Contango Charge

Contango Charge

Contango, a charge paid by a buyer or seller of securities to continue a transaction by postponing a transfer. The first day after the ending of a Stock Exchange account is 'Contango' day, on which speculators who do not wish to transfer securities may postpone the handing over. For example, if a bull's securities have not risen during the account as expected, he may wish to carry over the bargain into the next settlement. Normally bull contango applies, with bears in effect lending bulls money by not delivering the security sold. When 'uncovered' bears with no goods to deliver outweigh bulls, so that bulls are technically lending securities to bears, there is said to be backwardation. The sum of money paid to bulls by bears for this privilege is also known as backwardation.

Continuation, another name for Contango.

Contracting Out, See Disintegration; Pension; Trade Union.

Conversion, replacement of a loan or security by another carrying a smaller rate of interest. During the cheap money period organized by the late Lord Dalton after World War II, holders of British Government securities were asked to convert them into new loans at lower interest rates or receive their market value in cash.

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