Securities classified by the nature of financial liabilities. Securities
Throughout the history of its existence, money has acquired the ability to acquire various forms. The two most common are capital and commodity. But for the first option to work correctly, it becomes necessary to transfer it from one side to the other. It was for the purpose of transferring money that securities were invented.
Securities are no longer money. Their main value lies in the fact that they give their owner certain rights. The place where you can exchange them for anything is called the "stock market". The main tool in such a place is such documents, and the main operating entity is the investor. By the simplest definition, a security is a document that has a current selling value.
Classification signs
Classification of securities is a classical concept that implies the division of securities into groups according to various criteria. They are divided according to the following principles:
Types and subtypes of securities
The classic ones are divided into basic and industrial ones. Basic commercial documents give any privileges. Most often these are the owner's rights to cash bonuses, tangible goods, property or resources. Commercial documents are divided into:
- primary - this concept means assets that do not directly contain valuable assets;
- secondary - these are securities.
These types are divided into the following subspecies:
Note! A passbook issued to the bearer is a simplified form of certificate along with certificates of deposit or savings.
- The bill of lading is an international act containing the requirements of the contract for the carriage of goods by sea. It also indicates any nuances of loading or unloading cargo, as well as the right to receive and transport. The bill of lading can be subdivided into on-board, charter, linear and onshore;
- a check is a written order to the bank from the drawer indicating the amount that must be paid to the check holder. The drawer or investor is a legal or natural person who has money in bank accounts, as well as the right to dispose of them;
- a warrant is a document giving its owner a basis to redeem from the issuing entity a certain amount of shares at a fixed value within a specified time frame;
- a mortgage has the concept of a basis for the recovery of monetary or property compensation to its owner on the basis of a mortgage or property pledge contract;
- investment share - a security issued in a name, which certifies that the investor can count on a share and ownership of the property, the unit fund consists of it;
- a depositary receipt indicates that the investor owns a certain number of shares issued in the country, while their issuer is foreign;
- production securities (derivatives) do not have documentary expression, but they define a property right or obligation that arises as a result of changes in the value of an exchange-traded asset, it is its basis.
Derivatives also have their own division:
How to distinguish a security from a regular contract?
Securities have a list of characteristic differences that indicate their origin:
- documentary. A business document is drawn up with adherence to all formalities and a trusted representative. Such a document is legally binding;
- indicates private rights. First of all, this is a monetary document, something that confirms the owner, or is the result of a loan from a person who owns the document in relation to the issuer;
- obligatory presentation - the investor presents a paper for the implementation of the privileges specified in it;
- ability to turnover. This document may be the subject of various agreements;
- public credibility. The person obliged under the document has the right to put forward only such protests against the issuer that are a consequence of the possession of the security;
- a security is a document certifying the investment of funds. With its help, money takes on a material form;
The security must have the necessary details in accordance with the official model. The requisites are symbolically divided into economic and technical ones. The technical ones include the names of organizations, serial numbers, autographs, wet seals and addresses. Economic details are the denomination, form and period of validity of the security, the owner's official, his nationality and the rights granted.
A correctly selected classification of securities and their types gives an objective opportunity to correctly conduct synthetic and analytical accounting. Likewise, you can control their movement, as well as timely and effectively apply in the market.
b) Article 912 (the second part of the Civil Code of the Russian Federation) introduces four more types of securities:- double warehouse certificate;
- warehouse receipt as part of a double certificate;
- a pledge certificate (warrant) as part of a double certificate;
- simple warehouse receipt.
The fifteenth type of Russian security is one that received the rights of citizenship in accordance with the law of the Russian Federation "On Mortgage (Pledge of Real Estate)", which came into force on July 16, 1998. The last of the securities available in Russia is investment share(in accordance with the law of the Russian Federation "On Investment Funds", 2001).
Government bond and just a bond Is the same type of security with the only difference, consisting in the fact that a government bond can only be issued by the state, but simply a bond - any legal entity.
If a bond is issued by the state, then such a bond is called a government bond. If local government bodies - then municipal. Legal entities also issue bonds: banks - bank bonds, the rest of the companies - corporate. Individuals do not issue bonds.
Bearer bank passbook in fact there is kind of bank certificate(along with certificates of deposit and savings certificates).
Privatization check completed its existence by 1996
The following eight types of economic securities are legally (legally) permitted for issue and circulation in Russia: stock, bond, bill of exchange, check, bank certificate, bill of lading, mortgage and investment share.
Stock
Stock - in accordance with the law of the Russian Federation "O" is "an equity security that secures the rights of its owner (shareholder) to receive a part of the profit of a joint stock company in the form of dividends, participate in the management of a joint stock company and a part of the property remaining after its liquidation."
The economic definition is a security that certifies a single contribution to the charter capital of a commercial partnership with the ensuing rights for its owner.
Bond
Bond- in accordance with the law of the Russian Federation "On the Securities Market" - this is "an issue-grade security securing the right of its holder to receive from the issuer a bond within the specified period of the par value and the percentage of this value or property equivalent fixed in it";
An economic definition is a security that certifies a single debt obligation of an issuer (state or any other legal entity) to return its par value after a certain period in the future on terms that suit its holder.
Promissory note
Promissory note- a security document certifying a written monetary obligation of the debtor to repay the debt, the form and circulation of which are regulated by special legislation - bill of exchange;
- promissory note- this is a security that certifies the unconditional obligation (promise) of the debtor to pay the amount of money specified in it to the holder of the bill after a certain period of time;
- bill of exchange- this is a security that certifies an offer to the debtor to pay the amount of money indicated in it to the person indicated in it after a certain period.
Check
Check- a security that certifies a written order of the drawer to the bank to pay the check recipient the amount of money indicated in it during its validity period. A check is a type of bill of exchange that is issued only by a bank.
Bank certificate
Bank certificate- a security, which is a freely circulating certificate of a cash deposit (deposit - for legal entities, savings - for individuals) in a bank with the latter's obligation to return this deposit and interest on it after a specified period in the future.
Bill of lading
Bill of Lading - security, which is a document of a standard form, accepted in international practice, for the carriage of goods, certifying its loading, transportation and the right to receive.
Mortgage
Mortgage - this is a registered security, certifying the rights of its owner in accordance with the mortgage agreement (real estate pledge), to receive a monetary obligation or the property specified in it.
Investment share
Investment share- a registered security certifying the share of its owner in the ownership of the property that constitutes the mutual investment fund.
The listed types of securities, typical for countries with highly developed market economies, are not exhausted, and therefore it can be predicted that in the future the number of types of securities permitted by Russian legislation will increase.
Russian securities can be classified according to the main characteristics listed above as follows.
Comparative characteristics (classification) of Russian securitiesIn addition to the listed types of securities, which can be called basic, or primary, securities, in world practice there are securities that are based on primary, and therefore are considered derivatives in relation to them. Derivative, or secondary, securities include securities based on stocks and bonds: depositary receipts, stock warrants, etc.
Secondary, or derivative, security- this is a security that grants its owner not directly any property rights, but the rights to any basic securities and through them - to property rights.
Depositary receipt - it is a security that testifies to the ownership of a certain number of shares of a foreign issuer, but is put into circulation in the investor's country; it is a form of indirect purchase of shares of a foreign issuer.
Stock warrant is a security that gives its owner the right to buy from a given issuer a certain number of his shares (bonds) at a price set by him within a period of time specified by him.
Characteristics of a security
The form has a number of requisites, or economic characteristics, along with their essential ("capital") content. These market characteristics usually have a pairwise opposite character (for example, paper or paperless forms of existence of a security), and therefore securities are classified depending on which of the corresponding pair they meet. The combination of these characteristics inherent in a security is its economic content.
