talking about the “strength” or“weakness” of a currency, since it may be easily misconstrued by others.
For example, you are going long USDJPY but are unsure so you decide to phoneup a dealer friend to ask for his opinion. He may tell you that in his opinion‘the yen is going to rise”. Is he talking about USDJPY going up or the Yenincreasing in value (USDJPY declining)? For this reason professionals have longgiven nicknames to the major currency pairs in order to clear up what they arediscussing:
Euro (EURUSD); Cable (GBPUSD);! Loonie (USDCAD); Swissy (USDCHF)Dollar- Yen (USDJPY)
If you ask someone their opinion on the Loonie, it is the USDCAD rate you areasking about, not the Canadian dollar itself. Things get even more complicated forFX operators when discussing bid and offered prices, since they only make sensewhen you know who is doing the bidding and the offering (a dealer’s bid and offerare the opposite of a client’s). However, thankfully this does not affect the averagetrader.
To communicate effectively with other FX professionals, a new trader shouldmake sure that he is well-versed in all of these terms, or risk costly misunderstand-ings. Also interesting is the way FX professionals interact over the phone whendealing. Traditionally, a trader may say “mine” when buying and “yours” whenselling. A conversation in a fast-moving market may go something like this:
Trader: Hi Frank, what’s your price on 10 (million) Euro (EURUSD)?Dealer: 55/56
'The sterling/dollar nickname comes from the trans-Atlantic cable that was used for a long time totransmit prices, and the USDCAD nickname actually comes from the Canadian Loon (a bird) picturedon the side of the one-dollar Canadian coin.180
Trader: Mine!
Dealer: Done 10 at 56Trader: How do you stand?Dealer: 56/58
Trade: Mine!
Dealer: Done 10 at 58Trader: How do you stand?Dealer: 60/65
Trader: Yours! Etc.
Beat the Forex DealerFX Glossary
 
Appreciation Describes a currency strengthening in response to market demandrather than by official action.
Ask Price Ask is the lowest price acceptable to the buyer.Back Office Settlement and related processes.
Bank Rate The rate at which a central bank is prepared to lend money to itsdomestic banking system.
Base Currency The currency in which the operating results of the bank or insti-tution are reported.
Base Rate A term used in the UK for the rate used by banks to calculate theinterest rate to borrowers. Top quality borrowers will pay a small amount overbase.
Basis Point One per cent of one per cent.Bear A person who believes that prices will decline.
Bid Price Bid is the highest price that the seller is offering for the particularcurrency at a particular moment; the difference between the ask and the bidprice is the spread. Together, the two prices constitute a quotation. The bid—askspread is stated as a percentage cost of transacting in the foreign.
Big Figure Refers normally to the first three digits of an exchange rate that dealerstreat as understood in quoting. For example, a quote of “30/40” on dollar markcould indicate a price of 1.2530/40.
BIS Bank of International Settlement.
Bretton Woods The site of the conference that in 1944 led to the establishment ofthe post-war foreign exchange system that remained intact until the early 1970s.The conference resulted in the formation of the IMF. The system fixed currenciesin a fixed exchange rate system with | % fluctuations of the currency to gold orthe dollar.182 Beat the Forex Dealer
Broker An agent who executes orders to buy and sell currencies and related instru-ments either for a commission or on a spread. Brokers are agents working oncommission and not principals or agents acting on their own account. In theforeign exchange market brokers tend to act as intermediaries between banksbringing buyers and sellers together for a commission paid by the initiator orby both parties. There are four or five major global brokers operating throughsubsidiaries, affiliates, and partners in many countries.
Bull A person who believes that prices will rise.Bull Market A market characterized by rising prices.
Cable A term used in the foreign exchange market for the US dollar/British poundrate.
Central Bank A central bank provides financial and banking services for a coun-try’s government and commercial banks. It implements the government’s mone-tary policy as well, by changing interest rates. The Reserve Bank of India is thecentral bank of India, which performs the role of maintaining orderly conditionsin the forex market by intervention through various instruments like cash reserveratio, bank rate, open market operations, and moralization.
Confirmation A memorandum to the other party describing all the relevant detailsof the transaction.
Contract An agreement to buy or sell a specified amount of a particular currencyor option for a specified month in the future.
Correspondent Bank A foreign bank’s representative who regularly performs ser-vices for the bank, which has no branch in the relevant centre, e.g. to facilitatethe transfer of funds. In the US this often occurs domestically due to interstatebanking restrictions.
Counterparty The customer or bank with which a foreign exchange deal is exe-cuted.
Cross Rate An exchange rate between two currencies, usually constructed fromthe individual exchange rates of the two currencies, as most currencies are quotedagainst the dollar.
Currency The type of money that a country uses. It can be traded for other cur-rencies on the foreign exchange market, so each currency has a value relative toanother.
Currency Basket Various weightings of other currencies grouped together in rela-tion to a basket currency (e.g. ECU or SDR). Sometimes used by currencies tofix their rate, often on a trade-weighted basket.
Deal Date The date on which a transaction is agreed upon.FX Glossary 183
 
