securities

Serious Information

Trivia

A Security is a kind of transferable interest representing financial value.

Securities have been categorized into debt and equity securities, and between bearer and registered securities.

The uses that are made of securities have changed over time, both for the issuer and for the holder. Though the purpose of capital raising has sometimes been taken to be a defining characteristic of securities, its uses have expanded greatly in modern times.

Debt and equity
Securities are traditionally divided into debt securities and equities.
Debt
The holder of a debt security, typically a bond, is owed a debt by the issuer and is entitled to the payment of principal and interest, together with other personal rights under the terms of the issue, such as the right to receive certain information. Debt securities are generally issued for a fixed term and redeemable by the issuer at the end of that term. Government bonds are medium or long term debt securities issued by sovereign governments or their agencies. Money market instruments are short term debt instruments, such as certificates of deposit, commercial paper and certain bills of exchange. Eurosecurities

They are often represented by a certificate. They include shares of corporate stock or mutual funds, bonds issued by corporations or governmental agencies, stock options or other options, other derivatives, limited partnership units, and various other formal "investment instruments." Banknotes, checks, and some bills of exchange do not fall into this category. Transferable interest in commodities like oil, food grains or metals can also be referred to as securities. One can enter into contracts to buy or sell various quantities of commodities in various commodity exchanges. These become transferrable interest in the particular commodity.

Originally the term "securities" denoted security interests (such as mortgages and charges) supporting the payment of a debt or other obligation. In Early modern Europe, companies and government agencies began to raise capital from the public using secured debt obligations, which came to be known as "securities". As shares became more readily transferrable from the Victorian era, their functional similarity to debt securities became clearer, and both forms of investment became known as "securities". More recently, the term has also been extended to include units in investment funds and other forms of readily transferrable investment.

Equity
An equity is an ordinary share in a company. The holder of an equity is a shareholder, owning a share, or fractional part of the issuer.

Stock

Hybrid
Hybrid securities combine some of the characteristics of both debt and equity securities.

Preference shares form an intermediate class of security between equities and debt. If the issuer is liquidated, they carry the right to receive interest and/or a return of capital in priority to ordinary shareholders.

Convertibles are bonds which can be converted, at the election of the bondholder, into another sort of security such as equities.

Equity warrants are contractual entitlements to purchase shares on pre-determined terms. They are often issued together with bonds or existing equities, but are detachable from them and separately tradeable.

In 2004 Switzerland's largest bank, UBS, confirmed it may face legal action from US federal regulators for possible breaches of securities law.
UBS said it had been notified by the US Securities and Exchange Commission (SEC), and that it had been invited to present its position before any action.
BBC and Land Securities are to reorganise their property partnership

In September 2001 the BBC entered into a partnership agreement with Land Securities' property outsourcing business, Land Securities Trillium (LST), to carry out the BBC's ambitious property redevelopment programme across the UK, provide the finance for the new construction and to manage a range of facilities management and other property services for the BBC. LS Trillium planned to invest £220m to construct the first phase of the new development, around 550,000 square feet. They have also made a cash payment of £35m to the BBC which will go into programme production.

Bearer and registered securities

Bearer securities
Bearer securities are issued in the form of a paper instrument. On the face of the instrument is written the promise of the issuer to pay the bearer of the instrument. By a legal fiction, the instrument is deemed to constitute the debt of the issuer, and not merely to represent them. Regulatory and fiscal authorities sometimes regard bearer securities negatively, as they may be used to facilitate the evasion of regulatory restrictions and tax. In the United Kingdom, for example, the issue of bearer securities was heavily restricted firstly by the Exchange Control Act 1947 until 1963.
Registered securities
In the case of registered securities, certificates bearing the name of the holder are issued, but these merely represent the securities. A person does not automatically acquire legal ownership by having possession of the certificate. The issuer maintains a register (usually maintained by an appointed registrar) in which details of the holder of the securities are entered and updated as appropriate. In recent years, registers have generally become computerised. Unlike bearer securities, registered securities comprise of a bundle of intangible rights (chose in action) including the right of the shareholder to share in all the assets of a company, subject to all the liabilities of the company. A transfer of registered securities is effected by amending the register.

In 1998 China passed new securities law after six years of debate. The Chinese parliament has passed a law to police the country's stock markets and protect the interests of the forty million Chinese who buy and sell shares.

Trivia

Foreign terms for dividend

Wertpapier = German

Värdepapper = Sweden

Effecten = Dutch

Links on websites on subject

http://www.isda.org/ International Swaps and Derivatives Association

http://www.federalreserve.gov/Boarddocs/testimony/2000/20000621.htm Testimony of Chairman Alan Greenspan on Federal Reserve Board's views on the Commodity Futures Modernization Act of 2000

http://www.ise.ie/index.asp The home page of Irish stock exchange

http://www.nasdaq.com/ The homepage of the stock exchange

http://www.cityequities.com/
http://www.moneyweek.com

government_bond information

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