The set of characteristics that any security possesses includes:
Time characteristics:- period of existence: when it was released into circulation, for what period of time or indefinitely;
- form of existence: paper, or, in legal terms, documentary form, or paperless, non-documentary form;
- nationality: domestic or foreign security, that is, foreign;
- the procedure for fixing the owner: to the bearer or to a specific person (legal entity, individual);
- form of issue: emission, that is, issued in separate series, within which all securities are exactly the same in their characteristics, or non-emission (individual);
- the type of the issuer, that is, the one who issues the security on the market: the state, corporations, individuals;
- degree of circulation: freely circulated on the market or there are restrictions;
- risk level: high, low, etc .;
- the presence of accrued income: some kind of income is paid or not;
- transfer procedure (application form): delivery, assignment of rights of claim: cession or endorsement;
- registerability: registered or unregistered;
- type of denomination: constant or variable.
Classification and types of securities
Depending on the various characteristics, securities are classified as follows:
Types of securities by life:
- urgent (the term of existence is limited in time);
- indefinite (the period of existence is not limited in time);
Securities issued for the entire life of the person obliged under them are not directly related to any time period, and therefore they are perpetual securities. These usually include stocks. Securities issued for a limited period of time, irrespective of whether it was set when issuing a security or will be determined in the course of its circulation, constitute a group of term securities.
Term securities have a period of existence established at their issue or the procedure for establishing this period. Usually, urgent securities are divided into three subtypes:
- short-term, with a maturity of up to 1 year;
- medium-term, with a circulation period of 1 to 5 years;
- long-term, with a maturity of 5 to 30 years (according to the law, mortgage-backed securities can be issued with a maturity of up to 40 years).
Term securities, the circulation period of which is not regulated by anything, that is, they exist until maturity, the date of which is not indicated in any way when the security is issued, but only the procedure for their cancellation (redemption) has been established, are called revocable.
Types of securities by form of existence:
- paper, or documentary;
- paperless, or paperless;
The classical form of existence of a security is a paper form in which the security exists in the form of a document. The development of the securities market requires the transition of many types of securities, primarily issued, to a non-documentary form of existence.
Types of securities by nationality:
- national (Russian);
- foreign;
Types of securities by form of ownership:
- bearer or bearer securities;
- registered ones, which contain the name of their owner and are registered in the register of owners of this security;
Possession of a security can be registered or bearer. The bearer security does not fix the name of its owner, and its circulation is carried out by a simple transfer from one person to another. A registered security contains the name of its owner and, in addition, is registered in a special register. Usually it is transferred by agreement of the parties or by assignment.
If a registered security is transferred to another person by making a transfer inscription (endorsement) on it, or by order of its owner, then it is called an order security.
Types of securities by the form of issue:
- emission, that is, put into circulation in large batches, within which all securities are absolutely identical;
- non-issue, usually issued by the piece, or in small batches without state registration;
The issue of securities may or may not be accompanied by their mandatory registration with government bodies. Usually, the state registration is subject to equity securities, since their issue affects the interests of a large number of market participants. Under Russian law, issued shares, bonds, bank certificates (registered by the Central Bank) and mortgages are subject to mandatory registration. Other types of Russian securities, regardless of the size of their issue, are not subject to state registration.
Equity securities are usually issued in large series, which are subject to state registration. These are usually stocks and bonds. Non-equity securities are issued without any state registration.
Types of securities by type of issuer:
- government securities are usually different types of bonds issued by the government;
- non-state, or corporate - these are securities that are issued into circulation by corporations (companies, banks, organizations) and even individuals.
Government securities- securities issued. They occupy a special place in the range of securities.
The state is not a capitalist and does not use funds raised through securities to generate income, it only redistributes them through or through its financial system, that is, it acts as an intermediary. Consequently, government securities are not a representative of directly functioning capital, but a representative of capital that the state does not have, which in a roundabout way returns to the economy (through the salaries of civil servants, the military, the purchase of goods, for example, military equipment, etc.). Therefore, government securities are an indirect representative of real capital.
Types of securities by risk level:
- low-risk;
- average risk;
- high-risk;
According to the level of risk, securities are conventionally divided into risk-free and risky. Risk-free- these are securities for which there is practically no risk. In world practice, these are short-term (1-3 months) government bonds (treasury bills). All other securities are usually divided by the level of risk by low risk e (these are usually government papers), mid-risk(these are usually corporate bonds) and high risk(these are usually promotions). There are also more high-risk market instruments than ordinary stocks and bonds.
Graphically, the place of the main types of profitable securities from the point of view of the ratio of risk and the level of profitability is usually depicted as follows (Fig. 2.3).
In turn, each of the types of basic securities is divided into subspecies, etc.
Rice. 2.3. Dependence of income on riskTypes of securities according to the degree of circulation:
- market, or freely circulating;
- non-market ones, which are issued by the issuer and can be returned only to him; cannot be resold;
The main types of securities are market, that is, they can be freely sold and bought on the market. However, in some cases, the circulation of securities can be limited, and the security cannot be sold to anyone except the one who issued it, and then after a specified period. Such securities are called non-market.
Types of securities by the form of raising capital:
- equity, or ownership, which reflect the share in the authorized capital of the company;
- debt, which is a form of capital loan (cash).
Types of securities by type of par:
- with a constant denomination;
- with variable denomination;
According to Russian law, each security has its own par or par value. However, in world practice, it is allowed to issue, for example, shares with no money par value, or with a zero par value. In this case, it is indicated what share in the authorized capital is one share, and therefore its par, calculated by dividing the authorized capital by the number of shares, changes each time with a change in the size of this capital, and does not remain unchanged, as in the case when the par of a security is set when it is released. If a security is issued with an indication of the monetary denomination, then this constant paper... If a security is issued without a monetary denomination (with a zero denomination), then it is variable denomination paper.
Types of securities by the form of capital servicing:
- Investment (capital) securities are an object for investing money as capital, that is, for the purpose of earning income.
- Non-investment securities serve monetary settlements in commodity or other markets. Usually this role is played by bills of lading, warehouse receipts, bills.
Types of securities by the availability of accrued income:
- unprofitable;
- with accrued income;
From the point of view of accrued income, securities, as a rule, are profitable, but they can also be non-profitable when for their owner they are a simple certificate for a commodity or for money, and not for capital. Income on a security can be accrued in the form of a dividend (shares), interest (debt securities) or a discount, i.e. the difference between the par value of a security and a lower purchase price.
Types of securities and their characteristics table
At present, such an incredible variety of securities have been invented and issued that in connection with the changes in the stock markets of the planet, especially enterprising citizens could arrange their issuance in a soft form, and immediately in rolls.
Instead, they are issued, stored, resold, re-bought, come up with classifications, adjust legislation for this case, write textbooks, draw tables ... In general, they have fun as soon as they can. And this happiness fell to our lot.
Below are the most popular types of securities and their characteristics. There is also a table with properties.
Securities: classification, types and functions
The world of goods is divided into two groups: the actual goods (services) and money. Money, in turn, can be just money and capital, that is, money that brings new money.
There is always a need to transfer money from one person to another. Markets have developed two main ways of transferring money - through the process of lending and through the issuance and circulation of securities.
Securities are not money or tangible goods. Their value lies in the rights they give to their owner.
The latter exchanges his goods or his money for securities only if he is sure that this paper is not a little worse, or even better, than the money or the goods themselves.
A security is a special commodity that circulates in a special, its own market - the securities market, but has neither material nor monetary consumer value, that is, it is neither a physical product nor a service.
In the broader sense, a security is any document (paper) that is bought and sold at an appropriate price.
A security is a document that expresses the property and non-property rights associated with it, can independently circulate on the market and be an object of sale and purchase and other transactions, serves as a source of regular or one-time income.
Thus, securities are a kind of money capital, the movement of which mediates the subsequent distribution of material values.
The Civil Code of the Russian Federation contains the classic definition of a security. "A security is a document certifying, in compliance with the established form and mandatory details, property rights, the exercise or transfer of which is possible only upon its presentation."