Deal Ticket The primary method of recording the basic information relating to atransaction.
Dealer An individual or firm acting as a principal, rather than as an agent, in thepurchase and/or sale of securities. Dealers trade for their own account and risk.This is in contrast to brokers who trade only on behalf of their clients.
Deficit Shortfall in the balance of trade, balance of payments, or government bud-gets.
Delivery The settlement of a transaction by receipt or tender of a financial instru-ment or currency.
Delivery Date The date of maturity of a contract, when the final settlement of atransaction is made by exchanging the currencies. This date is more commonlyknown as the value date.
Details All the information required to finalize a foreign exchange transaction, i.e.name, rate, dates, and point of delivery.
Discount Less than the spot price example: forward discount.
EFT Electronic Fund Transfer.
EMS European Monetary System.
European Union The group formerly known as the European Community.
Exchange Rate Risk The potential loss that could be incurred from an adversemovement in exchange rates.
Exotic A less broadly traded currency.
Expiry Date The last day on which the holder of an option can exercise his rightto buy or sell the underlying security.
Fed The United States Federal Reserve. Federal Deposit Insurance CorporationMembership is compulsory for Federal Reserve members. The corporation haddeep involvement in the Savings and Loans crisis of the late 1980s.
Fixed Exchange Rate Official rate set by monetary authorities for one or morecurrencies. In practice, even fixed exchange rates are allowed to fluctuate betweendefinite upper and lower bands, leading to intervention by the central bank.
Flat/Square Where a client has not traded in that currency or where an earlierdeal is reversed, thereby creating a neutral (flat) position.
FOMC Federal Open Market Committee, the committee that sets money supplytargets in the US, which tend to be implemented through Fed Fund interest rates,etc.184 Beat the Forex Dealer
 
Foreign Exchange The purchase or sale of a currency against the sale or purchaseof another.
Forex An abbreviation of foreign exchange.
Forward Contract Sometimes used as synonym for “forward deal” or “future”.More specifically, for arrangements with the same effect as a forward dealbetween a bank and a customer.
Forward Points The interest rate differential between two currencies expressedin exchange rate points. The forward points are added to or subtracted from thespot rate to give the forward or outright rate (depending on whether the currencyis at a forward premium or discount).
Forward Rate The rate at which a foreign exchange contract is struck today forsettlement at a specified future date that is decided at the time of entering into thecontract. The decision to subtract or add points is determined by the differentialbetween the deposit rates for both currencies concerned in the transaction. Thebase currency with the higher interest rate is said to be at a discount to the lowerinterest rate quoted currency in the forward market. Therefore the forward pointsare subtracted from the spot rate. Similarly, the lower interest rate base currencyis said to be at a premium, and the forward points are added to the spot rate toobtain the forward rate.
Front Office The activities carried out by the dealer, normal trading activities.Fundamental Analysis Analysis based on economic and political factors.FX Foreign exchange.
GTC (“Good Till Cancelled”) An order left with a dealer to buy or sell at a fixedprice. The order remains in place until it is cancelled by the client.
Indicative Quote A market-maker’s price that is not firm.
Inflation Continued rise in the general price level in conjunction with a relateddrop in purchasing power. Sometimes referred to as an excessive movement insuch price levels.
Info Quote Rate given for information purposes only.
Interbank Rates The foreign exchange rates large international banks quote toother large international banks. Normally the public and other businesses do nothave access to these rates.
Interest Rate Risk The potential for losses arising from changes in interest rates.
Intervention Action by a central bank to effect the value of its currency by enteringthe market. In India the intervention by the Reserve Bank of India is confinedto the events of extreme volatility.FX Glossary 185
 
