share/Stock
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That which identifies the name of its owner. Its transfer must be recorded in a special book at the issuing company called the Shareholder Ledger. Currently, according to the rules of the Andean Pact, shares in Colombia are only of this type.
Taken from the Glossary of the Financial Superintendency of Colombia, available at: www.superfinanciera.gov.co/jsp/Glosario/user/main/s/0/f/0/c/0
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Nonpublic information |
Information about a company that is not known by the general public, which will have a definite impact on the stock price when released.
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offshore company |
a company that is based in a different country to the one in which it does most of its business, often for tax reasons
https://dictionary.cambridge.org/us/dictionary/english/offshore-company |
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Operating leverage |
Fixed operating costs, which are characterized as leverage because they accentuate variations in profits.
https://www.nasdaq.com/glossary/o/operating-leverage
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Opportunity costs |
The difference in the actual performance of a particular investment and some other desired investment adjusted for fixed costs and execution costs. It often refers to the most valuable alternative that is given up.
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Orange Bonds
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Securities in which the resources are destined exclusively to finance or refinance, either in part or totally, assets or projects to promote the comprehensive development of the creative and cultural industries included in those sectors that encompass the creation, production and marketing of goods and services based on intangible content of a cultural nature, or that generate protection within the framework of copyright, in accordance with Law 1834 of 2017, or any regulation that modifies, adds or replaces it.
Taken from the Basic Legal Circular Letter issued by the SFC, Part III – Title I – Chapter II |
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Ordinary Transfer |
Refers to the set of decisions made and operations executed that are necessary to implement the company's strategy and achieve its business objectives. Normally, responsibility for the Ordinary Line of Business falls on the Senior Management team led by the president of the company.
Taken from the Code of Best Corporate Practices, Country Code, available at: https://www.superfinanciera.gov.co/inicio/industrias-supervisadas/gobierno-corporativo/codigo-pais-61162
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Originator
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Transfers the goods or assets based on the securitization process. It can be any natural or legal person, national or foreign. The originator is not required in cases of structured securitizations from funds.
Taken from the Glossary of the Financial Superintendency of Colombia, available at: www.superfinanciera.gov.co/jsp/Glosario/user/main/s/0/f/0/c/0
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Outright |
Describe a type of transaction where two parties agree to buy or sell a given amount of currency at a predetermined rate at some point in the future
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Over-the-counter (OTC) |
A decentralized market (as opposed to an exchange market) where geographically dispersed dealers are linked by telephones and computers. The market is for securities not listed on a stock or derivatives exchange.
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Own Account in Primary Market
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Own account operations carried out by stock brokerage companies in the primary securities market are the following:
Taken from the Glossary of the Financial Superintendency of Colombia, available at: www.superfinanciera.gov.co/jsp/Glosario/user/main/s/0/f/0/c/0
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Own Account in Secondary Market
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Those acquisitions of securities listed on the stock exchange that are carried out by stock brokerage companies with the aim of providing liquidity and stability to the market, responding to offers or stimulating and supplying demands, or with the purpose of reducing the margins between the demand price and offer.
The disposal of the securities thus acquired is also considered an own account transaction.
Taken from the Glossary of the Financial Superintendency of Colombia, available at: www.superfinanciera.gov.co/jsp/Glosario/user/main/s/0/f/0/c/0
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Parent company |
A company that controls subsidiaries through its ownership of voting stock, as well as runs its own business.
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Participation Titles
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By purchasing these securities you become the owner of a part of the company or the investment project |
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Partnership |
Shared ownership among two or more individuals, some of whom may, but do not necessarily, have limited liability with respect to obligations of the group.
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Partnership
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Legal Entity, in which all its members have the same rights and obligations, responding jointly and collectively for the debts acquired by the company.
Taken from articles 294 to 322 of the Commercial Code |
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Partnership limited by shares
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The limited partnership will always be formed between one or more partners who jointly and unlimitedly commit their responsibility for the corporate operations and another or several partners who limit the liability to their respective contributions. The former will be called managing or collective partners and the latter, limited partners.