A security must contain the mandatory details provided for by law and comply with the requirements for its form, otherwise it is invalid.
The requisites of a security can be conditionally divided into economic and technical. Technical details - numbers, addresses, stamps, signatures, names of service organizations, etc.
Economic details: form of existence (paper or paperless), period of existence, affiliation, obliged person, face value, granted rights.
The features of a security are:
- Documentation - a security is a document, that is, a record officially drawn up by an authorized person in accordance with the requisites, which has legal significance.
- Embodies private rights. A security is a monetary document that can express two types of rights: in the form of the title of the owner and as the relationship of the loan of the person who owns the document to the person who issued it.
- Necessity of presentation - the presentation of a security is mandatory for the exercise of the rights enshrined in it.
- Turnover - a security can be an object of civil transactions.
- Public credibility - in relation to the owner of the security, the person obliged under it can only raise such objections that arise from the content of the document itself.
- A security is a documentary evidence of the investment of funds. Thanks to her, money savings become material objects.
Classification
Classification of securities is their division into types according to certain characteristics that are inherent in them. In turn, the species can in some cases be divided into subspecies, and they are even further.
Each subordinate classification is part of one or another higher classification. For example, a stock is one of the types of securities.
But the share can be ordinary and preferred. An ordinary share can be one-voiced and polyphonic, with or without par, etc.
Securities can be classified according to the following criteria:
- By the term of existence: urgent (short-term, medium-term, long-term and revocable) and indefinite.
- By the form of existence: paper (documentary) or paperless (non-documentary).
- By the form of ownership: bearer (bearer securities) and registered, which contain the name of their owner and are registered in the register of owners of this security.
- By the form of appeal (order of transfer): transferred by agreement of the parties (by delivery, by assignment) or order (transferred by order of the owner - endorsement).
- By the form of issue: emission or non-emission.
- By registration: registered (state registration or registration of the Central Bank of the Russian Federation) and unregistered.
- By nationality: Russian or foreign.
- By the type of issuer: government securities (these are usually various types of bonds issued by the government), non-government or corporate (these are securities that are put into circulation by companies, banks, organizations and even individuals).
- By circulation: market (freely circulating), non-market, which are issued by the issuer and can be returned only to him (cannot be resold).
- According to the purpose of use: investment (the purpose is to generate income) or non-investment (serve the turnover in the commodity markets).
- By risk level: risk-free or risky (low-risk, medium-risk or high-risk).
- By the presence of accrued income: non-profitable or profitable (interest, dividend, discount).
- At par: constant or variable.
- By the form of attracting capital: equity (reflect the share in the authorized capital of the company) and debt, which are a form of capital loan (cash).
Views
Securities are divided into 2 classes: basic securities and derivative securities (derivatives).
Attention!
Basic securities are securities based on property rights to an asset, usually to goods, money, capital, property, various resources, etc.
Such securities include: stock, bond, bill of exchange, bank certificates, bill of lading, check, warrant, mortgage, shares of mutual funds and others.
Major securities can be broken down into primary and secondary.
Primaries are based on assets, which do not include the securities themselves (backed by assets). This is, for example, a share, bond, bill of exchange, mortgage. Secondary are securities for the securities themselves: warrants, depositary receipts, etc.
A share is a security issued by a joint-stock company and securing the rights of its owner (shareholder) to receive part of the profit of the joint-stock company (JSC) in the form of dividends, to participate in the management of the joint-stock company and to a part of the property remaining after its liquidation.
As a rule, shares are divided into two groups: ordinary shares and preferred shares.
A bond is a security that is a promissory note for the return of an invested amount of money after a specified period with or without payment of a certain income.
If a bond is issued by the state, then such a bond is called a government bond.
If local government bodies - then municipal. Legal entities also issue bonds: banks - bank bonds, the rest of the companies - corporate.
A bill (from German Wechsel - exchange) is a security in the form of a long-term obligation, drawn up in writing in a certain form, certifying the unconditional obligation of the drawer (promissory note), or an offer to another payer specified in the bill (bill of exchange) to pay upon occurrence the term stipulated by the bill of exchange a certain amount of money.
Bank certificate - a security, which is a freely circulating certificate of a cash deposit (deposit - for legal entities, savings - for individuals) in a bank with the latter's obligation to return this deposit and interest on it after a specified period in the future.
A bearer bank passbook is essentially a type of bank certificate (along with certificates of deposit and savings certificates).
A bill of lading is a security, which is a document of a standard form adopted in international practice, which contains the terms of the contract of carriage of goods by sea, certifying its loading, carriage and the right to receive. Types of bills of lading: linear, charter, onshore and onboard.
A check is a security that certifies a written order from the drawer to the bank to pay the check holder the amount of money indicated in it during its validity period.
The drawer is a legal entity that has funds in the bank, which it has the right to dispose of by issuing checks, and the checkholder is a legal entity in whose favor the check was issued. Checks are of the following types: registered, order and bearer.
Warrant - a) a document issued by the warehouse and confirming the ownership of the goods in the warehouse; b) this is a security that gives its owner the right to buy from this issuer a certain number of his shares (bonds) at a price set by him within a period of time specified by him.
A mortgage is a registered security that certifies the rights of its owner in accordance with a mortgage agreement (real estate pledge) to receive a monetary obligation or property specified in it.
An investment share is a registered security certifying the share of its owner in the ownership of the property that constitutes a mutual investment fund.
A depositary receipt is a security that testifies to the ownership of a certain number of shares of a foreign issuer, but is issued for circulation in the investor's country; it is a form of indirect purchase of shares of a foreign issuer.
A derivative security or derivative is a non-documentary form of expression of property rights (obligations) arising in connection with a change in the price of the exchange-traded asset underlying the security.
Derivative securities include: futures contracts (commodity, currency, interest rate, index, etc.), freely tradable options and swaps.
Futures contracts (commodity, currency, interest, index, etc. - obligations to buy or sell a commodity at a certain time in the future at a price set today).
The conclusion of a futures contract is not a direct act of purchase and sale, i.e. the seller does not give his goods to the buyer, and the buyer does not give his money to the seller.
The seller undertakes to deliver the goods at the price fixed in the contract by a certain date, and the buyer undertakes to pay the corresponding amount of money.
To guarantee the fulfillment of obligations, a deposit is made, kept by the intermediary, i.e. organization conducting futures trading. A futures becomes a security and can be re-bought many times during its entire validity period.
Attention!
An option is a security that is a contract, the buyer of which acquires the right to buy or sell an asset at a fixed price within a certain period or to cancel the transaction, and the seller undertakes, at the request of the counterparty, to ensure the exercise of this right for a cash premium.
An option gives the right to choose (option), this gave the name to this security. An option, unlike a futures, gives the acquirer a right, not an obligation. Options are exercised if they are winning options at the time of exercise.
Swaps are an agreement between two parties to exchange the underlying assets or payments on these assets in the future in accordance with the terms specified in the contract. There are currency, interest rate, stock (index) and commodity swaps.
Swaps have a number of significant advantages for investors, the main one of which is the ability for investors to reduce currency and interest rate risks, make a profit on the difference between interest rates in different currencies, and reduce the cost of managing a securities portfolio.
All types of swaps are OTC contracts, they are not traded on the exchange and their liquidity is provided by special intermediaries - banks (often called swap banks) and dealers.
The peculiarity of these types of derivative securities is that their circulation is not regulated by the state, the main place in the swap market is occupied by banks participating in these transactions.
Properties
A security is a form of existence of capital, different from its commodity, productive and monetary forms, which can be transferred in its place, circulate in the market as a commodity and generate income.
Properties of securities:
- Negotiability - the ability to buy and sell on the market, and in many cases act as an independent payment instrument.
