Glossary of Financial Terms starting with Alphabet ‘R’

Glossary of ‘Financial Terms’ starting with Alphabet ‘R’, i.e. ‘Meaning’ or ‘Definition’ of Common and Unusual terms relating to Accounting, Auditing, Company Law, GST, Income Tax, Investments, etc., along with the ‘Context’ in which they are used.

Radar Alter (U.S)

Close watch by a company’s top executive on trading their company’s stock. The objective is to detect any unusual amount of buying which might indicate that some one is attempting to acquire a chunk of the stock in anticipation of a takeover attempt.

Random Walk Theory

Claims that a stock’s past price action is no guide to future prices because prices move randomly, not in a pattern. Random walk theoreticians would sneer at the idea that because a stock has been moving up during the last few weeks it is likely to continue moving up.

Real Time Gross Settlement (RTGS)

Concept designed to achieve sound risk management in the settlement of interbank payments. Transactions are settled across accounts held at the Central Bank on a continuous gross basis where settlement is immediate, final and irrevocable.

Record Date

A date on which the records of a company are closed for the purpose of determining the stockholders to whom dividends, proxies rights etc., are to be sent.

Red Herring

A preliminary prospectus filed with the Securities and Exchange Commission in the United States in order to test the market’s reaction to a proposed new issue of securities. In Indian scenario, Red Herring is a draft prospectus which is used in book built issues. It contains all disclosures except the price and is used for testing the market reaction to the proposed issue.

Redemption Price

The price at which a bond is redeemed.

Registered Bonds

A bond which is registered in the books of the company in the name of the owner.

Registrar to an issue

The person appointed by a body corporate or any person or group of persons to carry on the activities of collecting applications from investors in respect of an issue; keeping a proper record of applications and monies received from investors or paid to the seller of the securities and assisting body corporate or person or group of persons in- determining the basis of allotment of securities in consultation with the stock exchange; finalising of the list of persons entitled to allotment of securities; processing and despatching allotment letters, refund orders or certificates and other related documents in respect of the issue.

Regulation T/ Regulation U (U.S)

Two Federal Board regulations controlling respectively, the amount of credit a broker or a bank can extend to a client to buy securities. During recent years, under Regulation T (applying to Brokers), the Federal Reserve Board has set margin requirements on most stock at 50 per cent, meaning that the broker can lend a client no more than 50 per cent of the stocks he wishes to purchase. Regulation U applies in similar manner to banks.

Regulatory arbitrage

A financial contract or a series of transactions undertaken, entirely or in part, because the transaction(s) enable(s) one or more of the counterparties to accomplish a financial or operating objective which is unavailable to them directly because of regulatory obstacles.

Rematerialisation

The process of converting electronic holdings into physical securities through a Depository Participant.

REPO – Repurchase Agreement

Repo is one of the mechanisms of borrowing (against placing of Government security as collateral) at a transaction value equivalent to the market rate of the security as on the date on which the transaction is made, at an agreed rate of interest/ tenure, which will provide the lender an extremely low risk return. The underlying security is though transferred from borrower to the lender, however the risk/ rewards related to such security continue to remain with the lender of the security (i.e. the borrower under the finance arrangement). You can also refer the term ‘Reverse Repo’ below.

Repurchase price

The price or net asset value at which an open-ended scheme purchases or redeems its units from the unit holders. It may include exit load, if applicable.

Reverse book building

Reverse book building is similar to the process of book building, which is aimed at securing the optimum price for a company’s share. In reverse book building the investors’ aim is to sell the shares to exit the company.

Reverse repo

Reverse Repo is a mechanisms of lending money (against receipt of Government security as collateral) at a transaction value equivalent to the market rate of the security as on the date on which the transaction is made, at an agreed rate of interest/ tenure, i.e. purchase of securities with an agreement to resell them at a higher price at a specific future date. This is essentially just a loan of the security at a specific rate. Also called reverse repo (repurchase agreement). You can also refer the term ‘Repo – Repurchase Agreement’ above.

Rigged Market

Manipulation of share price to attract buyers and sellers to the riggers advantage.

Rights Issue/ Rights Shares

The issue of new securities to existing shareholders in a fixed ratio to those already held.

Rolling settlement

The practice on many stock markets of settling a transaction a fixed number of days after the trade is agreed.

Ruling Price

The current market price of a security.

Run

A run involves a person creating activity in a security by successively buying or selling that security. The intention is that the increased activity would, in case where the person is buying, attract others to buy and push up the price. At that point, those organizing the run would then attempt to sell out at a financial gain. This is sometimes known as “pumping and dumping.”

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