The administration of the company is in charge of the managing partners and it may not be established or operate with less than five (5) shareholders, of which at least one must be a manager.
Taken from articles 323 and 343 of the Commercial Code and the Glossary of the Financial Superintendency of Colombia, available at: www.superfinanciera.gov.co/jsp/Glosario/user/main/s/0/f/0/c/0
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Payable date |
The date when dividends or capital gains are paid to shareholders or reinvested in additional shares.
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Placement of Shares |
The sale of Shares undertaken without having any knowledge of the identity of the purchaser, through an investment banker or broker.
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Placement Percentage
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Indicates in percentage terms the amount acquired by the investment community of the total value of an issuance.
Taken from the Glossary of the Financial Superintendency of Colombia, available at: www.superfinanciera.gov.co/jsp/Glosario/user/main/s/0/f/0/c/0
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Pledge Bonds
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Security title issued by a general deposit warehouse, which incorporates a collateral credit on the merchandise covered by the certificate of deposit and confers, by itself, the rights and privileges of the pledge.
Taken from the Glossary of the Financial Superintendency of Colombia, available at: www.superfinanciera.gov.co/jsp/Glosario/user/main/s/0/f/0/c/0
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Portfolio
Portfolio diversification |
A collection of investments, real and/or financial.
https://www.nasdaq.com/glossary/p/portfolio
Investing in different asset classes and in securities of many issuers in an attempt to reduce overall investment risk and to avoid damaging a portfolio's performance by the poor performance of a single security, industry, (or country).
https://www.nasdaq.com/glossary/p/portfolio-diversification
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Potential Future Exposure
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It corresponds to the loss that an entity could have on a derivative financial instrument during its remaining term due to a possible default by its counterparty, under the assumption that the fair exchange price is positive on the maturity date of the respective instrument.
When the possibility of offsetting positions in derivative financial instruments has been agreed with a certain counterparty, the potential future exposure of said portfolio will correspond to a value that includes the potential future exposures of each of the derivative financial instruments that comprise it.
Taken from article 2.35.1.1.1 of Decree 2555 of 2010 |
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Preferential Share/Stock
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Grants the right to receive a minimum dividend established in the subscription regulations to be paid in preference to that corresponding to ordinary shares; to preferential reimbursement of contributions once the external liability has been paid, in the event of dissolution of the company; and the other rights provided for ordinary shares, except for the right to participate in and vote in the shareholders' meeting, except when this right is specified or when special events occur such as the non-declaration of preferential dividends.
Taken from articles 63 and 64 of Law 222 of 1995, available at: https://www.suin-juriscol.gov.co/viewDocument.asp?id=1655766
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Premarketing
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Also known as preliminary promotion. Consists of the possibility of carrying out a promotion of securities, prior to the launch of the respective public offer, using a preliminary prospectus, without constituting a binding public offer.
Taken from the Glossary of the Financial Superintendency of Colombia, available at: www.superfinanciera.gov.co/jsp/Glosario/user/main/s/0/f/0/c/0
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Price risk |
The risk that the value of a security (or a portfolio) will decline in the future.
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Primary market |
Where a newly issued security is first offered.
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Private Equity Funds
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Closed Mutual Investment Funds that must allocate at least two thirds (2/3) of the contributions of their investors to the acquisition of assets or rights of economic content other than securities registered in the National Registry of Securities and Issuers (RNVE). For the purposes of this calculation, assets that indirectly involve investments in securities registered in the National Registry of Securities and Issuers (RNVE) will not be counted.
The Private Capital Funds will be closed, which implies that the private capital fund management company will only be obliged to redeem the investors' shares at the end of the period established for the duration of the private capital fund.
In any case, Private Capital Funds may be created in which specific deadlines are established to carry out the redemption of the shares, which must be previously determined in the regulations. The minimum redemption period for shares in these private capital funds may not be less than thirty (30) common days.
Taken from article 3.3.2.1.1 of Decree 2555 of 2010 |
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Pro rata |
Shared or divided according to a ratio or in proportion to participation.
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Productive unit
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Business, association, producer or group of people that carry out economic and/or commercial activities by supplying the goods or services demanded in the market, with the purpose of obtaining income. |
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Professional Suitability Test |
An academic test that will have as its main objective the verification of the degree of development of competencies and skills of professionals subject to the National Registry of Securities Market Professionals, RNPMV. The academic test may be based on learning tools that promote professionalization, such as continuing education.
Taken from articles 5.4.3.1.1 and 5.4.1.1.2 of Decree 2555 of 2010 |
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Public Offer Notice
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Prospectus
The mechanism used to make a public offer known to its recipients.
Taken from the Glossary of the Financial Superintendency of Colombia, available at: www.superfinanciera.gov.co/jsp/Glosario/user/main/s/0/f/0/c/0
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Public Offering of Securities through the Construction of the Offer Book
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Procedure according to which an issuer can determine the price, distribution and allocation of the securities to be issued and the size of the issuance, either directly or through a third party, through marketing, preliminary promotion of the securities and reception and registration of demand orders in an offer book, in accordance with the procedure indicated in article 6.2.2.1.3 of Decree 2555 of 2010.
Taken from article 6.2.2.1.1 of Decree 2555 of 2010 |
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Public Offers for Democratization
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Those in which the controlling party offers, under conditions that promote massive participation in share ownership, part or all of the shares it owns, using sales procedures that guarantee wide publicity and free competition, such as advertising campaigns. through mass media that incorporate the concept of democratization of share ownership, as well as the use of the network of credit establishments.
Taken from article 6.15.3.1.2 of Decree 2555 of 2010 |
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Qualified endorsement
/
Restrictive endorsement |
A signature on the back of a negotiable instrument transferring the amount to some other party but that includes wording that limits the endorser's liability.
https://www.nasdaq.com/glossary/q/qualified-endorsement
/
An endorsement signature on the back of a check that specifies the conditions under which the check can be transferred or paid out.
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Quoted price |
The price at which the last trade of a particular security or commodity took place.
https://www.nasdaq.com/glossary/q/quoted-price
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R.P.G.
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Indicator that results from dividing the market price of a share by the earnings per share reported by the issuer. Represents the number of periods required, at this level of profits, to recover the investment.
Taken from the Glossary of the Financial Superintendency of Colombia, available at: www.superfinanciera.gov.co/jsp/Glosario/user/main/s/0/f/0/c/0
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Ratings |
An evaluation of credit quality of a company's debt issuance […]. Investors and analysts use ratings to assess the riskness of an investment. Ratings can also be an evaluation a country's creditworthiness or ability to repay, taking into consideration its estimated percentage default rate and political risk.
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Ratings agency |
an organization that calculates the risk that a share, bond, etc. will not be paid back, using a system of letters to show the level of risk
https://dictionary.cambridge.org/us/dictionary/english/ratings-agency |
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Redemption |
Repayment of a debt security or preferred stock issuance, at or before maturity, at par or at a premium price.
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Redemption date |
The date on which a bond matures or is redeemed.
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Regulatory sandbox |
A regulatory sandbox is a tool for developing evidence about how a new product, technology, or business model (innovation) works and the outcomes it produces. Evidence gathering can help assuage (or confirm) regulatory concerns about the impact of innovations, allowing beneficial innovations to reach the marketplace.
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Relevant information
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Every issuer of securities must disclose, in a truthful, clear, sufficient and timely manner to the market, through the Financial Superintendency of Colombia, in the established manner, any situation related to it or its issuance that would have been taken into account by a prudent and diligent expert when purchasing, selling or holding the securities of the issuer or when exercising the political rights inherent to such securities.
Taken from the Glossary of the Financial Superintendency of Colombia, available at: www.superfinanciera.gov.co/jsp/Glosario/user/main/s/0/f/0/c/0
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Relevant operations |
Significant facts for the issuer, its businesses, its registered securities and/or the offer to the market of said securities, in accordance with the criteria indicated in article 1.1.2.18 of Decree 3139 of 2006.
Taken from the Code of Best Corporate Practices, Country Code, available at: https://www.superfinanciera.gov.co/inicio/industrias-supervisadas/gobierno-corporativo/codigo-pais-61162
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Replacement Cost
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The fair exchange price of a derivative financial instrument when it is positive, otherwise its value is zero (0).
In the event that the possibility of offsetting positions in derivative financial instruments has been agreed with a certain counterparty, the replacement cost of the portfolio of such instruments negotiated with that counterparty will be the sum of the fair exchange prices thereof, provided that this is positive, its value being zero (0) otherwise.
Taken from article 2.35.1.1.1 of Decree 2555 of 2010 |
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Repo |
An agreement in which one party sells a security to another party and agrees to repurchase it on a specified date for a specified price
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Retail investors
Small investor |
Small individual investors who commit capital for their personal account rather than on behalf of another company.
https://www.nasdaq.com/glossary/r/retail-investors
An individual person investing in small quantities of stock or bonds. This group of investors makes up a minimal fraction of total stock ownership.
https://www.nasdaq.com/glossary/s/small-investor
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Return on assets (ROA) |
Indicator of profitability. Determined by dividing net income for the past 12 months by total average assets. Result is shown as a percentage. ROA can be decomposed into return on sales (net income/sales) multiplied by asset utilization (sales/assets).
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Return on equity (ROE) |
Indicator of profitability. Determined by dividing net income for the past 12 months by common stockholder equity (adjusted for stock splits). Result is shown as a percentage. Investors use ROE as a measure of how a company is using its money. ROE may be decomposed into return on assets (ROA) multiplied by financial leverage (total assets/total equity).
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Return on investment (ROI) |
Generally, book income as a proportion of net book value.
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Risk |
In finance, risk refers to the degree of uncertainty about the rate of return on an asset and the potential harm that could arise when financial returns are not what the investor expected. In general, as investment risks rise, investors seek higher returns to compensate them for taking on such risks.
https://www.investor.gov/introduction-investing/investing-basics/glossary/risk |
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Second Market
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The market where negotiations are carried out on securities whose registration in the National Registry of Securities and Issuers, RNVE, is carried out in accordance with the requirements established for this and whose acquisition can only be carried out by authorized or professional investors.
The securities that belong to the same issuance cannot be part of the Second Market and the Main Market simultaneously. Likewise, the shares of a company may only be part of one of the two markets.
Taken from article 5.2.3.1.1 of Decree 2555 of 2010 |
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Secondary market |
The market in which securities are traded after they are initially offered in the primary market. Most trading occurs in the secondary market.
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securities brokerage |
securities brokerage means the operation of a securities company acting as an intermediary to carry out securities buying or selling orders on behalf of the customers.
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Securities Market Law
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Law 964 of 2005 |
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securities settlement system (SSS) |
An entity that enables securities to be transferred and settled by book entry according to a set of predetermined multilateral rules.
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Securitization |
Creating a more or less standard investment instrument such as the mortgage pass-through security, by pooling assets to back the instrument. Also refers to the replacement of nonmarketable loans and/or cash flows provided by financial intermediaries with negotiable securities issued in the public capital markets.
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Securitization Administrator
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The entity in charge of the administration, custody and conservation of the assets or goods subject to securitization, as well as the collection and transfer to the management agent of the flows coming from said assets or goods. The originator of the securitization, the managing agent or a different person may act as administrator of a securitization. However, the action of the administrator does not exonerate the managing agent from its responsibility in diligently carrying out the acts necessary to achieve the purpose pursued in the securitization process.