- Availability for civil circulation - the ability of a security to be the subject of other civil transactions.
- Standard and serial.
- Documentation - a security is always a document, and as a document it must contain all the mandatory details provided for by law.
- Regulation and recognition by the state.
- Market - inextricably linked with the relevant market, are its reflection.
- Liquidity is the ability of a security to be quickly sold and converted into cash.
- Risk - the possibility of losses associated with investments in securities and inevitably inherent in them.
- Obligatory performance.
- Profitability - characterizes the degree of realization of the right to receive income by the owner of the security.
Functions
Securities perform a number of socially significant functions:
- They have a pronounced information function and indicate the state of the economy. Stable securities prices or their rise, as a rule, indicate a normal economic situation.
- They play an important role in the flow of capital between different spheres of the economy (redistribution function).
- Used to mobilize temporarily free money savings of citizens (mobilizing function).
- Used to regulate money circulation (regulatory function).
- Banks, enterprises and organizations use securities as a universal credit and settlement instrument (settlement function).
Emission
The issue of securities is a set of procedures established by law to ensure the placement of securities between investors.
Its purpose is to attract additional funds by the issuer on borrowed terms (in the case of issuing bonds) or by increasing the authorized capital (in the case of issuing shares), but this is done according to the rules and under the control of the state represented by its authorities regulating the securities market.
The issue is usually carried out by involving professional participants in the stock market, who are called underwriters, who, under an agreement with the issuer, undertake certain obligations to issue and place its securities for an appropriate fee.
From the point of view of priority, emission is usually divided into primary and secondary. An initial issue takes place either when a commercial organization first issues its securities, or when a security is issued by this organization for the first time.
Subsequent issue is the repeated placement of certain securities of a given commercial organization.
According to the method of placement, the issue can be carried out by distribution, subscription and conversion.
Conversion
Conversion is the placement of one type of security by exchanging it for another on pre-established terms.
Only persons who, prior to its implementation, have ownership rights to securities already placed, can participate in the conversion.
Conversion can be divided into the following types:
- conversion of shares into shares with a higher par value,
- conversion of shares into shares with a lower par value,
- conversion of shares into shares with other rights,
- conversion of bonds into shares,
- conversion of bonds into bonds,
- conversion of securities during the reorganization of commercial organizations.
Conversion of ordinary shares into preferred shares of any type is prohibited.
In addition, the legislation of the Russian Federation on securities does not provide for the possibility of converting shares into bonds, which in fact also means that such conversion is prohibited.
Stocks and bods market
The securities market is a system of economic relations between those who issue and sell securities and those who buy them.
The participants in the securities market are issuers, investors and investment institutions. Businesses that issue and sell securities are called issuers.
The stock market is an institution or mechanism that brings together buyers (bearers of demand) and sellers (suppliers) of stock values, i.e. valuable papers. The concepts of the stock market and the securities market are the same.
According to the definition, the commodity circulating on a given market are securities, which, in turn, determine the composition of the participants in a given market, its location, operating procedure, regulation rules, etc.
In a market economy, the securities market is the main mechanism for the redistribution of money savings.
The stock market creates a market mechanism for the free, albeit regulated, overflow of capital into the most efficient sectors of the economy.
Source: http://mir-fin.ru/cennye_bumagi.html
The concept of a security (CB) is regulated by the current legislation of the Russian Federation. This financial document has its own characteristics and does not relate to goods or services.
Attention!
Nevertheless, the Central Bank can be a subject of purchase or sale and has its own material value.
All types of securities permitted for circulation in the Russian Federation give the owner certain property rights, serve as a source of income, confirm material solvency and can be assigned.
The types of government securities and the Central Bank, non-government issue, are quite diverse. They are divided into different categories, and each paper gives its owner certain rights, for example, to receive dividends.
Consider which securities belong to a specific category: Debt: this category includes promissory notes and bonds (both government and corporate), mortgages, checks.
- bank certificates (evidence of the registration of a deposit with a clearly specified period for the payment of principal and dividends) and savings books;
- equity: such securities include shares of different types;
- investment shares and depositary receipts;
- derivatives or production securities such as futures, swaps or options.
A bill of lading (an obligation to deliver the goods in one way or another), a warrant (indicates the right to the goods in the warehouse) also belong to this category.
These are the main types of securities (government and non-government), which are used in accordance with the purpose and within the framework of the current legislation.
Characteristic
Currently, several types of securities are used. There are a number of characteristics that make it possible to determine the belonging of a security to a particular category.
Their main properties are:
- Seriality and standardization;
- Documentation (strict rules for the design of each type of securities are a prerequisite);
- Transferability: it is assumed that the owner can use them as a calculation tool or a source of funds for the sale. This means that securities can be treated as a commodity and as a payment instrument at the same time;
- Availability: often subject to civil transactions;
- Liquidity: the ability to quickly implement if necessary;
- State recognition and regulation;
- Obligation to fulfill;
- Profitability: the Central Bank is often considered as a source of income (due to dividends) or a promising investment;
- Market: reflects economic trends and is inextricably linked to the market;
- Riskiness: changes in the general economic situation or other factors may lead to depreciation or lack of expected income.
Main functions
We have already examined the types of securities and their characteristics (the Central Bank table will be a hint to those who want to purchase them). Now let's find out about the main functions:
- calculated function. It is actively used by financial institutions, enterprises and companies. Among individuals, this function is also quite in demand;
- reflection of the economic situation. Those who are knowledgeable in the economy can judge the general economic situation in the country by the tendencies of the rise or fall of securities;
- redistribution. Playing the role of an instrument for calculations, they contribute to the redistribution of capital between various sectors of the economy;
- regulation. The use of the Central Bank allows you to regulate cash flows;
- mobilization. To withdraw free funds from circulation that are at the disposal of individuals or various companies, this function is used.
Additional criteria
You have already learned the basic properties inherent in government and non-government securities. These criteria should be guided by when choosing an investment option at the time of purchase.
You should also pay attention to such parameters as the period of existence, the form of issue and ownership. Market characteristics also matter. For example, the availability of income or quick liquidity.
The main types of securities are actively used by both individuals and legal entities. Central banks can serve as both a commodity and a calculation tool, which significantly expands the possibilities of their use.
Source: http://sbankom.ru/vkladyi/vidyi-tsennyih-bumag.html
Types of Central Bank. Common classification
Many people ask the question - What securities do you know? Offhand, they can name three, five types of securities, let's try to figure out what they are and give a small definition of "Who is who" the most interesting.
The description and listing of types of securities, oddly enough, are enshrined in law, so Article 143 of the Civil Code of the Russian Federation determines that securities are:
- Stock;
- Bill of exchange;
- Mortgage;
- Investment share of a mutual investment fund;
- Bill of lading;
- Bond;
- Government bond;
- Certificate of Deposit;
- Savings certificate;
- Bank savings book issued to bearer;
- Securities related to privatization;
- As well as other securities named as such in the law or recognized as such in the manner prescribed by law.
The mortgage, as a security, took shape as such, with the release of the law "On Mortgage" in 1998.
It is worth noting that Article 912 of the Civil Code of the Russian Federation also falls under the clarification about other securities named in the law, which adds to this list:
- Simple warehouse receipt;
- Double warehouse certificate;
- Warehouse certificate, which is part of a double certificate;
- Warrant, namely - a pledge certificate, which is part of a double certificate.
The result is sixteen types of securities enshrined in law, although, in fact, government bonds and just bonds are different only in the form of who issues them, if government - only the state, just bonds - any authorized legal entity.
Privatization-related securities such as privatization checks had ceased to exist by early 1996.
Other classifications
The same article 143 of the Civil Code of the Russian Federation, securities can be classified into documentary and non-documentary. In turn, documentary securities can be divided into three types.
Bearer is a documentary security, the bearer of which, requiring the performance of obligations under it, is recognized as its owner.
Order is a documentary security, the bearer of which, requiring the fulfillment of obligations under it, is recognized as its owner if the security is issued in his name or passed to him as a result of endorsement (transfer inscription on the back of the security, transferring ownership rights to another person).
Registered is a documentary security, according to which the person authorized to demand the fulfillment of obligations under it is recognized either as the owner indicated by the copyright holder in the accounts, or the owner in whose name it was issued or transferred.
Also, securities can be divided into:
- Urgent - the period of validity is limited to a specific time period
- Indefinite - the period of validity is not limited
Legally permitted Central Bank
Currently, there are only eight legally permitted securities issued in the Russian Federation.
A share is an equity security that allows the owner to exercise his right to receive a part of the profit - by means of the dividends issued, as well as to take part in the management of a joint-stock company, and receive a part of its property in the event of its liquidation, is registered - in accordance with the legislation of the Russian Federation.
To properly invest in stocks, you should monitor the dynamics of the value of stocks.
Bond - a security, issue-grade debt, which provides the owner with the opportunity to receive from the issuer (the one who issued this security), within a specified period, the par value of the bond in cash or property. This security is issued to make a loan for the issuer.
Promissory note - a security, an order security, subject to the holder's indication in the promissory note, or registered, subject to the clarification of the phrase "not ordered" by the person issuing the promissory note or the person transferring the right to the promissory note, drawn up according to a strict pattern, giving the owner the right to receive the amount from the debtor specified in the bill in a certain place.
The executor for promissory notes in case of a promissory note is the person who issued it, in case of a bill of exchange (draft) - the person is indicated directly in the security, being at the same time a debtor in relation to the person who issued this promissory note.
A check is a security, a special type of a bill of exchange issued only by a bank, which is a written order of the drawer to the bank, to pay the check recipient within the specified time the amount indicated in the check.
A bank certificate is a security, which is a free-for-circulation certificate of a cash deposit; for legal entities, a deposit is a deposit, for individuals - a savings, with the obligation of the bank to return the deposit with interest within a specified period.
A bill of lading is a security document of the established form for the carriage of goods, confirming loading, and giving the right to transport and receive the goods.
A mortgage is a security that gives the owner the right, in accordance with an agreement on a mortgage or pledge of real estate, to receive a monetary obligation or the property specified in it.
An investment share is a registered security that gives ownership of a share of property in a mutual investment fund.
All the securities described above are typical for countries with highly developed market economies, based on this, it can be assumed that the number of different types of securities for the Russian Federation will only grow over time.
It is worth noting that it is almost infinite to classify securities depending on the selected parameters, therefore, only the most important ones were touched upon in this article.
Source: https://utmagazine.ru/posts/4326-vidy-cennyh-bumag.html
Securities in a market economy
In a market economy, there are many types of securities. They can be classified according to several criteria.
Attention!
One of them is the various groups of issuers. Three such groups are usually distinguished: the state, the private sector, and foreign entities.
Government securities are issued and guaranteed by the government, ministries and departments, or municipal authorities.
Private sector securities are usually divided into corporate and private. Corporate securities are issued by non-state enterprises and organizations.
Private securities can be issued by individuals (for example, bills of exchange or checks). Foreign securities are issued by non-residents of the country.
Securities can be divided into registered and bearer securities. The name of the owner of the security is registered in a special register maintained by the issuer or an external independent registrar. Bearer securities are not registered in the name of the owner with the issuer.
Another sign of the classification of securities is according to their economic nature. In this case, the following are distinguished: certificates of ownership (shares, checks, money certificates); loan certificates (bonds, bills); contracts for future transactions (futures, options).
All three types of securities exist and are circulating in Russia:
Non-fixed income securities are primarily stocks, i.e. securities certifying the ownership of a share in the capital of a joint-stock company and giving the right to receive part of the profit in the form of a dividend.
According to Russian law, a share is an equity security that secures the rights of its owner (shareholder) to receive part of the profit of a joint-stock company in the form of dividends, to participate in the management of a joint-stock company and to a part of the property remaining after its liquidation.
Fixed income securities (also called debt obligations) are represented by bonds, certificates of deposit and savings certificates, checks and bills of exchange.
Bonds - promissory notes of the state, local governments, enterprises, various funds and organizations, usually issued in large quantities.
They are evidence that the issuing authority is a debtor and undertakes to pay the bondholder within a certain time interest on it, and upon maturity, to repay its debt to the bondholder.
In any case, the bond is debt, and its holder is the creditor (but not the co-owner, like a shareholder).
According to Russian legislation, a bond is an equity security that secures the right of the holder of this security to receive from the issuer a bond within the stipulated time frame of its par value and a percentage of this value or other property equivalent fixed in it.
A certificate of deposit is a financial document issued by credit institutions. It is a certificate of this institution about the deposit of funds, certifying the depositor's right to receive a deposit.
A distinction is made between certificates of deposit on demand and urgent ones, which indicate the term for withdrawal of the deposit and the amount of interest due. Certificates of deposit are universally accepted by investors, various companies and institutions.
Savings certificate - a written commitment to deposit funds by an individual in a credit institution, certifying the depositor's right to receive the deposit and interest on it. Distinguish between registered and bearer savings certificates.
A check is a monetary document of the established form, containing an unconditional order of the drawer to a credit institution to pay its holder the amount specified in the check.
As a rule, the payer of the check is a bank or other credit institution that has such a right.
A bill of exchange is an unsecured promise to pay off a debt and interest on it at the appointed time. This type of securities is in last place among the debt obligations of the company. Like checks, bills of exchange are also issued by individuals.
Government securities are government debt. They differ in terms of issue dates, maturities, and interest rates. In a sense, it is an alternative to money emission and, consequently, inflation in the event of a state budget deficit.
Currently, in most countries, government securities of several types are traded:
- Treasury bills with maturities typically 91 days;
- treasury bonds with maturity up to 10 years;
- Treasury bonds with maturities ranging from 10 to 30 years.
These types of securities are issued for lending short-, medium- and long-term government debt. Accordingly, the interest payments on them also differ.
Attention!
So, in the USA in the 90s. they were: on treasury bills - about 6%, on treasury bonds - about 7%.
In Russia in the 90s. produced:
- state short-term zero-coupon bonds (GKO) since 1993. The issuer is the Ministry of Finance of the Russian Federation. T-bills are issued for a period of 3, 6 and 12 months. and are placed through the institutions of the Central Bank of the Russian Federation;
- treasury bonds (KO) in non-documentary form in the form of an entry on accounts, as well as GKO;
- federal loan bonds (OFZ) since 1995, circulating in a single system together with GKOs in non-cash form, with a variable coupon interest and a validity period of more than one year;
- bearer bonds of the state savings loan (OGSZ) since 1995, intended mainly for the population;
- bonds of the domestic foreign currency loan (OVVZ), which are a means of restructuring the domestic foreign currency debt.
Local governments, along with the central government and its agencies, issue debt-credit securities. This is a different type of securities - municipal bonds.
Like other bonds, they are obligations to repay debt by a specified date with payment of a fixed interest. Municipal bonds are also issued in Russia.
The objects of the stock market are various types of securities. A security is a monetary document certifying the property rights of the owner of the document or the loan relationship. In addition, it is a tool for attracting funds, an object of investment of financial resources. Securities circulation is a sphere of such activities as brokerage, custody, registrar, trust, clearing and consulting.
Securities as objects of civil rights have a free character of transfer from one person to another in the order of universal legal succession and are not limited in circulation. They can be documentary and non-documentary. Securities act as economic and legal categories. They are divided into two large classes - main and derivative.
Basic securities are securities, which are based on property rights to any asset (usually to goods, money, capital, property, various kinds of resources, etc.).
