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Glossary of Investment Terms: L

Ladder
Dealers analysis of the forward book or deposit book showing every existing deal by maturity date, and the net position at each future date arising.

Lagging Indicator
A measure of economic activity which tends to change after change has occurred in the overall economy e.g. CPI.

Lapsed Rights
Rights for which call payments have not been made by he acceptance date.

Last Trading Day
The day on which trading ceases for an expiring contract.

Lay Off
To carry out a transaction in the market to offset a previous transaction and return to a square position.

Leading Indicators
Statistic that are considered to precede changes in economic growth rates and total business activity, e.g. factory orders.

Leads and Lags   
The effect on foreign trade payments of an anticipated move in the exchange rate, normally a devaluation. Then payment of imports is faster and export receipts is slowed down.

Left-hand Side
Taking the left hand side of a two way quote i.e. selling the quoted currency. See Right-hand Side.

Leverage
In options terminology, this expresses the disproportionately large change in the premium in terms of the relative price movement of the underlying instrument.

Liability
In terms of foreign exchange , the obligation to deliver to a counterparty an amount of currency either in respect of a balance sheet holding at a specified future date or in respect of an un-matured forward or spot transaction.

LIBOR
The London Interbank Offered Rate, the rate charged by one bank to another for lending money.

Life of Contract
The period between the beginning of trading in a particular future and the expiration of trading.

LIFFE
London International Financial Futures Exchange

Limit Down
The maximum price decline from the previous trading day's settlement price permitted in one trading session.

Limit Move
A price that has advanced or declined the permissible limit permitted during one trading session.

Limit Order
An order to buy or sell a specified amount of a security at a specified price or better.

Limit Up
The maximum price advance from the previous trading day's settlement price permitted in one trading session.

Limit
(1) The maximum price fluctuation permitted by an exchange from the previous session's settlement price for a given contract. (2) In international banking the limit a bank is willing to lend in a country. (3) The amount that one bank is prepared to trade with another. (4) The amount that a dealer is permitted to trade in a given currency.

Limited Convertibility
When residents of a country are prohibited from buying other currencies even though non-residents may be completely free to buy or sell the national currency.

Lines
An arrangement by which a bank agrees to lend to the line holder during some specified period any amount up to the full amount of the line.

Liquidation
Any transaction that offsets or closes out a previously established position.

Liquidity
The ability of a market to accept large transactions.

Local
A futures trader who normally trades on an exchange on his/her own account.

Locked Market
A market is locked when the bid price equals the asked price.

Long Dated Shorts
A forward purchase and sale with a brief uncovered position between them. This may also be referred to as long short dates.

Long
The holding of an excess of a particular currency .

Long Hedge
The purchase of futures contracts for price protection purposes, as a defensive position against an increase in cash prices, or falling interest rates.

Lot
Unit to measure the amount of the deal. The value of the deal always corresponds to an integer number of lots.