Guide to Analysing Companies

Off-exchange
Dealing in shares that takes place between buyers and sellers
outside a recognised stock exchange. investment banks
holding large amounts of a company’s stock will occasionally
deal directly to save costs and complete a deal quickly. Yet in
most developed economies, the amount of off-exchange
dealing in equities is remarkably low. This is because the
growing use of screen-based trading (which allows dealers to
buy and sell securities at the touch of a button) has reduced
costs and speeded up transactions even for the majority of deals
that pass through an exchange’s hands.
Off-market
The transfer between two parties of a commodity or finan-
cial instrument without recourse to an exchange or official
marketplace. Such deals are often done at a discount and
therefore do not reflect market prices. For example, two banks
may decide to enter into a swap agreement based on interest
payments below the market rate for instruments of a similar
maturity. They then compensate for the difference with an
extra payment at the beginning or the end of the deal. A gov-
ernment may choose to complete the privatisation of, say,
an airline by issuing shares off-market to existing sharehold-
ers in proportion to those they already own. Any shares left
over may then be sold as part of a wider offer to outside in-
vestors. The parties to an off-market transaction must generally
consider whether, in doing such a deal, they are flouting tax
rules or illegally shutting out other interested parties.
Offshore
Financial business denominated in foreign currencies and trans-
acted between foreigners. Some jurisdictions tolerate legitimate
financial centres (such as the Isle of Man or Gibraltar)
where regulation is low and where non-residents may hold
O
OFFSHORE
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assets offshore. Such centres provide a relatively safe haven
and lower taxes for people who spend a minimum amount of
time out of the country of which they are a citizen. Yet for pro-
fessional investors London, the home of the eurodollar
market, is by far the world’s biggest offshore financial centre.