Derivative securities are non-documentary forms of expression of property rights (obligations) arising from a change in the price of the underlying asset, i.e. the underlying asset of the security. Basic assets can be considered commodities (grain, meat, oil, gold, etc.), basic securities (stocks and bonds), etc. Derivative securities include futures contracts (commodity, foreign exchange, interest rate, index, etc.) and freely tradable options.
possession of a security;
certification of property and liability rights;
management right;
certification of transfer or receipt of property.
According to the main characteristics (attributes), securities are classified in accordance with Table 1. Each group of securities includes their subtypes.
Table 1- Classification of securities
Continuation of table 1
existence |
Paper, or documentary Paperless or paperless |
National affiliation |
Domestic Foreign |
use |
Investment, or capital - securities that are the object of capital investment (stocks, bonds, futures contracts, etc.) Non-investment - securities that service cash settlements in commodity or other markets (bills of exchange, checks, bills of lading) |
Ownership |
Bearer - securities that do not fix the name of their owner, and their circulation is carried out by a simple transfer from one person to another Registered - securities containing the name of their owner and, in addition, registered in a special register Order - registered securities transferred to another person by making a transfer inscription (endorsement) on them |
Release form |
Equity - securities, usually issued in large series, in large quantities, and within each series, all securities are absolutely identical (stocks and bonds) Non-equity - securities issued individually or in small series |
property |
State Non-government - securities that are issued into circulation by corporations (companies, banks, organizations) and individuals |
Character convertibility |
Market, or freely tradable Non-market (circulation of securities may be limited, and the security cannot be sold to anyone other than its issuer and after a specified period) |
Risk level |
Risk-free and low-risk Risky |
Availability of income |
Profitable Unprofitable |
Attachment form |
Debt - securities that usually have a fixed interest rate and are an obligation to pay the amount owed at a certain date in the future Ownership equity - securities that give ownership of the related assets |
Economic essence |
Bonds, etc. |
Securities can also be classified according to the following criteria:
1) by issuers (state, private and mixed);
2) by the degree of protection (high-grade and low-grade);
3) by the form of issue (documentary and non-documentary);
4) by the validity period (urgent and indefinite);
5) by type (registered and bearer);
6) by the volume of the granted rights (with the right of ownership, with the right to manage and with the right to credit);
7) on the territory of circulation (municipal, state, foreign and all-Russian);
8) according to the form of income generation (with constant income and with point income); 9) whenever possible exchange (convertible and non-convertible).
The main types of securities are: stock, bond, bill of exchange, check, savings certificate, certificate of deposit, option, futures, bill of lading, etc.
Stock- this is an equity security securing the rights of its owner (shareholder) to receive part of the profit of a joint stock company in the form of dividends, to participate in the management of the joint stock company and to a part of the property remaining after its liquidation.
The types of stocks are very diverse. Shares are classified based on the following characteristics:
by type of transfer of ownership;
by the scope of rights granted to the owner of the share.
Ordinary shares serve to ensure equal rights for all owners - members of a joint stock company, especially the right to vote and the right to receive dividends.
Preference shares provide their holders with certain firm privileges in the distribution of profits, in the dissolution of the joint stock company and in the exercise of the right to preemptive purchase of newly issued shares.
Preferred shares come in various types. So they distinguish: cumulative, convertible, plural shares, preferred shares with an increasing share in the liquidation fund, returnable, or revocable preferred shares.
A common or common share does not contain the name of the owner. The transfer of the paper itself is the transfer of a share with all rights without identification of the owner.
A registered share means a share containing information about the owner of the security.
Vinculated registered shares are limited transferable shares.
Adjusted shares are formed by the transformation of savings from retained earnings into fixed capital without attracting additional capital to the company.
Collective shares are distributed by a joint stock company to its collective, either free of charge or at a reduced price, and, as a rule, are held for a certain period.
Popular shares are issued to the general public at discounted prices when the public sector is privatized. This is how the formation of capital by the masses is guaranteed.
A "golden share" is a special type of share that gives its owner, the state, special rights in comparison with all other shareholders for the purpose of state control over the enterprise being privatized. According toDecree No. 144 of the President of the Republic of Belarus dated March 42009, the institution of the "golden share" in the country is canceled.
Shares are the most common securities of the whole variety of securities. This explains the increased interest in them not only by investors and professional managers, but also by academic economists.
Bond- this is an equity security securing the right of its holder to receive a bond from the issuer within the period stipulated by it of its par value and the percentage of this value or other property equivalent fixed in it.
There is a wide variety of bonds. Bonds are classified by issuers, purposes of issue, loan terms, nature of circulation, methods of registration, form of issue and forms of payment of income.
Bonds are generally considered the safest investment. Professionals in the securities market call bonds, depending on the issuers, corporate, municipal, state and departmental. Despite the specifics of the issue and the characteristics of each type of bond, they have one common quality - they are promissory notes, evidence of a loan provided by the lender (owner of the bond) to the borrower (issuer). For the use of the borrowed money, the issuer of the bond must pay their holder a remuneration in the form of interest during the entire period of holding the bonds. And the total amount to be repaid is called the principal amount of the loan, or face value. A number of well-established terms are also used in relation to bonds. The date of repayment of the loan amount is usually called the maturity date of the bonds, the interest rate - the coupon, and the circulation time of these securities - the circulation period.
Fixed income securities other than bonds are certificates of deposit and savings. Certificates of deposit and savings certificates are written certificates of the issuing bank certifying the right of the depositor (beneficiary) or his successor to receive the deposit amount and interest on it after the expiration date. Certificates of deposit can be issued on a one-off basis and can be either registered or bearer. They are issued only to legal entities and are issued for a period from 30 days to 1 year. Savings certificates are only issued to individuals and have a maturity of three years.
Promissory note- this is a written promissory note drawn up in the form established by law and giving its owner the unconditional right to demand, upon the onset of the term specified in the bill of exchange, from the person who issued the obligation, the payment of the amount specified in it. The most liquid are promissory notes that have a guarantee of large banks in the form of aval (surety) or acceptance (consent to payment).
Option- a contract concluded between two parties, according to which one of the parties (the option seller) grants the other party (the option buyer) the right to buy or sell a certain asset at a fixed price within the time period specified in the contract or on a certain date.
Futures contract - This is a standard exchange-traded contract for the sale (delivery) of an exchange-traded asset after a certain period in the future at a price set by the parties to the transaction at the time of its conclusion.
Warrant is a security that gives its owner the right to buy a certain number of shares (or bonds) of any company within a specified period of time at a fixed price .
Check- this is a security containing an unconditional order of the drawer to the bank to make a payment of the amount indicated in it to the check holder.
Bill of lading is a document of a standard form, accepted in international practice, for the carriage of goods, which certifies its loading, transportation and the right to receive. The bill of lading is used for the carriage of goods in international traffic and is a security that certifies the right of ownership of the transported goods, goods.
Mortgage is a registered security that certifies the rights of its owner in accordance with the mortgage agreement (pledge of real estate) to receive a monetary obligation or the property specified in it.
According to the level of risk, the types of securities are arranged on the basis of the principle: the higher the yield, the higher the risk, and the higher the security of the security, the lower the risk. This dependence is shown in Figure 1.
Figure 1 - Classification of securities by risk level
The world commodity sphere consists of two categories: the first is the provision of our own services, the second is money. Finance can be represented in the form of money and capital. Money is unique in that it is with the help of money that new money is accumulated. In commodity circulation there is a constant movement of money in the form of their transfer from one consumer to a new one. Thanks to this scheme, a complex chain of monetary relations is formed within the organized money market. Over the millennia, the world market has developed several methods of transferring funds - this is the issuance of credit loans and the turnover itself, in which all types of securities circulate.
The value of securities lies in the fact that theoretically they can be safely equated in function to money, but they, above all, also provide their owner with specific rights. A person who has money with him can exchange the existing product for any security, making sure that the value of the latter is greater than or equal to money.
