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CLARITY Act

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Digital Asset Market Clarity Act (CLARITY Act) The Digital Asset Market Clarity Act , often called the CLARITY Act , is a major U.S. law proposal under the broader “Project Crypto” push to create clear, written rules for digital assets. The big idea is simple, stop relying on case-by-case enforcement and replace it with a predictable rulebook. Definition: The CLARITY Act is a statutory framework that explains which U.S. regulator is in charge of different types of crypto assets and sets registration requirements for firms that trade, broker, or custody them. How it splits oversight: CFTC: Oversees digital commodities , tokens tied to a functional crypto system where value mainly comes from how the system runs and market supply and demand. SEC: Oversees digital securities , including tokenized versions of traditional securities and tokens sold as investment contracts. What changed in practice: As of early 2026, a joint SEC and CFTC technical interpretation support...
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Items in Process of Collection (IPC)

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Items in Process of Collection (IPC) Definition: Items in Process of Collection (IPC) is a bank balance sheet asset representing checks or electronic items that have been deposited by customers but have not yet been finally settled by the paying bank. In plain English, IPC is the “financial limbo” between the moment a customer deposits funds and the moment the bank actually receives them. How IPC Works When you deposit a $10,000 check, your bank typically credits your account immediately. However, the bank has not yet received cash from the other institution. Until settlement occurs, the deposit sits in IPC. Two related accounting concepts help explain this timing difference: Gross IPC: Total dollar amount of all uncollected items currently in transit. Deferred Credit Items: The liability representing provisional credit given to customers. The difference between the two is known as Net Float : Net Float = Gross IPC – Deferred Credit Items This “float” reflect...
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Dispersion Trade

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Dispersion Trade A dispersion trade is an options strategy that takes opposite positions in the volatility of a stock index and the volatility of its individual stocks. The goal is to profit from a gap between how much the index moves and how much its components move. The basic idea: Index volatility is not just about how volatile each stock is. It is also heavily influenced by correlation , which is how much the stocks move together. When correlations rise, the index tends to swing more as a group. When correlations fall, individual stocks can move a lot while the index looks calmer because gains and losses offset. Real-world example: A trader might buy options (volatility) on several large S&P 500 stocks and sell options on the S&P 500 index. This position can work when single stocks move a lot, but they do not all move in the same direction at the same time. Two common ways to structure it: 1) The Straddle Approach (the “unit” t...
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Bull Flattener

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Bull Flattener A bull flattener is a move in the yield curve where interest rates fall across maturities, but long-term rates fall more than short-term rates . The curve gets flatter because the gap between short and long yields shrinks. It often signals expectations of easier policy over time, plus concern about slower growth and lower inflation ahead. Quick example (2-year vs 10-year) Imagine the 2-year Treasury yield drops by 25 basis points , while the 10-year Treasury yield drops by 75 basis points . Since the 10-year fell much more, the spread between 10-year and 2-year yields becomes smaller. That narrowing spread is what “flattens” the curve, even though both yields moved down. The catalyst (why it happens) A bull flattener usually shows up when investors are more worried about long-term stagnation or disinflation than near-term funding stress. Long-dated bonds rally hard because markets expect lower inflation and weaker growth over the yea...
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Bear Flattener

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Bear Flattener A bear flattener is a move in the yield curve where interest rates rise across maturities , but short-term rates rise more than long-term rates . The result is a flatter curve, even though yields are higher overall. Simple example: suppose the 2-year Treasury yield jumps from 4.50% to 5.25% (up 75 basis points), while the 10-year yield rises from 4.20% to 4.45% (up 25 basis points). Short rates “bear” the bigger move upward, so the curve flattens. What usually causes it? Fed tightening: markets price in more rate hikes, which hits short-term yields most directly. Sticky near-term inflation: investors demand higher yields in the front end because inflation looks stubborn in the next 6 to 24 months. Growth concerns later: long-term yields may rise less if investors think tighter policy will slow the economy. Why people confuse it: A bull flattener is also a flattening, but it happens when yields fall , often because the market expects rate cuts o...
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Bull Steepener

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Bull Steepener A bull steepener is a move in the yield curve where the curve gets steeper because short-term yields fall more than long-term yields . It is called “bull” because overall interest rates are falling , which is usually positive for bond prices. What it looks like: Imagine the market starts to expect the central bank to cut rates soon. The 2-year Treasury yield, which is heavily influenced by near-term policy, drops from 4.50% to 3.80% . The 10-year yield drops too, but less, say from 4.20% to 4.05% . The gap between 10-year and 2-year yields widens from -0.30% to +0.25% . That widening is the “steepening.” Why it happens: A bull steepener often reflects two ideas at the same time. First, the market expects easier policy soon , which pulls short-term yields down. Second, investors may still expect better growth or higher inflation later , so long-term yields do not fall as much, and can even rise. Do not confuse it with a bear steepener :...
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Bear Steepener

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Bear Steepener A bear steepener is a move in the yield curve where long-term interest rates rise more than short-term rates . The curve becomes steeper because the gap between long and short yields widens. It is called “bear” because rising yields usually mean falling bond prices . What it looks like (simple example) Imagine the 2-year Treasury yield goes from 4.0% to 4.2% (up 0.2%), while the 10-year Treasury yield goes from 4.2% to 4.8% (up 0.6%). Long-term yields moved up more, so the yield curve steepened. Since bond prices move inversely to yields, 10-year bond prices would typically fall more than 2-year bond prices . Why does a bear steepener happen? Higher long-term inflation expectations: Investors demand higher yields to protect purchasing power. Heavier Treasury issuance: More long-term bonds for sale can push long yields higher. Stronger growth expectations: Markets may price in higher future rates and higher long-run borrowing costs. Common conf...
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