Charles Schwab 2015 Annual Report Download - page 43

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THE CHARLES SCHWAB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Millions, Except Ratios, or as Noted)
- 23 -
GLOSSARY OF TERMS
Active brokerage accounts: Brokerage accounts with balances or activity within the preceding eight months.
Asset-backed securities: Debt securities backed by financial assets such as loans or receivables.
Assets receiving ongoing advisory services: Client relationships under the guidance of independent advisors and assets
enrolled in one of the Company’s retail or other advisory solutions.
Average client assets: The daily average client asset balance for the period.
Basel III: Global regulatory standards on bank capital adequacy and liquidity issued by the Basel Committee on Banking
Supervision.
Basis point: One basis point equals 1/100th of 1%, or 0.01%.
Cash and investments segregated and on deposit for regulatory purposes: Client cash or qualified securities balances not
used for margin lending are generally segregated and maintained for the exclusive benefit of clients, pursuant to Rule 15c3-3
of the Securities Exchange Act of 1934 (commonly referred to as the Customer Protection Rule), by the Company’s broker-
dealer subsidiaries.
Client assets: The market value of all client assets custodied at the Company, which includes both cash and securities.
Client cash as a percentage of client assets: Calculated as money market fund balances, bank deposits, Schwab One®
balances, and certain cash equivalents as a percentage of client assets.
Clients’ daily average trades: Includes daily average revenue trades by clients, trades by clients in asset-based pricing
relationships, and all commission-free trades, including the Company’s Mutual Fund OneSource® funds and exchange-traded
funds, and other proprietary products.
Commitments to extend credit: Legally binding agreements to extend credit for unused HELOCs, pledged asset lines and
other lines of credit.
Common Equity Tier 1 (CET1) Capital: The sum of common stock and related surplus net of treasury stock, retained
earnings, accumulated other comprehensive income and qualifying minority interests, less applicable regulatory adjustments
and deductions.
Common Equity Tier 1 (CET1) Risk-Based Capital Ratio: The ratio of CET1 Capital to total risk-weighted assets.
Concentration risk: The Company’s risk exposure resulting from holding large positions in financial instruments
collateralized by assets with similar economic characteristics or in securities of a single issuer or particular industry or
geographical area.
Core net new client assets: Net new client assets before significant one-time inflows or outflows, such as
acquisitions/divestitures or extraordinary (generally, greater than $10 billion) mutual fund clearing transfers.
Credit risk: The potential for loss due to a borrower, counterparty, or issuer failing to perform its contractual obligations.
Daily average revenue trades: Total revenue trades during a certain period, divided by the number of trading days in that
period. Revenue trades include all client trades that generate trading revenue (i.e., commission revenue or principal
transaction revenue).
Debt to total capital ratio: Calculated as long-term debt divided by stockholders’ equity and long-term debt.