Forex glossary of terms
Forex glossary - I
ICCH - International Commodities Clearing House Limited, a clearing house based in London operating world wide for many futures markets.
IFEMA - International Foreign Exchange Master Agreement.
IMF - International Monetary Fund, established in 1946 to provide international liquidity on a short and medium term and encourage liberalization of exchange rates. The IMF helps its members to tide over the balance of payments problems with supplying the necessary loans.
IMM - International Monetary Market part of the Chicago Mercantile Exchange that lists a number of currency and financial futures Implied volatilityA measurement of the market's expected price range of the underlying currency futures based on the traded option premiums.
Implied Rates - The interest rate determined by calculating the difference between spot and forward rates.
Implied volatility - See Volatility Inconvertible Currency - Currency which cannot be exchanged for other currencies either because it is forbidden by the foreign exchange regulations or the currency witnesses extreme volatility that it is not percieved to be a safe haven for parking the funds.
Indicative Quote - A market-maker's price which is not firm.
Indirect quote - See reciprocal currency.
Inflation - Continued rise in the general price level in conjunction with a related drop in purchasing power. Sometimes referred to as an excessive movement in such price levels.
Info Quote - Rate given for information purposes only.
Initial Margin - The percentage of the price of a security that is required for the initial deposit to enter into a position. The Federal Reserve Board requires a minimum of 50% initial margin. For futures contracts, the market determines the initial margin.
Initial performance bond - The funds required when a futures position (or a short options on futures position) is opened. Previously referred to as initial margin. See Performance Bond.
Interbank Rates - The forex rates large international banks quote to other large international banks. Normally the public and other businesses do not have access to these rates.
Inter-commodity spread - A spread trade involving the same month of different but related futures contracts.
Interest Parity - Theory that says that the difference in interest rates across countries should be equal to the difference between the forward and spot rate.
Interest Rate Risk - The potential for losses arising from changes in interest rates Interest Rate Swaps - An agreement to exchange interest rate exposures from floating to fixed or vice versa. There is no swap of the principal. The principal amount is notional as at the end of the tenure only cash flows related with the interest payments (whether payment or reciept) are exchanged.
Interest-Rate Swap Points - The interest rate can be determined through the difference in the bid and offer price of an exchange rate. If you are looking at the EUR/USD exchange rate and the offer price is higher than the bid price, than Europe's interest rates are higher than US interest rates.
Intermarket Analysis - An analysis of an underlying asset that incorporates examinations of various markets. Namely, four markets are examined - currencies, commodities, stocks, and bonds. Intermarket analysis is centered on the idea that the four markets are correlated.
Inter-market spread - A spread trade involving same or related commodities at different exchanges. Also called an inter-exchange spread.
Intervention - Action by a central bank to effect the value of its currency by entering the market. In India the intervention by Reserve Bank of India is confined to the events of extreme volatility.
In-the-money - A call option with a strike price less than the underlying futures price. A put option with a strike price greater than the underlying futures price.
Intra Day Limit - Limit set by bank management on the size of each dealer's Intra Day Position.
Intra Day Position - Open positions run by a dealer within the day. Usually squared by the close.
Intra-market spread - A spread trade involving different contract months of the same commodity. Also called an inter-delivery spread.
Intrinsic value - The relationship of an option's in-the-money strike price to the current futures price. For a put - Strike Price - Futures Price. For a call - Futures Price - Strike Price.
Introducing broker (IB) - A firm or person engaged in soliciting or accepting and handling orders for the purchase or sale of futures contracts, subject to the rules of a futures exchange, but not in accepting any money or securities to margin any resulting trades or contracts. The IB is associated with a correspondent futures commission merchant and must be licensed by the CFTC.
IOM - Index and Options Market part of the Chicago Mercantile Exchange.
IPI - Industrial Production Index. A coincident indicator measuring physical output of manufacturing, mining and utilities.
ISDA (International Securities Dealers Association) - Organization which foreign currency exchange banks have formed to regulate inter-bank markets and exchanges.
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