Taken from the Glossary of the Financial Superintendency of Colombia, available at: www.superfinanciera.gov.co/jsp/Glosario/user/main/s/0/f/0/c/0
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Security |
An investment instrument such as a stock or bond.
https://www.investor.gov/introduction-investing/investing-basics/glossary/security
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Security ratings
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Commercial rating agencies' assessment of the credit and investment risk of securities.
https://www.nasdaq.com/glossary/b/blue-chip-stock
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Segregation
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Segregation or improper division is understood to be the operation through which a company (the "segregant"), allocates one or more parts of its assets to the constitution of one or several companies or to the increase in capital of already existing companies (“beneficiaries”). As consideration, the segregating company receives shares, quotas or parts of interest in the beneficiary companies.
A contribution in kind will be considered to constitute segregation when, as a result of it, a line of business, commercial establishment is delivered or a significant change occurs in the development of the corporate purpose of the segregating entity. In this sense, it is presumed that a significant change has occurred in the development of the corporate purpose of the segregating entity when the net value of the assets contributed is equal to or greater than twenty-five percent (25%) of the total assets of the respective company, or when the contributed assets generate thirty percent (30%) or more of the company's operating income, based on the financial statements corresponding to the immediately preceding year.
Taken from the Code of Best Corporate Practices, Country Code, available at: https://www.superfinanciera.gov.co/inicio/industrias-supervisadas/gobierno-corporativo/codigo-pais-61162
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Self-regulatory organization (SRO) |
Organizations that enforce fair, ethical, and efficient practices in the securities and commodity futures industries, including all national securities and commodities exchanges and the National Association of Securities Dealers - NASD. FINRA definicion
https://www.nasdaq.com/glossary/s/self-regulatory-organization |
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Senior Management |
Those natural persons who exercise executive functions within an investment firm, a market operator or a data reporting services provider, and who are responsible and accountable to the management body for the day-to-day management of the entity, including for the implementation of policies concerning the distribution of services and products to clients by the firm and its personnel.
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Settlement date |
The date on which payment is made to settle a trade.
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settlor |
A person who creates a trust (legal arrangement to manage the assets of someone else) and puts money, property, etc
https://dictionary.cambridge.org/dictionary/english/settlor?q=settlors |
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Share / Stock |
An instrument that signifies an ownership position (called equity) in a corporation, and a claim on its proportional share in the corporation's assets and profits. Most stocks also provide voting rights, which give shareholders a proportional vote in certain corporate decisions, such as the election of corporate directors.
https://www.investor.gov/introduction-investing/investing-basics/glossary/stock
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Share repurchase |
Program by which a corporation buys back its own shares in the open market. It is usually done when shares are undervalued. Since repurchase reduces the number of shares outstanding and thus increases earnings per share, it tends to elevate the market value of the remaining shares held by stockholders.
https://www.nasdaq.com/glossary/s/share-repurchase
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Share repurchase |
Program by which a corporation buys back its own shares in the open market. It is usually done when shares are undervalued. Since repurchase reduces the number of shares outstanding and thus increases earnings per share, it tends to elevate the market value of the remaining shares held by stockholders.
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shareholders-agreement |
A shareholders’ agreement is an arrangement among the shareholders of a company. It contains provisions regarding the operation of the company and the relationship between its shareholders. A shareholders’ agreement is also known as a stockholders’ agreement. It protects both the corporate entity and the shareholders’ investment in that entity.
https://corporatefinanceinstitute.com/resources/equities/shareholders-agreement/ |
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shareholders-assembly |
An assembly consisting of the shareholders in the Company formed in accordance with the provisions of the Companies Law and the Company’s bylaws.
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Short selling |
Establishing a market position by selling a security one does not own in anticipation of the price of that security falling.
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Short-term |
Any investments with a maturity of one year or less.
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Significant influence |
The holding of a large portion of the equity of a corporation, usually at least 20%, which gives the holder a significant amount of control over the corporation. This degree of holding must be recorded in a firm's financial statements.
