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Currency Exchange Glossary

Appreciation

Increase in value recorded by the currency of one country compared to the currency of another country.

Ask price

The ask price is the price at which the dealer is willing to sell a financial instrument. For those trading in the markets, it is the price at which you can buy a financial instrument at a given moment.


Balance of payments

Statistical-accounting document that records the exchange of goods and services with foreign countries, primary income (cross-border flows of labor and capital income), secondary income (current transfers), capital transfers, and capital movements (financial account) during a certain period of time. Switzerland's balance of payments, compiled by the Swiss National Bank (SNB), consists of three sections: the current account, capital transfers, and financial account.

Bank transfer

A bank transfer is a banking operation in which a sum of money is transferred from one individual or legal entity (the payer) to another (the beneficiary). It is usually completed by debiting and crediting the money to their respective current accounts. It is done by providing the beneficiary's bank details and account number. It can be free of charge or subject to a fee.

Bank transfer

A bank transfer is a banking operation in which a sum of money is transferred from one individual or legal entity (the payer) to another (the beneficiary). It is usually completed by debiting and crediting the money to their respective current accounts. It is done by providing the beneficiary's bank details and account number. It can be free of charge or subject to a fee.

Banknote

Paper currency printed and put into circulation by the central bank of each country or union of countries.

Beneficial owner

Economically entitled is a phrase that expresses the same concept as the term "Beneficiary in fact" (or economic beneficiary) as defined in this glossary.

Beneficial owner

By "beneficiary in fact" (or economic beneficiary), we mean an individual or entity that enjoys the economic benefits and rights associated with the ownership of a financial asset, such as stocks, bonds, or other investments, even if the legal title or ownership of the asset may be held by another party, typically a nominee or custodian. The beneficiary in fact is the party that ultimately controls and receives the income, dividends, interest, or capital gains generated by the asset.

Beneficiary

In the case of bank transfers, it is normally the one who receives the transaction in their account, whether it is with a bank or another payment service provider.

Bid price

The bid price (denaro) is the price at which the dealer is willing to buy a financial instrument. For those trading in the markets, it is the price at which you can sell a financial instrument at a given moment.

Border worker

Cross-border workers are foreign residents in the foreign border area who carry out gainful activities within the Swiss border area.

Border zones

Border areas are considered to be the regions designated as such in agreements on cross-border workers concluded by Switzerland with neighboring states.

Broker

A broker is a person or company that undertakes financial transactions on behalf of third parties. This professional deals with various types of investments, such as shares, currency exchanges (forex), real estate and insurance. He usually charges a commission for each transaction. Some brokers offer advice and provide market information, suggesting which investments might be most profitable to buy or sell. This may vary depending on whether they are a complete broker or are limited to the execution of orders. However, it is important to emphasise that a broker can only give advice and make financial transactions on behalf of others after having obtained the explicit consent of the client.


Cash

Cash money refers to the means of payment consisting of coins and banknotes, which is universally and mandatorily accepted. Carrying large amounts of banknotes or coins can expose one to the risk of loss or theft. Unlike other payment methods, cash does not have systems to verify ownership, and it cannot be blocked after a theft.

Commission

Commission is a transaction cost related to the initiation, execution, and monitoring of commercial transactions. Every commercial transaction involves transaction costs for both the seller and the buyer. In the case of currency exchange, the commission can be fixed or a percentage of the transaction value.

Currency

Currency is a generic term for circulating coins and the fiduciary securities representing them. It is mostly used with attributes like national or foreign. It serves as a means of exchange for goods and/or services and as a common measure of value.

Currency

Currency is a generic term used to refer to the coins in circulation and the fiduciary instruments that represent them. It is mostly used with attributes like national or foreign, for example. It serves as a medium of exchange for goods and/or services and as a common measure of values.

Currency conversion

The term "currency conversion" is synonymous with "currency exchange", as described in this glossary.

Currency converter

A currency converter is a tool that allows you to check at any time the exchange rates for currencies from around the world. Normally, the displayed data is in real-time.

Currency intervention

The purchase or sale of national currency against one or more foreign currencies by a central bank with the intention of strengthening or weakening its own currency and influencing the exchange rate.

Currency pair

A currency pair, or currency-pair in English, is a financial instrument composed of two currencies that is traded in the currency market and allows for buying and/or selling operations with respect to the two currencies considered in the pair. The price at which each currency pair is traded is the exchange rate between the two.

Customer profile

The customer profile is a summary document that contains all the personal and financial data of a client or counterparty of a financial intermediary.


Dealer

A dealer is defined as a financial intermediary operating in the investment services sector, on the supply side, and operating directly with customers. Dealers carry out transactions of financial instruments on their own behalf, first by acquiring instruments that will be part of their portfolio (inventory), and then selling them to generate a profit.