Kiwi Dealer slang for the New Zealand dollar.
Leading Indicators Statistics that are considered to precede changes in economicgrowth rates and total business activity, e.g. factory orders.
Liability In terms of foreign exchange, the obligation to deliver to a counterpartyan amount of currency either in respect of a balance sheet holding at a specifiedfuture date or in respect of an unmatured forward or spot transaction.
LIBOR (London Inter Bank Offer Rate) British Bankers’ Association averageof interbank offered rates for dollar deposits in the London market based onquotations at 16 major banks. Effective rate for contracts entered into two daysfrom the date appearing.
Limit Order An order to perform a deal at a superior rate to the current marketlevel. Can be removed on completion (filled) or cancelled at any time (pulled).
Margin The required initial deposit of collateral to enter into a position or foreignexchange trade. This is held as a deposit on any running contract.
Margin Call A demand for additional funds to cover positions.
Market Value Market value of a foreign exchange position at any time is theamount of the domestic currency that could be purchased at the then market ratein exchange for the amount of foreign currency to be delivered under the foreignexchange contract.
Maturity Date for settlement of the transaction, which is decided at the time ofentering into the contract.
Offer The rate at which a dealer is willing to sell the base currency.
One Cancels Other Order The execution of one order automatically cancels aprevious order; also referred to as OCO or “one cancels the other’.
Open Position Any deal that has not been settled by physical payment or reversedby an equal and opposite deal for the same value date. It can be termed as ahigh-risk, high- return proposition.
Outright Forward Foreign exchange transaction involving either the purchase orthe sale of a currency for settlement at a future date.
Over The Counter (OTC) A market conducted directly between dealers and prin-cipals via a telephone and computer network rather than a regulated exchangetrading floor. These markets have not been very popular because of the risksboth the parties face in case the other party fails to honor the contract. Theywere never part of the stock exchange since they were seen as “unofficial”.
Pip Also see “point”. The term used in the currency market to represent thesmallest incremental move an exchange rate can make. Depending on context,186 Beat the Forex Dealer
 
normally one basis point (0.0001 in the case of EUR/USD, GBD/USD, USD/CHFand 0.01 in the case of USD/JPY).
Point (1) 100th part of a percent, normally 10 000 of any spot rate. Movementof exchange rates are usually in terms of points. (2) One percent on an interestrate, e.g. from 8 to 9%. (3) Minimum fluctuation or smallest increment of pricemovement.
Position The netted total exposure in a given currency. A position can be eitherflat or square (no exposure), long (more currency bought than sold), or short(more currency sold than bought).
Range The difference between the highest and lowest price of a future recordedduring a given trading session.
Rate The price of one currency in terms of another.
Reserve Currency A currency held by a central bank on a permanent basis as astore of international liquidity; these are normally the dollar , euro, and sterling.
Resistance A price level at which the selling is expected to take place.
Revaluation Increase in the exchange rate of a currency as a result of officialaction.
Rollover Where the settlement of a deal is carried forward to another value datebased on the interest rate differential of the two currencies. Example: next day.
Selling Rate Rate at which a bank is willing to sell foreign currency.Settlement Actual physical exchange of one currency for another.
Settlement Date It means the business day specified for delivery of the currenciesbought and sold under a foreign exchange contract.
Short A market position where the client has sold a currency they do not alreadyown. Usually expressed in base currency terms.
Slippage The difference between the price a trader expects to be filled at and theprice they are actually filled at.
Spot (1) The most common foreign exchange transaction. (2) Spot refers to thebuying and selling of the currency where the settlement date is two businessdays forward.
Spot Price/Rate The price at which the currency is currently trading in the spotmarket.
Spread The difference between the bid and ask price of a currency.
Stable Market An active market that can absorb large sales or purchases of cur-rency without having any major impact on the interest rates.FX Glossary 187
 
Sterling British pound.
Stop Loss Order Order given to ensure that should your trade lose a certainpercentage, the position will be covered even though this involves taking a loss.Profit orders are less common.
Support Levels A price level at which the buying is expected to take place.
Swap The simultaneous purchase and sale of the same amount of a given currencyfor two different dates, against the sale and purchase of another. A swap can be aswap against a forward. In essence, swapping is somewhat similar to borrowingone currency and lending another for the same period. However, any rate ofreturn or cost of funds is expressed in the price differential between the twosides of the transaction.
SWIFT Society for Worldwide Inter-bank Financial Telecommunication is a clear-ing system for international trading.
Swissy Market slang for Swiss franc rate.
Technical Analysis The study of the price that reflects the supply and demandfactors of a currency. Common methods are flags, trend lines, spikes, bottoms,tops, pennants, patterns, and gaps.
Technical Correction An adjustment to price not based on market sentiment buttechnical factors such as volume and charting.
Tick A minimum change in price, up or down.Trade Date The date on which a trade occurs.Transaction Date The date on which a trade occurs.
Value Date Settlement date of a spot or forward contract. Also known as maturitydate.
Value Spot Normally settlement for two working days from the date the contractis entered into.
Value Today Transaction Transaction executed for same day settlement; some-times also referred to as “cash transaction”.
Volatility A measure of the amount by which an asset price is expected to fluctuateover a given period. Normally measured by the annual standard deviation ofdaily price changes (historic). Can also be implied from futures pricing, whichis referred to as implied volatility.
Whipsaw Dealer slang for a condition of a highly volatile market where a sharpprice movement is quickly followed by a sharp reversal.188 Beat the Forex Dealer
 