Characteristic features of securities and their role in the global market
When characterizing securities, it should be borne in mind that this is a specific commodity unit. It can only rotate within its own special market. But in comparison with money, it knows neither the consumer price nor the generally accepted material value. Therefore, such a market does not belong to the category of services. The above documents that circulate within the special stock market are called financial instruments. This name was given to them for a reason, because with their help you can earn money by putting up such a peculiar product for auction.
Securities are documentation where all rights are reflected in property and non-property terms. Within the market, they can both freely circulate and have specific tasks. That is, to be:
- an object for transactions;
- purchase and sale tool;
- a source that allows you to receive regular or one-time profits.
Based on the above, we can conclude that the described financial instruments are types of capital, in the movement of which the distribution of material resources takes place.
The Code of the Russian Federation characterizes these papers as documentation that provides for a certain form, with the content of details confirming that property rights belong to a specific person. The official transfer of the latter is foreseen only when the official document is presented.
The content of each security, without exception, is subject to the terms of the country's legal framework. And the value of this document appears only if its form meets all the requirements with the obligatory content of the details. All requisites may have technical parameters and clear content of an economic nature. The technical parameters (requisites) include addresses, different numbers, signatures of the owners of the documents, as well as those affixed on the seal forms. The concept of economic details implies the form of drawing up a document, which contains:
- validity;
- the affiliation of the person entrusted with certain duties;
- clear denomination;
- availability of rights.
The security has its own distinctive features. Namely:
- This is an official document, which only an authorized person is entitled to draw up. It always has unique details and has a number of rights.
- Private rights are displayed in the document. The latter are expressed in two forms: presented as the title of the owner or displayed in the form of a relationship between the legal entity that received the document and the person who issued it.
- The rights that a certain document stipulates have the right to be exercised only after its presentation.
- In respect of civil law agreements, the document must be negotiable.
- The person mentioned in the security has the right to present the requirements specified in the document to its owner.
- This is an official document confirming the fact that investments have taken place, therefore, the money pledged and reflected in it acquires the characteristics of a material object.
Standard classification of securities: detailed description!
The classification of securities means their division into types according to unique criteria. In parallel with this, the main types of securities are sorted by subtype, and those are further sorted. Therefore, it becomes clear that the subordinate division is included in the superior classification. For example, a stock is considered a type of security. And it can be both ordinary and privileged. It may or may not have a face value.
So, valuable documents are also distinguished by unique characteristics:
- By "life expectancy": urgent, and those that are not limited by terms;
- By actual existence: documentary expression, non-documentary expression.
- By the characteristics of ownership: to an indefinite person (that is, a person who, under certain circumstances, can become the bearer of the document), as well as registered ones (those in which the name of their owner is spelled out). If bearer shares are aimed at any person who may one day become a bearer, then the name of their owner is initially spelled out in registered shares, they must always be officially registered. All important information about such shares is entered in the register of official shareholders.
- By the principles of treatment: documents, the transfer of which takes place through delivery or through cession; or order ones (that is, they are transferred after the actual order of their owner).
- Based on the actual release form: can be emission or non-emission.
- By registration parameter: registered (according to the legislation, can be registered by government agencies and the Central Bank of the Russian Federation), as well as documents that are not registered anywhere.
- By the parameter of belonging to a certain state the financial market instrument described above can be foreign or Russian.
- Depending on the type of issuer the financial instrument described above can be: state, corporate. The issue of government securities is carried out by state offices that have the relevant competence, and private companies are engaged in the issue of corporate documents.
- If we consider securities by the sphere of their circulation, then two categories can be distinguished - market and non-market (the last category implies the return of securities strictly to the issuing organization, in addition, such securities are strictly prohibited from resale).
- By the nature of use: investment (the owners of such documents pursue a single goal - to receive additional income), non-investment (the purpose of which is to service the turnover within the goods market).
- By the parameter of the risk level, the type of documents described above can be risky and risk-free. If everything is clear with documents that do not imply any risk, then risky documents can be discussed for a long time, since they are divided into low-risk, high-risk and medium-risk.
- By the parameter of accrued income: those that do not imply a income part, and income (these are divided into: interest, dividend, discount).
- By the peculiarities of raising funds: equity (they clearly reflect the percentage owned by the owner in the context of 100% of the authorized capital of the enterprise) and debt (that is, they illustrate the option of the loan that took place).
Types of securities
The main types of securities are basic financial instruments and derivatives.
Basic- these are the documents, in the content of which specific rights (property) to a certain rather valuable asset are already laid down. An interesting fact is its versatile expression. It can be presented as either capital or money. But it can also act as property, as well as another other resource. Whenever we talk about basic securities, these types are meant:
- stock;
- bonds;
- promissory notes.
But it also includes bank certificates, checks, and also - warrants, bills of lading, mortgages, unit investment funds.
Since underlying securities are common financial instruments today, it is advisable to pay a lot of attention to them. So, they are divided into the following types:
- Primary(They are often based on assets. But the interesting fact is that they themselves are not included in them in any way. Hence the widespread concept - "securities backed by assets"). The primary ones are usually stocks, bonds, in addition, this category implies bills of exchange and mortgages.
- Secondary- these are official documents of a high degree of importance, which are created for a certain type of securities. Warrants are most often used today, but depositary receipts may also occasionally occur.
Types of primary securities: detailed information about each type and unique differences!
Stock- This is a common security today. Only a joint stock company has the official right to issue such documents. The document described above secures the rights of its owner (who, after the acquisition of shares, can be safely called a shareholder) to legally receive a certain percentage of the profit of the joint-stock company. The shareholder will receive profit on shares systematically, it will be credited to his account in the form of dividends. The share is valuable in that it allows you to manage the property of a particular joint-stock company under the conditions of its official liquidation. Today there are both common and preferred shares in circulation.
Bond they call a security that acts as a debt obligation. Its owner thus promises to return the pledged amount of money after a certain period of time with the payment of some income (or without its payment). If the issue of bonds is entrusted to the shoulders of the state apparatus, then such a paper will be called state. If local government organizations are engaged in the issue of bonds, then the bond issued by them will be called municipal. By the way, not everyone knows that bank offices can also issue the above-mentioned document. Therefore, such bonds are called bank bonds. If other companies are engaged in the issue of these securities, then another new concept appears - corporate bonds.
By bill it is considered to be a document that acts as a kind of debt guarantee. Such a document is always drawn up in writing, it is subject to a specific statutory form. If we are talking about a promissory note, then we mean obligations that are not supported by anything in fact. But there is also such a concept as an original bill, which implies an offer to a certain person-payer (this person is always indicated in the bill).
Such debt securities oblige the payer to pay the amount indicated in the document before a specific date.
The above securities are not a complete list of them. There is one more species worth mentioning. This is - bank certificate, which means freely circulating evidence that a specific monetary contribution exists, and it was opened in a specific place, on a specific day, by a specific person. In order not to get confused in the types of bank certificates, you should clearly distinguish between them. So, if a deposit in the bank was opened by a legal entity - such a bank certificate will be called a deposit certificate, if an individual was the opener of the deposit - such a document can be called a savings document. The bank that issued this security to a specific person undertakes to return this deposit and interest on it after a certain period.
A bearer bank savings account can be safely called a type of bank certificate (together with the above-described ones - a certificate of deposit and savings).
Bill of lading- this is another type of securities. He is little known to the general public and the average man in the street. A bill of lading is a document, a characteristic feature of which is a clear standard form, which is strictly prohibited to correct or change. Such securities usually rotate within a wide international arena. The bill of lading prescribes the terms of the contract for the carriage of goods by sea. This document certifies the actual loading of the cargo, its transportation and gives the right to receive the cargo. This document is divided into four types:
- charter,
- linear,
- onboard,
- coastal.