Dealer

is a person or company that buys and sells securities on its own account, either directly or through an intermediary. The dealer acts as a principal in trading on his own account, unlike a broker who acts as an order-executing agent on behalf of his clients. Dealers are important figures in the market as they help create liquidity in the financial markets. They place orders in the market, underwrite securities and provide investment services to investors. This means that dealers are the market makers who provide the bid and ask quotes you see when you look up the price of a security in the over-the-counter market.

Depreciation

Currency depreciation refers to the decrease in value of a country's currency compared to the currency of another country.


Exchange

Currency exchange is the operation of converting (or swapping) a certain number of units of currency into another currency. The exchange rate is the ratio at which one currency can be exchanged for another, and it depends on the market value of the currencies in the international market.

Exchange rate

The exchange rate is the ratio at which one currency can be exchanged for another. It depends on the market value of currencies in the international market.


Fiduciary Services Act

The Federal Act on the Exercise of Fiduciary Professions is a Swiss federal law designed to regulate and discipline the exercise of fiduciary professions (money changers, trust accountants, real estate trustees) in Switzerland.

Financial intermediary

A financial intermediary is a business that engages in the professional provision of financial or investment services to the public. The category of Financial Intermediaries includes banks, trust companies, stockbrokers, securities dealers, asset management companies, and investment companies.

Financial Services Act

The Swiss Federal Act on Financial Services (FinSA) is a Swiss law that contains regulations for the provision of financial services and financial instruments, customer protection, and the creation of uniform competitive conditions for financial intermediaries.

FINMA

The Swiss Financial Market Supervisory Authority (FINMA) is responsible for the supervision of banks, insurance companies, stock exchanges, securities dealers, collective investment schemes, and insurance intermediaries. As an independent supervisory authority, its objective is to protect creditors, investors, and policyholders, as well as to safeguard the functioning of financial markets.

Foreign currency

Foreign currency is the currency that has legal tender in a specific foreign country or state and is used in international trade.

Forex

The Foreign Exchange Market (Forex or FX) is the term that identifies the global electronic market for the trading of international currencies and currency derivatives. It has no physical location but is the largest and most liquid market in the world, with trillions traded daily.

Form A

Form A is the form in which a client/counterparty of a financial intermediary specifies the economically entitled party to the equity securities handled during the business relationship. It is used when the client/counterparty is an individual.

Form K

Form K is the form in which a client/counterparty of a financial intermediary specifies the controlling party for unlisted legal entities and partnerships entering into a business relationship with the financial intermediary.

Forward exchange transaction

A forward foreign exchange transaction is a foreign exchange operation that involves the exchange of two currencies on a future date at a predetermined exchange rate at the time of the transaction.

Free currency

A freely convertible currency is a national currency for which the use in international transactions is allowed and regulated.


Inflation rate

A prolonged increase in the general price level, which corresponds to a loss of purchasing power of the currency.

Institutional client

Institutional clientele typically refers to: banks, insurance companies, central banks, national or supranational public entities.

Interbank exchange rate

Exchange price at which banks and other financial institutions exchange currencies with each other. This rate is used as a benchmark for international financial transactions and represents the relative reference value of one currency against another at a given point in time.
Banks use the interbank exchange rate as a basis for determining the exchange rates they offer their customers. It is important to note that the interbank exchange rate may differ from the exchange rates offered to the public, as banks often charge fees or margins to cover costs and make a profit on currency transactions. On the foreign exchange market, the interbank rate can thus be defined as a 'wholesale' price, usually valid for transactions of EUR 100,000 or more or equivalent.


Lloyd's Insurance

commonly known as Lloyd's, is a British insurance corporation that originated in the late 17th century, located in the heart of the financial district of the City of London.
Initially, shipowners and businessmen gathered at the café of Edward Lloyd, known as Lloyd's Coffee House, located near the River Thames in London, to insure his ships. Today, it is recognized as one of the most important global insurance markets and commonly identified as "The Lloyd's".
The Lloyd's company does not underwrite insurance policies directly but entrusts this responsibility to its members. It operates as a market regulator establishing guidelines under which members can operate and provide centralized services to other affiliated operators. The key players at Lloyd's can be divided into two categories: the members, known as underwriters, who provide the capital, and the agents, brokers and other professionals who assist members, assess risks and represent external clients.


Market maker

A market maker is a financial intermediary that participates in one or more markets (currency, stocks, commodities, etc.) by ensuring the ability for investors to trade financial instruments at a fair price. Normally, a market maker purchases financial instruments from those who want to sell them and resells the same financial instruments to those who want to buy them.

Mark-up

The markup applied by any dealer in goods and services corresponds to the amount added to the cost of the goods/services offered to cover overhead expenses and generate a profit. In the case of a currency changer, it corresponds to a percentage added to the exchange rate offered to customers.

Money changer

A Money Changer or Currency Exchange Operator is a person who professionally engages in the currency exchange activity to make a profit.

Money Laundering Act

The Federal Act on Combating Money Laundering and Terrorist Financing (AML), also known as the Federal Act on Combating Money Laundering and Terrorist Financing, is a Swiss federal law designed to combat money laundering by requiring financial intermediaries to be vigilant about the origin of the funds they handle.