Working day A day on which the banks in a currency’s principal financial centreare open for business. For foreign exchange transactions, a working day onlyoccurs if the bank in both money centers are open for business.
Yard Dealer slang for a billion dollars.Trading Maxims
 
12-01-1900, NEW YORK TIMES, p. 8: If the Wall Street proverb, to the effect that“nothing is so timid as a million dollars, except two millions,” is true, the timidityof fifty or seventy-five millions may be assumed to represent abject terror of anyinnovations involving expense and presenting unknown difficulties. The bigger youbecome, the harder it is to trade.
12-27-1913, NEW YORK TIMES, p. 8: The subject being strictly sordid andmundane, it may be permissible to quote the Wall Street maxim that “everythingis in the price”. Everything is priced-in by the market.
03-14-1931, NEW YORK TIMES, p. 43: “Good times, good fellowship — hardtimes, hard faces” is a proverb brought to the Wall Street mind recurrently thesedays... A trader’s life... .
07-18-1959, NEW YORK TIMES, pg. 19: Lorillard introduced its long-heraldedmenthol filter cigarette and fell 1 3/8 on the Wall Street maxim to “sell on thenews”. News are anticipated and usually already priced-in by professionals, thusthere is no reason to take the price higher.
11-08-1969, NEW YORK TIMES, p. 47: The pyrotechnics in telephone and in theglamour-laden computer issues came from heavy buying by mutual funds, otherinstitutions and market traders following that old adage, “Don’t fight the tape”.Trade the price action. If the price is going up then demand must outstrip supply,irrespective of any outside news or backdrop. Always trade in the prevailingdirection.
03-05-1985, NEW YORK TIMES, p. C5: As they say in the corporate corridors,nobody ever got fired for buying IBM. Money managers protect their jobs aboveall else, even at the expense of performance.
6-17-1998, NIGHTLY BUSINESS REPORT: There’s an old Wall Street sayingthat cash is trash. The search for yield is constant.190 Beat the Forex Dealer
8-2-1998, FORBES MAGAZINE, p. 265: What’s been going on with Amazonstock is best explained by an old Wall Street maxim: “A stock and a company arenot always the same thing”. When emotions enter the markets, irrational thingshappen.
8-6-1998, CHRISTIAN SCIENCE MONITOR, p. 1: There is an old Wall Streetsaying that the stock market has anticipated eight of the last three recessions.Analysts are wrong more than they are right.
8-12-1998, WALL STREET JOURNAL EUROPE, p. UK7B: Mr Manley recallsan old Wall Street saying: “If you are going to panic, panic early”. When in doubt,get out!
9-21-1998, BUSINESS WEEK, p. 114: Grant, the newsletter editor, likes to quotea play-it-safe Wall Street maxim: “Never meet a margin call”. Never let a losingposition run away from you. Cut your losses short.
10-12-1998, RICHMOND TIMES-DISPATCH: Guy Chance, director of marketingstrategy at Scott & Stringfellow Inc., recalled an old Wall Street maxim duringa recent selling spree: “This is when money returns to its rightful owners”. The“smart money” always ends up on top.
4-11-1999, SOUTH CHINA MORNING POST, p. 3: It proves an old Wall Streetsaying — when you rob a whorehouse, take the piano player too, because no oneis entirely innocent. Money attracts sharks.
10-4-1999, SEATTLE POST_INTELLIGENCER, p. C3: As the Wall Street proverbsays: “You can’t eat relative performance”. You can’t be satisfied with beating yourpeers, you have to learn to make money in down times.
3-29-2000, YOMIURI SHIMBUN/DAILY YOMIURI: There is a Wall Streetmaxim that says a bullish market is born amid pessimism, grows up underskepticism, matures with optimism, and dies with euphoria. Most of the peopleare wrong most of the time.Bibliography
 
