backwardation

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English

WOTD – 9 January 2023

Etymology

From backward +‎ -ation (suffix denoting an action or process).[1]

Pronunciation

Noun

backwardation (countable and uncountable, plural backwardations) (stock market, finance)

  1. In full normal backwardation: the situation in a futures market where the price for future delivery of a commodity (the forward price) is lower than the price for immediate delivery (the spot price) or nearer delivery, generally arising from a near-term shortage of the commodity.
    Antonyms: contango, forwardation
  2. A situation in which short-term interest rates are higher than long-term interest rates.
  3. The situation in a stock market where the offer price for stock is lower than the bid price.
  4. (obsolete) In the London Stock Exchange: a fee paid by a seller on settlement day either to the buyer or to a third party who lends stock, when the seller wishes to defer settlement until the next settlement day.
    Antonym: contango

Translations

References

  1. ^ “backwardation, n.”, in OED Online Paid subscription required⁠, Oxford, Oxfordshire: Oxford University Press, December 2022; “backwardation, n.”, in Lexico, Dictionary.com; Oxford University Press, 2019–2022.

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