Transferable security: Difference between revisions
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===[[Securitisation]]=== | ===[[Securitisation]]=== | ||
To | To “[[securitise]]” an income stream or asset (or a [[loan]], or [[OTC]] [[derivative]]) is to convert it into the form of a transferable security so it can be easily transferred in the market. | ||
{{c2|Securities|Collateral}} | {{c2|Securities|Collateral}} | ||
{{ref}} | {{ref}} | ||
Revision as of 11:57, 11 July 2018
A negotiable investment[1] in bearer or registered form and which the holder may freely transfer by delivery:
- Debt]: A debt security: A bond, note, MTN, warrant, certificate of deposit — that kind of thing — evidencing indebtedness;
- Equities: An equity security, evidencing an equity interest in an undertaking,
To be contrasted with indebtedness or exposure in the form of, say, a loan or over-the-counter derivative, where the creditor or counterparty cannot easily sell its right to repayment[2].
Transfer
These days transferable securities are cleared electronically through clearing systems like Euroclear, Clearstream and DTC. The days of security-printed bearer bonds are over.
Also called a physical security (to distinguish it from a synthetic one).
Securitisation
To “securitise” an income stream or asset (or a loan, or OTC derivative) is to convert it into the form of a transferable security so it can be easily transferred in the market.
References
- ↑ I say negotiable investment not negotiable instrument because a cheque is a negotiable instrument, and I don't think you would commonly call that a transferable security.
- ↑ Yes, yes, I know it can novate it, or sub-participate it, or indeed securitise it