capitalpl.com

Home

Investor Information

About Us

Our Services

FAQ

A share confers ownership of a portion of the company, entitling the owner to a share in the fortunes of the company, and the ability to control the mamagem,ent of the company.

What is a dividend?

A dividend is the cash sum paid periodically to shareholders as a distribution of a company's profits, as decided by the board of the company.

What does 'Ex-dividend' mean?

A security which no longer carries the right to the most recently declared dividend; or the period of time between the announcement of the dividend and the payment. For transactions during the ex-dividend period, the seller will receive the dividend, not the buyer. Usually indicated with an x next to the share's name.

What does 'cum-dividend' mean?

Purchase of a share cum dividend means that the buyer of a share is entitled to the next dividend payment; cum rights means that the purchaser is entitled to shares from a forthcoming rights issue; cum cap means that the purchaser is entitled to a scrip issue; cum all means that the purchaser is entitled to all of these.

What is the record date?

Date on which an individual must own shares in order to be eligible to receive a declared dividend or capital gains distribution. Also called date of record.

What is stamp duty?

Stamp duty is government tax charged at 0.5% on purchases (not sales) of UK equities. There is no stamp duty due on gilts, Exchange Traded Funds, Unit Trusts or OEICs (although dealing costs such as stamp duty, incurred by the fund manager, will be reflected in the price of collective funds.) Overseas equities may attract differing levels of stamp duty, i.e. 1% tax is payable on Irish stocks.

What is PTM Levy?

The PTM Levy is a flat rate charge of £1.00 collected on all trades over £10,000 to finance the Panel Of Takeovers and Mergers (POTAM).

What is a contract note?

A contract note is a legal document sent to you each time you have bought or sold shares. It gives details of commission charges and taxes on your transaction. Both electronic contract notes and those posted to you should be kept for capital gains tax purposes. The electronic contract notes sent to you via CPL secure messaging facility should be printed and kept in a secure place.

What is the p/e ratio

The Price/Earnings ratio (p/e) is derived by dividing the current share price by its earnings per share (itself calculated by dividing the earnings figure by the number of shares in issue). The p/e figure shows how many years of earnings it would take to equal the current share price: a high figure and the share is expensive, low and it is cheap. That being said, you should not buy a company simply because the P/E is low any more than you should avoid it if the P/E is high. A high 'rating' indicates that the market expects continued strong profit growth. A low P/E indicates low expectations. The P/E ratio is, therefore, a judgement given other factors.

What is a Market Maker?

A brokerage or bank that maintains a firm bid and offer price in a given security by standing ready, willing, and able to buy or sell at publicly quoted prices. Also called making a market.

What is a CDI?

A CDI is a CREST Depository Interest. CREST holds all international stocks in a pool in a local depository such as Clearstream for German stocks and DTC for US stocks. CREST then issues a CDI to each holder of the security, which can then be transferred in CREST just like UK equity.What is an investment trust?

Investment trusts are companies whose sole purpose is to invest in the shares of other companies. The main difference between these and Unit Trusts is that Investment Trusts are "closed-ended" investments and issue shares in as any other quoted company. As such, a fixed number of shares are in issue at any moment. They usually trade at a discount to Net Asset Value, with the price being determined by demand for shares rather than the value of the fund.

What is an ETF?

ETF stands for Exchange Traded Funds. They are collective investments, which track the performance of particular stock market indices and sectors. Like a unit trust, ETFs are open ended, meaning that they can trade at close to net asset value.

What is a unit trust?

Unit trusts are open-ended collective investments. Money from a number of investors is pooled and invested collectively on their behalf by a manager. Here, you can buy and sell units of your chosen fund(s) where they will be created and or cancelled with demand. Priced daily, the price per unit directly reflects the underlying net asset value of the fund.

What is an OEIC?

Open Ended Investment Companies (OEICs) are hybrids of unit trusts and investment trusts. Like a unit trust, they trade at NAV, are priced daily and are not quoted on any exchange, but like an Investment Trust, they have a company rather than a trust structure. This makes them easier to market across Europe . Other differences include single pricing and an umbrella structure.

What is a gilt?