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Small enterprise
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The one that has:
Taken from article 2 of Law 590 of 2000 |
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Social bonds |
Social bonds, where the funds raised are exclusively spent on projects advancing social objectives.
https://www.imf.org/-/media/Files/Publications/WP/2023/English/wpiea2023058-print-pdf.ashx
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Sole proprietorship
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A legal entity made up of the presence of a natural or legal person who allocates part of their assets to carrying out one or more business activities.
Taken from articles 71 to 81 of Law 222 of 1995 |
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Special class shares |
Some companies also issue preferred stock, which usually guarantees a fixed dividend payment similar to the coupon on a bond. This might make preferred stocks attractive to people looking for income. Dividends on preferred stock are paid out before dividends on common stock.
The price of preferred stock, however, doesn't move as much as common stock prices. This means that while preferred stock doesn't lose much value even during a downturn in the stock market, it doesn't increase much either, even if the price of the common stock soars.
An important additional difference between common stock and preferred stock has to do with what happens if the company fails. In that event, there is a priority list for a company's financial obligations and obligations to preferred stockholders must be met before those to common stockholders. On the other hand, preferred stockholders are lower on the list than bondholders.
https://www.finra.org/investors/investing/investment-products/stocks#types
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Special Meeting |
Refers to a meeting of shareholders outside the usual annual general meeting. In the context of corporate governance, some limitations either increase the level of shareholder support required to call a special meeting beyond that specified by state law or eliminate the ability to call one entirely. Such provisions add an extra time delay to many proxy fights, since bidders must wait until the regularly scheduled annual meeting to replace board members or dismantle takeover defenses.
https://www.nasdaq.com/glossary/s/special-meeting
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Specialized Audit
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Peritaje
Study, analysis and issuance of an opinion on a specific topic. The specialized audit can be requested by a group of shareholders under the conditions stipulated by the company to carry out this procedure. The specialized auditor will be obliged to maintain confidentiality on the topics consulted and the information presented for the development of the contract.
Taken from the Code of Best Corporate Practices, Country Code, available at: https://www.superfinanciera.gov.co/inicio/industrias-supervisadas/gobierno-corporativo/codigo-pais-61162
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Specific Destination Bonds
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Those bonds whose resources are intended exclusively to finance or refinance, either in part or in full, new or existing eligible projects. Eligible projects are understood to be: assets, projects, investments, related or support expenses and research and development activities that contribute to the achievement of environmental, social, sustainable or orange economy objectives.
Taken from the Basic Legal Circular Letter issued by the SFC, Part III – Title I – Chapter II |
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Spot transaction |
A foregin exchange transaction in which each party promises to pay a certain amount of currency to the other on the same day or within one or two days.
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Stakeholders |
All parties that have an interest, financial or otherwise, in a firm-stockholders, creditors, bondholders, employees, customers, management, the community, and the government.
https://www.nasdaq.com/glossary/s/stakeholders
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Start-up |
The earliest stage of a new business venture.
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Stock company |
A company whose ownership is divided into shares that can be bought and sold
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Stock exchanges |
Formal organizations approved and regulated […], that are made up of members who use the facilities to exchange certain common stocks.
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Stockholder / Shareholder |
Person or entity that owns shares or equity in a corporation.
https://www.nasdaq.com/glossary/s/shareholders
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Structured product |
Structured products are investment vehicles based on a basket of underlying securities, such as derivatives, equities, debt issuance, commodities, indices, currencies, or any combination thereof
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Subscribed capital |
Subscribed capital means such part of the capital which is for the time being subscribed by the members of a company
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Subscription
Subscription privilege |
Agreement to buy new issuance of securities.
https://www.nasdaq.com/glossary/s/subscription
The right of current shareholders of a corporation to buy newly issued shares before they are available to the public.
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Subscription price |
Price that current shareholders pay for a share of stock in a rights offering.