Coninx, Raymond G.F., Foreign Exchange Dealer’s Handbook, Third Edition,Woodhead-Faulkner Ltd, 1995.
Dewachter, H., Can Markov switching models replicate chartists profits in theforeign exchange market, Journal of Asset Management, March, 2005.
Galati, Melvin, Why has FX trading surged? Explaining the 2004 triannual survey,BIS, 2005.
Giddy, I.H., and Dufey, G., The Management of Foreign Exchange Risk, NYUStern, 1992.
Lefevre, Edwin, Reminiscences of a Stock Operator, John Wiley & Sons, Ltd,Reprint, 2004.
Luca, Cornelius, Trading in the Global Currency Markets, Prentice-Hall, 1995.Lukeman, Josh, The Market Maker’s Edge, McGraw-Hill, 2000.Marlowe, J., “Hedging Currency Risk with Options and Futures”, Thesis, 1999.
Murphy, John, Technical Analysis of the Futures Markets, Prentice-Hall Press,1986.
Sherden, William A., The Fortune Seller: The Big Business of Buying and SellingPredictions, John Wiley & Sons, Ltd, 1998.
Xin, H., Currency Overlay: A Practical Guide, Risk Books, 2003.CFTC Minimum FinanceRequirement
 
Title 17; Commodity and Securities ExchangesMinimum Financial and Related Reporting Requirements(selected parts)
§ 1.17 Minimum financial requirements for futures commission merchants andintroducing brokers.
(a)(1)(i) Except as provided in paragraph (a)(2)(i) of this section, each personregistered as a futures commission merchant must maintain adjusted net capitalequal to or in excess of the greatest of:
(A) $250,000;
(B) The futures commission merchant’s risk-based capital requirement computedas follows:
(1) Eight percent of the total risk margin requirement (as defined in §1.17(b)(8))for positions carried by the futures commission merchant in customer accounts (asdefined in §1.17(b)(7)), plus
(2) Four percent of the total risk margin requirement (as defined in §1.17(b)(8))for positions carried by the futures commission merchant in noncustomer accounts(as defined in §1.17(b)(4)).
(C) The amount of adjusted net capital required by a registered futures associationof which it is a member; or
(D) For securities brokers and dealers, the amount of net capital required by Rule15c3—1(a) of the Securities and Exchange Commission (17 CFR 240.15c3-1(a)).
(ii) Each person registered as a futures commission merchant engaged in solicitingor accepting orders and customer funds related thereto for the purchase or sale ofany commodity for future delivery or any commodity option on or subject to the194 Beat the Forex Dealer
 
rules of a registered derivatives transaction execution facility from any customerwho does not qualify as an “institutional customer” as defined in §1.3(g) must:
(A) Be a clearing member of a derivatives clearing organization and maintainnet capital in the amount of the greater of $20,000,000 or the amounts otherwisespecified in paragraph (a)(1)(i) of this section; or
(B) Receive orders on behalf of the customer from a commodity trading advisoracting in accordance with §4.32 of this chapter.
(iii) Except as provided in paragraph (a)(2) of this section, each person registeredas an introducing broker must maintain adjusted net capital equal to or in excessof the greatest of:
(A) $30,000;
(B) The amount of adjusted net capital required by a registered futures associationof which it is a member; or
(C) For securities brokers and dealers, the amount of net capital required by Rule15c3—1(a) of the Securities and Exchange Commission (17 CFR 240.15c3-1(a)).
(2)(i) The requirements of paragraph (a)(1) of this section shall not be applica-ble if the registrant is a member of a designated self-regulatory organization andconforms to minimum financial standards and related reporting requirements setby such designated self-regulatory organization in its bylaws, rules, regulations orresolutions approved by the Commission pursuant to section 4f(b) of the Act and§1.52.
(ii) The minimum requirements of paragraph (a)(1)(ili) of this section shall not beapplicable to an introducing broker which elects to meet the alternative adjusted netcapital requirement for introducing brokers by operation pursuant to a guaranteeagreement which meets the requirements set forth in §1.10(j). Such an introducingbroker shall be deemed to meet the adjusted net capital requirement under thissection so long as such agreement is binding and in full force and effect, and,if the introducing broker is also a securities broker or dealer, it maintains theamount of net capital required by Rule 15c3—1(a) of the Securities and ExchangeCommission (17 CFR 240.15c3—1(a)).
(3) No person applying for registration as a futures commission merchant or as anintroducing broker shall be so registered unless such person affirmatively demon-strates to the satisfaction of the National Futures Association that it complies withthe financial requirements of this section. Each registrant must be in compliancewith this section at all times and must be able to demonstrate such compliance tothe satisfaction of the Commission or the designated self-regulatory organization.
(4) A futures commission merchant who is not in compliance with this section,or is unable to demonstrate such compliance as required by paragraph (a)(3) ofthis section, must transfer all customer accounts and immediately cease doingbusiness as a futures commission merchant until such time as the firm is ableCFTC Minimum Finance Requirement 195
 