UK government bonds are known as gilt edged securities or gilts. Bonds are fixed rate securities issued as debt and repaid at a future date.

What is a collective investment?

A collective investment is where a fund manager pools your money with that of other investors to purchase securities. Investment trusts, Exchange Traded Funds (ETFs), unit trusts and OEICs are all examples of collective or pooled investments. Depending on the particular fund, they offer diversified exposure to domestic and international stock markets and other investments with the benefit of having funds managed by an industry expert (Fund Manager or Unit Trust Manager). Note that some funds will be 'passive', e.g. ETFs track an index or given basket of stocks.

What is an Investment Club?

An Investment Club is a group of people who meet regularly and pool together some of their surplus cash to invest in the stock market. Members of the club share a mutual desire to increase their understanding of the stock market and improve their personal investing ability.

What is an ISA?

ISA stands for Individual Savings Account. ISAs were introduced by the Government in April 1999 to promote saving and investment amongst individuals in the UK . An ISA allows you to save and invest in a tax efficient way.

What is a PEP?

Personal Equity Plans (PEPs) were launched in 1987 as a tax efficient wrapper into which equity investments could be placed. They were introduced to encourage individuals to invest in the UK stock market, directly or via collective investments. The Single Company PEP was added in 1992 allowing an additional investment in the shares of just one company (this distinction has now been removed). It has not been possible to invest new funds into PEPs since April 1999 when ISAs were launched. However, existing plans are allowed to continue, retaining the tax benefits, and with unrestricted trading.

What is a settlement period?

A settlement period is the completion of a transaction. This is the time between the transaction and settlement when monies and stock are due either to or from the market. Standard stockmarket settlement is currently three working days or T+3.

What is CREST?

CREST is the electronic settlement system used by Stock Market participants. It is a non-profit making organisation.

What is a nominee account?

A Nominee is the legal, but not beneficial, owner of assets such as shares. A Nominee account allows your securities to be held electronically, thereby easing settlement. Dividends are collected centrally and distributed to you. End of year holdings statements and tax statements are issued.

What is an RSP?

RSP stands for Retail Service Provider. They are 'Market Making' institutions, i.e. they quote prices at which they will buy and sell a given quantity of shares in an individual company.

What is AIM and Ofex?

The Alternative Investment Market. Launched by The London share Exchange in 1995 as a market for smaller companies, AIM sets lower standards of entry than the share Exchange Official List.Ofex is a market operated by PLUS Markets, which is similar.

What is a corporate action?

A Corporate Action refers to any alteration to a Company's share capital or a distribution of benefits. A Corporate Action might come about as a result of a takeover or merger, capital re-organisation, dividend or rights issue.

GLOSSARY

AIM
The Stock Exchange introduced a new, less regulated, market in June 1995. This is the Alternative Investment Market (AIM). It is designed primarily to enable trading in new, small and growing companies. A Press Release dated 20 February 1995 confirmed that shares and securities on AIM do not fall to be treated as quoted or listed for tax purposes.
clearing house
a company through which transactions on an exchange may be cleared
collateral
any form of security, guarantee or indemnity provided by way of security for the discharge of any liability arising from a transaction.
contingent liability investment
a derivative under the terms of which the client will or may be liable to make further payments (other than charges, and whether or not secured by margin) when the transaction falls to be completed or upon the earlier closing out of his position
debenture
the investment, specified in article 77 of the Regulated Activities Order (Instruments creating or acknowledging indebtedness), which is in summary: any of the following which are not government and public securities:
(a) debentures;
(b) debenture stock;
(c) loan stock;
(d) bonds;
(e) certificates of deposit;
(f) any other instrument creating or acknowledging indebtedness.
debt instrument
debentures, debenture stock, loan stock, bonds, certificates of deposit or any other instrument creating or acknowledging indebtedness.
derivative
a contract for differences, a future or an option.
exchange
a regulated market or designated investment exchange.
execution-only transaction
a transaction executed by a firm upon the specific instructions of a client where the firm does not give advice on investments relating to the merits of the transaction.
Financial Ombudsman Service
the scheme provided under Part XVI of the Act (The Ombudsman Scheme) under which certain disputes may be resolved quickly and with minimum formality by an independent person.
future
the investment, specified in article 84 of the Regulated Activities Order (Futures), which is in summary: rights under a contract for the sale of a commodity or property of any other description under which delivery is to be made at a future date and at a price agreed on when the contract is made.
investment trust
a company listed in the United Kingdom or another EEA State which:
(a) is approved by the Commissioners for HM Revenue and Customs under section 842 of the Income and Corporation Taxes Act 1988 (or, in the case of a newly formed company, has declared its intention to conduct its affairs so as to obtain such approval); or
(b) is resident in an EEA State other than the United Kingdom and would qualify for such approval if resident and listed in the United Kingdom.