National currency

The national currency is the legal tender in a specific state.


OTP (one-time password)

OTP (One-Time Password) is an authentication service designed to protect your payments and online transactions.

Over-the-counter

An OTC (Over-the-Counter) transaction refers to a trade or transaction that occurs directly between two parties, often facilitated by a dealer network rather than through a centralized exchange. In an OTC trade, the buying and selling of financial instruments, such as stocks, bonds, commodities, or derivatives, take place directly between the buyer and the seller, outside the scope of a formal exchange.
These transactions are typically conducted electronically or via phone and are characterized by being less regulated compared to trades that occur on formal exchanges. OTC transactions offer flexibility in terms of negotiation, pricing, and contract terms, but they may also involve higher risks due to the lack of transparency and standardized regulations compared to exchange-traded transactions.


Private client

Private clientele is defined as the customer segment that cannot be classified as professional clientele. Essentially, it consists of ordinary savers who turn to financial intermediaries to make their investments or to receive financial services.

Professional client

A professional client is an entity that possesses the experience, knowledge, and expertise necessary to make informed investment decisions and evaluate the risks they undertake. This category normally includes legal entities but also individuals under certain conditions.


Quotations

Quotations refer to the most recent selling price of a stock, bond, or any other traded asset, such as currencies.


SARON rate

The Guaranteed Overnight Credit Rate, acronym SARON (Swiss Average Rate Overnight), is part of the Swiss Reference Rates. It is based on the most liquid segment of the Swiss franc money market and is calculated using actual transactions and binding quotes from the interbank market for repo transactions. SARON is administered by SIX Index SA. In recent years, it has gained increasing importance as a reference rate.

Self-regulatory organizations (SROs)

SROs are the so-called Self-Regulatory Bodies. They are private law bodies responsible for supervising the activities of Swiss financial intermediaries and ensuring that they meet the diligence obligations stemming from the Anti-Money Laundering Act (AML).

Sender (ordering party)

In the case of bank transfers, it is usually the one who gives the order to transfer a certain sum of money to their bank or payment service provider, in favor of a third party, the so-called recipient.

SEPA Instant payment

SEPA Instant payment, or more precisely, SEPA Instant credit transfer, is a type of electronic money transfer available within the SEPA area. It is available 24 hours a day, 7 days a week, and takes no more than 10 seconds for the receiving payment service provider (PSP) to receive it and make it available to its customer.

SEPA payment

The payment or SEPA transfer is a tool with which you can transfer a sum of money, typically from one bank account to another within the SEPA area.

Single Euro Payments Area (SEPA)

SEPA (Single Euro Payments Area) is an area where all euro-denominated transactions will be conducted with consistent technical standards, transparent and guaranteed service levels, and pricing criteria. The SEPA area includes the 27 European Union countries, as well as Iceland, Liechtenstein, Norway, and Switzerland. The payment instruments within the SEPA area are and will be bank transfers, direct debits, electronic money, and cash. Checks are excluded.

Spot exchange transaction

A spot foreign exchange transaction is a foreign exchange operation involving the immediate exchange of two currencies at the current exchange rate.

Spread

In trading, the spread is the difference between the buying price (ask) and the selling price (bid) quoted by the market. It is an essential element for currency trading because it determines the price that will be offered to customers.

Strong currency

In general, a strong currency refers to that of countries with a positive balance of payments. A strong currency tends to appreciate compared to other currencies in the long term.

Swiss Interbank Clearing (SIC) or Swiss National Payment

The Swiss Interbank Clearing (SIC) payment system is at the heart of financial transfers in Switzerland. Since its activation on 10 June 1987, its operational management has been entrusted to SIX Interbank Clearing Ltd (SIC Ltd), on behalf of the Swiss National Bank (SNB). The main entities involved in the system include local banks and other players in the financial landscape. In addition to handling large transactions, SIC also settles smaller payments, such as fund transfers for financial services (credit transfers, card transactions, direct debits, and the like). Since its launch, the SIC system has grown in importance, both in terms of transaction volume and settled value, becoming a fundamental pillar of the Swiss financial system.

Swiss National Bank (SNB) policy rate

The interest rate that the National Bank sets for the implementation of its monetary policy, aiming to keep short-term rates on secured money market loans in Swiss francs close to it. Among these, the most significant today is SARON.


Value date

The value date in financial transactions indicates the day when the sums will actually be available to the beneficiary of each transaction. It is important because, for example, if the balance of a current account is positive on a value date, the account holder can use those funds on the same day. In financial markets, it is common for the indicated value date to be one or more days after the contract is signed or the transaction is authorized.


Weak currency

A weak currency is typically a currency that experiences frequent fluctuations in its value compared to other currencies and tends to devalue over the long term. This long-term devaluation is often attributed to deficits in the balance of payments of the country or countries associated with that currency.


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