Finance Careers Glossary M to W: Roles and Terms (plain-English definitions)

About this page

Finance is full of terms that sound simple until you have to use them. This page is a plain-English glossary for Finance Careers, covering entries such as Market infrastructure institutions, Master data, Material weakness, Middle office, Minimum transfer amount (MTA), each with a short definition and a pointer to the part of the volume where it is explained.

Keep it open while you read, or use it to settle an argument about what a term really means. Every entry is written to stand on its own, with no jargon left undefined, and the part number beside it tells you where to read more. Use it as a quick reference whenever a term trips you up.

A sample of the entries (63 terms on the full page)

Market infrastructure institutions — SEBI’s collective term for stock exchanges, clearing corporations and depositories; also MIIs. (Part 0 India Lens)

Material weakness — A deficiency, or combination, in internal control over financial reporting giving a reasonable possibility that a material misstatement will not be prevented or detected on time (F.1).

Minimum transfer amount (MTA) — The smallest margin call a CSA requires to be paid; smaller amounts are carried until they grow past it (E.5).

Money transmitter license — A US state license required for a non-bank that receives and sends money for customers; most payments companies need one in each state where they operate. (B.8)

Net leverage — Net debt divided by trailing twelve-month EBITDA; a common loan covenant tested each quarter (F.2).

Net stable funding ratio (NSFR) — Available stable funding divided by required stable funding; must be at least 100% (E.9).

Nostro — A firm’s own account held at a correspondent bank, usually in a foreign currency; nostro reconciliation matches it to the bank statement (E.2).

Paid-up share capital — The amount shareholders have actually paid to the company for its issued shares; Indian company-law thresholds are set on it. (D.6)

Performance obligation — A promise in a customer contract to transfer a distinct good or service; ASC 606 recognizes revenue as each one is satisfied (F.4).

Plant controller — The finance lead at a factory or distribution site, owning standard costs, inventory valuation and manufacturing variances. (B.1)

Principal financial officer — The SEC’s term for the officer who signs financial certifications and filings, usually the CFO; Form 8-K reports their departure or appointment (A.1, A.3).

Quiet period — The period, at least from filing a registration statement until the SEC declares it effective, when an issuer’s offering communications are restricted (F.3).

Registrar and transfer agent — In India, the SEBI-registered firm that keeps an investor register and processes purchases, redemptions and payouts (E.8).

Requisite service period — Under ASC 718, the period over which an employee must work to earn an award, over which its grant-date fair value is expensed (C.10).

Risk and Control Self-Assessment (RCSA) — A business unit’s rating of its own risks and controls, challenged by the risk function. (C.7)

Risk-adjusted return on capital (RAROC) — Revenue minus expected loss and operating cost, divided by the capital allocated; compared with a hurdle rate to judge a loan or relationship (E.11).

Rule 12b-1 fee — A fee paid out of a US mutual fund’s assets to cover distribution costs, permitted under SEC Rule 12b-1. (B.7)

Section 906 — The Sarbanes-Oxley provision (18 U.S.C. §1350) requiring a CEO and CFO statement with each periodic report, with criminal penalties for a false one (A.1).

Shadow NAV — A fund manager’s own parallel calculation of net asset value, used to check the administrator’s official NAV. (B.3)

Side letter — An agreement outside the main contract that changes its terms, such as an acceptance clause or free services; it is part of the contract for revenue recognition (F.4).

Spreading — Entering a borrower’s financial statements into a lender’s standard template, adjusted for one-off items, so ratios are comparable (E.10).

Statutory accounting — For US insurers, the NAIC’s solvency-focused accounting rules used in regulatory filings. (B.4)

Stress capital buffer — A US capital requirement for large bank holding companies set from the results of the Federal Reserve’s supervisory stress test; the test runs every year for the largest firms and every other year for Category IV firms. (B.2)

Take rate — The share of payment volume a payments company keeps as revenue, for example $3.5 million on $500 million of volume, or 70 basis points. (B.8)

Theoretical ex-rights price (TERP) — The expected share price after a rights issue: the value of existing shares plus subscription cash, divided by the new share count (E.3).

Tolerable deviation rate — The highest rate of control failures a tester will accept and still rely on the control (G.3).