margin
cash or other property paid, transferred or deposited under the terms of a derivative; for these purposes cash or property will be treated as having been paid, transferred or deposited if it must be paid, transferred or deposited in order to comply with a requirement imposed by the market on which the contract is made or traded
nominee company
a body corporate whose business consists solely of acting as a nominee holder of investments or other property
OFEX
An unregulated over-the-counter market established in 1995 specialising in smaller companies, and authorised by the Financial Services Authority.There are around 200 companies listed on OFEX, many of them small, young companies with a high-tech bent. Admission to OFEX is decided by a panel of "wise men" and the only requirement is that companies must publish financial reports twice a year. So the risks are high.Liquidity of OFEX companies is poor as trades are carried out on a matched bargain basis - that is, you can only sell if there is a buyer for your shares - and the bid/offer spreads can be wide. .OFEX shares are regarded as "business assets" for CGT purposes in the UK.The OFEX website is www.ofex.com.
option
the investment , specified in article 83 of the Regulated Activities Order (Options), which is an option to acquire or dispose of:
(a) a designated investment (other than an option); or
(b) currency of the United Kingdom or of any other country or territory; or
(c) palladium, platinum, gold or silver; or
(d) an option to acquire or dispose of an option specified in (a), (b) or (c).
penny share
a readily realisable security in relation to which the bid-offer spread is 10 per cent or more of the offer price, but not:
(a) a government and public security ; or
(b) a share in a company quoted on The Financial Times Stock Exchange 100 Index; or
(c) a security issued by a company which, at the time that the firm deals or recommends to the client to deal in the investment, has a market capitalisation of £100 million or more (or its equivalent in any other currency at the relevant time).
private customer
a client who is not a market counterparty or an intermediate customer, including:
(a) an individual who is not a firm ;
(b) an overseas individual who is not an overseas financial services institution ;
safe custody investment
a designated investment , which is not the property of the firm, but for which the firm , or any nominee company controlled by the firm or by its associate, is accountable; which has been paid for in full by the client ; and which ceases to be a safe custody investment when the firm has disposed of it in accordance with a valid instruction.
settlement agent
a person with or through whom the firm effects settlement of UK -settled or foreign-settled transactions.
share
the investment , specified in article 76 of the Regulated Activities Order (Shares etc), which is in summary: a share or stock in the share capital of:
(a) any body corporate (wherever incorporated);
(b) any unincorporated body constituted under the law of a country or territory outside the United Kingdom .
stabilisation
any purchase or offer to purchase relevant securities, or any transaction in associated instruments equivalent thereto, by investment firms or credit institutions, which is undertaken in the context of a significant distribution of such relevant securities exclusively for supporting the market price of these relevant securities for a predetermined period of time, due to a selling pressure in such securities.
terms of business
a statement in a durable medium of the terms and conditions on which a firm will carry on a regulated activity with or for a client or retail customer.
unit
the investment, specified in article 81 of the Regulated Activities Order (Units in a collective investment scheme) and defined in section 237(2) of the Act (Other definitions)), which is the right or interest (however described) of the participants in a collective investment scheme; this includes:
(a) (in relation to an AUT) a unit representing the rights or interests of the unitholders in the AUT;
(b) (in relation to an ICVC) a share in the ICVC.
warrant
the investment, specified in article 79 of the Regulated Activities Order (Instruments giving entitlements to investments), which is in summary: a warrant or other instrument entitling the holder to subscribe for a share, debenture or government and public security.

What is a share?

FAQ