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Sustainability bonds |
Sustainability bonds, which fund both environmental and social projects.
https://www.imf.org/-/media/Files/Publications/WP/2023/English/wpiea2023058-print-pdf.ashx
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Takeover bid |
An offer or attempt to take control of a company by buying enough of its shares to do this, or the amount of money offered
https://dictionary.cambridge.org/es/diccionario/ingles/takeover-bid |
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Tax Value Units |
Value measure that allows adjusting the values contained in the provisions relating to taxes and obligations administered by the Special Administrative Unit Directorate of National Taxes and Customs, DIAN, which is readjusted annually to the variation of the consumer price index for average incomes, certified by the National Administrative Department of Statistics, DANE, in the period between the first (1) of October of the year preceding the taxable year and the same date of the year immediately preceding it.
Taken from article 868 of the Tax Statute |
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Technical analysis |
Security analysis that seeks to detect and interpret patterns in past security prices.
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Technology-based entrepreneurship
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Refers to the creation and management of new companies that are based on advanced knowledge and technologies from scientific research and, in general, R&D&I results (Research, Development, innovation). |
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To sell |
to give something to someone else in return for money
https://dictionary.cambridge.org/es/diccionario/ingles-espanol/sell |
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Topline performance |
Usually refers to overall earnings for a corporation (as opposed to earnings by segment).
https://www.nasdaq.com/glossary/t/topline-performance
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trade repository (TR) |
An entity that maintains a centralised electronic record (database) of transaction data.
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Trust company |
An organization that acts as a fiduciary and administers trusts.
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uncertainty |
In accounting, uncertainty refers to the inability to foretell consequences or outcomes because there is a lack of knowledge or bases on which to make any predictions.
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Underwriter |
A firm, usually an investment bank, that buys an issuance of securities from a company and resells it to investors. In general, a party that guarantees the proceeds to the firm from a security sale, thereby in effect taking ownership of the securities.
https://www.nasdaq.com/glossary/u/underwriter Buscar si hay definicion de otras modalidades como ganatizada, al mejor esfuerzo |
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Unpaid dividend |
A dividend declared by the directors of a corporation that has not yet been paid.
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Valuation |
Determination of the value of a company's stock based on earnings and the market value of assets.
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Variable cost |
A cost that is directly proportional to the volume of output produced. When production is zero, the variable cost is equal to zero.
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Venture capital |
An investment in a start-up business that is perceived to have excellent growth prospects but does not have access to capital markets. Type of financing sought by early-stage companies seeking to grow rapidly.
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Vertical analysis |
Dividing each expense item in the income statement of a given year by net sales to identify expense items that rise more quickly or more slowly than a change in sales.
https://www.nasdaq.com/glossary/v/vertical-analysis
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Virtual asset |
A virtual asset is a digital representation of value that can be digitally traded, or transferred, and can be used for payment or investment purposes. Virtual assets do not include digital representations of fiat currencies, securities and other financial assets that are already covered elsewhere in the FATF Recommendations.
https://www.fatf-gafi.org/en/publications/Fatfrecommendations/Fatf-recommendations.html |
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Weighted average cost of capital (WACC) |
Expected return on a portfolio of all a firm's securities. Used as a hurdle rate for capital investment. Often the weighted average of the cost of equity and the cost of debt The weights are determined by the relative proportions of equity and debt in a firm's capital structure.
https://www.nasdaq.com/glossary/w/weighted-average-cost-of-capital |
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Working capital |
Defined as the difference between current assets and current liabilities.
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Working Table |
All representatives of the different groups, infrastructure providers, associations and institutions that jointly, periodically and dynamically develop the Code of Best Corporate Practices.
Taken from the Code of Best Corporate Practices, Country Code, available at: https://www.superfinanciera.gov.co/inicio/industrias-supervisadas/gobierno-corporativo/codigo-pais-61162
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Yield |
The percentage return paid on a stock in the form of dividends, or the effective rate of interest paid on a bond or note.
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