By check it is customary to call a security, which is a written confirmation of the drawer's order to the bank to pay the holder of the check a specific amount (clearly stated in the document) during the validity period of this document. The drawer is usually a legal entity that has funds in a bank office. The drawer officially has the right to dispose of bank funds by issuing checks. The check holder is usually a person (more often a legal entity) for whom the drawer issued the check. This document has its own specific classification: checks are personal, bearer and order.
An interesting type of security is warrant... It has a double meaning and can mean two different concepts. In the practice of commodity circulation, a warrant means a document issued by a warehouse. A warrant in warehouse practice confirms the right to own a specific product stored within the warehouse.
Among shareholders, the term warrant means a security that gives its owner the right to buy from a given issuer a number of its shares (or bonds) at the declared value over a certain time interval.
Mortgage- it is always a registered security, which serves as a certificate of the right of its owner in accordance with the mortgage agreement (mortgage of housing), to receive money or the property specified in this document.
Investment share- another type of securities, which serves as a certificate of the share of its owner about the actual right to own property held by a particular mutual investment fund (abbreviation - mutual investment fund).
So, depositary receipt- This is a certificate of ownership of a certain number of shares of the issuing organization, which is located outside the country. This document is issued in the state of the investor. In our country, the concept of a depositary receipt is understood as an indirect purchase of shares of a foreign issuing organization.
Types of secondary securities and their specificity
Studying the topic of securities, it is important to study the properties of derivatives. First of all, we note that this is a paperless form of guarantees that arise due to fluctuations in the value included in the document of a given exchange asset. Derivatives include - futures contracts (which also have their own types, subdivided into currency, commodity, index, interest rate), swaps and options, which are always in free circulation.
So, futures contracts- these are guarantees that the goods will be bought or sold at a certain time in the near future (period boundaries are usually clearly spelled out) at the cost that was established at the time of signing of this security. Many newcomers to the business world mistakenly believe that signing futures contracts can be equated with an act of sale and purchase. In fact, this is far from the case. By signing such a contract, the seller does not transfer his goods into the hands of the buyer, just as the buyer does not transfer money to the seller for such goods. The signing of a futures contract only means that the seller guarantees to deliver the goods at a specific pre-agreed price (it is always written in such a contract) on a specific date; and the buyer, in turn, undertakes to pay a specific amount of money for the product. An intermediary (a futures company that conducts futures trading) acts as a guarantor of such obligations. Thus, a futures contract turns into an important document and can be overbought several times throughout its "life period".
Option- another type of securities. By option, it is customary to mean a contract. By signing the latter, the buyer gets the full legal right to buy (or sell) a specific asset at a specific, clearly agreed value. The option prescribes certain terms within which the purchase or sale of an asset must take place. But during the period of the option, its owner can also voice the refusal to complete the transaction. By signing such a contract, the obligation is given not only by the buyer, but also by the seller, guaranteeing for a certain amount of money to ensure the realization of the right to purchase. Often in practice, there is confusion in the definition of the concepts of futures and options. To prevent this from happening, it should be clearly understood that the key difference between an option and a futures is that an option gives the purchaser of something a right, but not an obligation. Options can only be exercised if, at the time of exercise, they are accompanied by a specific win.
Swaps also supplement the existing types of securities. Swaps are agreements in which two parties prescribe the conditions for the future exchange of assets or payments for such assets in accordance with the conditions specified in the contract. Such types of swaps are known today: currency, interest rate, index, and also commodity.
Swaps have always been and will be an attractive type of securities for individuals who have an impressive amount of money. Investors find this financial instrument attractive, as it can significantly reduce currency and interest rate risks, as well as have a good profit for the percentage difference.
All types of securities of this format are free, over-the-counter contracts. Therefore, it is impossible to fix them on the stock exchange. Their liquidity is directly related to special intermediaries, that is, bank offices and dealers. These types of securities have an important feature - their turnover is regulated by the state apparatus, the main place in the swap market is given to bank offices, which act as participants in such transactions.
Properties of securities
All types of securities have the same properties. Properties are the moment that unites them all. So, the properties of securities include:
- negotiability (this property implies the ability of all types of securities to be bought and sold within the special market; this property allows them to act as an autonomous instrument of quick payments).
- accessibility for the framework of civil circulation (this factor is extremely important for the public, since it implies the ability of a security to become an object of other civil transactions).
- serial characteristics and standardization (that is, upon release, they are subject to standard forms, according to which they are issued);
- marketability (that is, all securities belong to the relevant market in which they are circulated);
- liquidity (all types of securities have the ability to sell quickly, thus turning into money);
- risk (all types of securities have this property, it indicates the possibility of losses that an investor in securities may have);
- the obligation to be fulfilled;
- a certain degree of profitability.
Functions that all types of securities have
If we consider the functions as a whole, then all types of securities, regardless of their type, perform five functions that are most important for society:
- Carry information function, reflecting the actual state of economic processes in the country. If the stock prices are stable or have increased, it means that the economy is normal. If all types of securities began to show a decline in prices, it means that the country's economy is in a difficult situation.
- Perform redistributive function, that is, they are responsible for the flow of capital between different spheres of the economy.
- Used as mobilization a tool for temporarily released money from citizens.
- Perform regulating function in the processes of monetary circulation.
- For banks and enterprises, all types of the above-described securities are a convenient and, in its way, a universal credit and settlement instrument.
Issue of securities
The issue of securities is a complex set of procedures established by law that create conditions for the distribution of securities among several investors. With its help, the issuer attracts additional finance for the development of its activities in the form of loans. These are bonds. If it is necessary to increase the authorized capital, the issuer issues shares. Both options are carried out under state control, by persons authorized to regulate the securities market.
Professionals (underwriters) from the stock market are involved in the issue. By concluding an agreement with the issuer, they assume obligations related to the issue and placement of documents.
The issue of securities, in relation to the priority, is primary and secondary. An issue is called primary when the issue of securities by a commercial entity is carried out for the first time. Secondary - involves their subsequent placement.
The issue has several ways of placing documents:
- by distribution;
- via subscription;
- by conversion method.
Conversion of securities
Conversion is a method of placing documents with their simultaneous exchange for another type of paper under certain conditions. Only the owners of securities become participants in the conversion.
Conversion types:
- conversion between shares for a higher or lower par value;
- conversion between shares with different rights;
- conversion between bonds;
- exchange of bonds for shares;
- conversion associated with the reorganization of commercial structures.
The legislation of the Russian Federation prohibits the conversion of ordinary shares into preferred shares with certain rights and restrictions. Also, a ban was imposed on the conversion of shares into bonds.
Features of the securities market
The economic relationship between the persons issuing and buying the financial instruments described above is called the securities market.
This market involves investment institutions, investors, as well as significant issuers in their role. Organizations that issue and sell such financial instruments are called issuers.
In accordance with the definition, the role of goods in such a market is played by all types of securities, and the number of its participants, their activities, location and other factors depend on them.
The securities market in the economy of any country is the main apparatus that redistributes money capital into certain types of it. Thanks to the stock market, conditions are created for the free redistribution of capital in more efficient areas.
Why is state regulation necessary and what are its principles in the conditions of modern reality?
The need for government intervention in the securities market is due to a number of such reasons:
- the need to ensure the principle of unity regarding the activities of all disparate elements of this system;
- ensuring control so that market participants are aware of the responsibility of their activities and understand what measures can be directed at those persons who violate the principles of the system;
- the need to create fair conditions of equality between all persons who are participants in the special market described above.
- the need to monitor compliance with the principle of transparency and encourage professionals to join the development of a regulatory framework for a specific securities market;
- the need to stimulate competition by prohibiting the introduction of preferences or all kinds of benefits for certain market participants.
The policy of the special securities market is regulated by the Civil Code of the Russian Federation, as well as by several other laws. The legal framework as a whole sanctifies all aspects of such trading activities and complies with generally accepted norms of the international format.
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