Glossary terms beginning with M
- Management fee
- The money paid to the manager(s) of a mutual fund, annuity subaccount, or other type of professionally managed investment. Also called an advisory fee.
- Margin Equity Percentage
- Calculates the value of your securities in relation to the money you have borrowed. Keep in mind, a negative margin balance does not necessarily indicate borrowed funds.
- Market Maker System
- A competitive trading environment where floor traders create efficiency and liquidity by competing with each other to provide the best bids and offers.
- Mark-to-Market
- The process of valuing an account at the end of the day based on the settlement prices of the securities.
- Market-Not-Held-Order
- An order issued by a customer allowing the floor broker to use his or her best judgment regarding the price and timing of the trade.
- Money Market Funds
- A type of mutual fund contains securities such as T-bills and commercial paper. Most of these funds invest in short-term debt instruments with no longer than a 90 day duration.
- Money Purchase Plan
- A Trust in which a defined portion or percentage of the account is distributed to the trustee(s) on a defined basis whether the account is profitable or not.
- Mortgage-Backed Securities
- A number of mortgages bundled together into a single security to be sold.
- Municipal Bond
- A bond that is issued by a state or local government. Historically, the interest paid on these bonds has been exempt from federal, state and local taxes in the state of issuance.
- Municipal Securities Rulemaking Board (MSRB)
- An independent self-regulatory organization in charge of establishing rules and regulations in trading of municipal securities.
- Mutual Fund
- An open-end investment company that invests the money of thousands of people in a number of securities to achieve a specific objective over time.
- Mutual Fund Category
- A number of mutual funds specialized to a certain type of investment objective, carrying similar levels of risks and returns.
- Mutual Fund Exchange
- Switching on mutual fund investment from one fund to a different fund within the same mutual fund family.
- Mutual Fund Family
- A group of mutual funds managed by a single company.
- Market If Touched Order
- An order which becomes a market order if the specified price is reached.
- Market On Close Order
- A buy or sell order which is to be executed as a market order as close as possible to the end of the day.
- MA
- Moving average
- Maintenance Margin
- The minimum value that you must keep in your account in order to continue to hold a position. The Maintenance Margin is typically less than the Initial Margin, and also differs by contract. If your account falls below the Maintenance Margin requirement, you will receive a margin call. If you wish to continue to hold the position, you will be required to restore your account to the full Initial Margin level (not to the Maintenance Margin level). Also known as the Maintenance Performance Bond. (See also Margin)
- Margin account
- A brokerage account allowing customers to buy securities and/or other financial instruments with money borrowed from the brokerage.
- Margin Call
- A call from a brokerage firm to a customer to bring margin deposits back up to minimum levels required by exchange regulations; similarly, a request by the clearinghouse to a clearing member firm to make additional deposits to bring clearing margins back to minimum levels required by clearinghouse rules. A demand upon an investor to put up more collateral for securities bought on credit.
- Margin
- (1) In the futures industry, it is an amount of money deposited by both buyers and sellers of futures contracts to ensure performance against the contract. It is not a down payment. (2) In the stock market, the amount of cash that must be put up in a purchase of securities. If the margin requirement is 50%, the buyer must put up 50% of the purchase price; the buyer must borrow the rest.
- Market arbitrage
- The simultaneous purchase and sale of the same security, futures, or other financial instrument in different markets to take advantage of a price disparity between the two markets.
- Market Order
- An order to buy or sell futures contracts, stocks or other financial instrument which is to be filled at the best possible price and as soon as possible. A limit order, in contrast, may specify requirements for price or time of execution.
- Member firm
- (1) A broker-dealer in which at least one of the principal officers is a member of the New York Stock Exchange, another exchange, a self-regulatory organization, or a clearing corporation. (2) A member of the National Futures Association.
- MII
- Market Inversion Index. A very short term momentum indicator. This indicator is used to determine which side of the market to be on for the close and early session the following day. When the MII flips from, for instance, long to short on the market close, a trader should go short with the intent of covering the short either in globex or early in the next day’s session. This is a short term indicator for aggressive traders.
- Moving Average
- A mathematical procedure to smooth or eliminate the fluctuations in data. Moving averages emphasize the direction of a trend, confirm trend reversals, and smooth out price and volume fluctuations or “noise” that can confuse interpretation of the market.