to demonstrate such compliance: Provided, however, The registrant may trade forliquidation purposes only unless otherwise directed by the Commission and/orthe designated self-regulatory organization: And, Provided further, That if suchregistrant immediately demonstrates to the satisfaction of the Commission or thedesignated self-regulatory organization the ability to achieve compliance, the Com-mission or the designated self-regulatory organization may in its discretion allowsuch registrant up to a maximum of 10 business days in which to achieve com-pliance without having to transfer accounts and cease doing business as requiredabove. Nothing in this paragraph (a)(4) shall be construed as preventing the Com-mission or the designated self-regulatory organization from taking action against aregistrant for non-compliance with any of the provisions of this section.
(5) An introducing broker who is not in compliance with this section, or is unableto demonstrate such compliance as required by paragraph (a)(3) of this section,must immediately cease doing business as an introducing broker until such time asthe registrant is able to demonstrate such compliance: Provided, however, That ifsuch registrant immediately demonstrates to the satisfaction of the Commission orthe designated self-regulatory organization the ability to achieve compliance, theCommission or the designated self-regulatory organization may in its discretionallow such registrant up to a maximum of 10 business days in which to achievecompliance without having to cease doing business as required above. If the intro-ducing broker is required to cease doing business in accordance with this paragraph(a)(5), the introducing broker must immediately notify each of its customers andthe futures commission merchants carrying the account of each customer that it hasceased doing business. Nothing in this paragraph (a)(5) shall be construed as pre-venting the Commission or the designated self-regulatory organization from takingaction against a registrant for non-compliance with any of the provisions of thissection.
(b) For the purposes of this section:
(1) Where the applicant or registrant has an asset or liability which is defined inSecurities Exchange Act Rule 15c3-1 (§240.15c3-—1 of this title) the inclusion orexclusion of all or part of such asset or liability for the computation of adjustednet capital shall be in accordance with §240.15c3-1 of this title, unless specificallystated otherwise in this section.
(2) Customer means customer (as defined in §1.3(k)), option customer (as definedin §1.3(jj) of this part and in §32.1(c) of this chapter) and includes a foreign futuresand foreign options customer (as defined in §30.1(c) of this chapter).
(3) Proprietary account means a commodity futures or options account carried onthe books of the applicant or registrant for the applicant or registrant itself, or forgeneral partners in the applicant or registrant.
(4) Noncustomer account means a commodity futures or option account carried onthe books of the applicant or registrant which is either:196 Beat the Forex Dealer
 
(i) An account that is not included in the definition of customer (as defined in§1.17(b)(2)) or proprietary account (as defined in §1.17(b)(3)), or
(ii) An account for a foreign-domiciled person trading futures or options on aforeign board of trade, and such account is a proprietary account as defined in§1.3(y) of this title, but is not a proprietary account as defined in §1.17(b)(3).
(5) Clearing organization means clearing organization (as defined in §1.3(d)) andincludes a clearing organization of any board of trade.
(6) Business day means any day other than a Sunday, Saturday, or holiday.
(7) Customer account means a commodity futures or option account carried on thebooks of the applicant or registrant which is either:
(i) An account that is included in the definition of customer (as defined in§1.17(b)(2)), or
(ii) An account for a foreign-domiciled person trading on a foreign board of trade,where such account for the foreign-domiciled person is not a proprietary account(as defined in §1.17(b)(3)) or a noncustomer account (as defined in §1.17(b)(4)(ii)).
(8) Risk margin for an account means the level of maintenance margin or perfor-mance bond that the futures commission merchant is required to collect under therules of an exchange, or the rules of a clearing organization if the level of marginto be collected is not determined by the rules of an exchange, from the owner ofa customer account or noncustomer account, subject to the following:
(i) Risk margin does not include the equity component of short or long optionpositions maintained in an account;
(ii) The maintenance margin or performance bond requirement associated witha long option position may be excluded from risk margin to the extent that thevalue of such long option position