Proliferation Of Acronyms In The Investment WorldAs financial products and investment trading become more highly specialized and digitized, the growth in acronyms seems to overwhelm the underlying items of description.
For example, home mortgages get packaged and sold as CMOs (collateralized mortgage obligations). Yet CMOs are only one type of CDO (collateralized debt obligation).
Often described as financial abbreviations, the list is long and never-ending. It includes ARMs, CDs, ETFs, MMKTs, REITs, TSAs (no, not that TSA), UITs, etc.
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Even individual stocks have their own trading symbols, such as BA (Boeing), AAPL (Apple), T (AT&T), TSLA (Tesla).
BANKING AND CORPORATE ACRONYMS
The banking world has its own terms of description. They include AIR, APR, EFT (not to be confused with ETF), FDIC.
Others terms of note include CAGR, CAPEX, COB, EPS, LLC, MTD, NAV, NDA, P&L, P/E, ROA, ROI, ROIC, RONA, ROS, SIV, and TSR.
Also, there are cute descriptive terms to describe various products. Some of these are general (strips and spreads); others are more specific (TGREs, pronounced ‘tigers’; and SPDRs, pronounced ‘spiders’).
And if all that isn’t enough, let’s go to the corporate world where officers in senior management are identified by their position. A CFO is Chief Financial Officer, a COO is Chief Operating Officer, and a CAO is Chief Accounting Officer.
More designations include CFA, CFM, CIA (Certified Internal Auditor), CMA, CPA, and CSO.
The corporate world’s tendency to assign three-letter designations to its officers also includes a CMO. This person’s full title is Chief Marketing Officer and has nothing to do with the CMO (collateralized mortgage obligation) referred to earlier in this article.
ACRONYMS FOR BROKERS
Apart from the tendency to describe and define using acronyms and financial abbreviations, there are brokers who in the investment world who identify themselves with various activities. Among these are stock brokers, bond brokers, commodity brokers, and foreign exchange brokers.
Yet the tendency persists. Foreign exchange is abbreviated as FOREX, or simply FX. And some FOREX brokers are known as ECN brokers, or, ECN Forex brokers.
The acronym ECN stands for Electronic Communication Network.
“ECN or Electronic Communication Network is a technology bridge built with the purpose to links retail Forex market participants or traders to liquidity providers. So eventually ECN is a non dealing desk bridge with straight-through processing execution that enables execution in a direct connection between the parties.”
There are also NDD Forex brokers and STP Forex brokers.
GOVERNMENT ACRONYMS AND MORE
No where is the proliferation of acronyms more prevalent than in government. Their use borders on excessive and the list is mind boggling. Here are some government agencies – NSA, NSC, CIA, NTSB, FDA, DEA, OMB, FAA, UST, IRS, HEW, OSHA, TSA, GAO, BATF, FBI, SBA, SEC and EPA.
The sports world is full of them: NBA, NFL, NHL, NCAA, PGA, NASCAR, NHRA.
Acronyms are all around us. Texting and social media reinforce their use for reasons of speed and expediency.
I suppose if there is an argument against their use, it is that we may have dampened our capacity for linguistics and conversation. I wonder how many of us know what a specific acronym stands for when we read something in which one or more of them are referenced; or when we hear them mentioned in a news report.
Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED!