Transferable security: Difference between revisions
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A [[negotiable instrument]]: A [[share]], [[bond]], [[note]], [[warrant]], [[certificate of deposit]] — that kind of thing — evidencing [[indebtedness]] or an [[Equity securities|equity interest]] in an undertaking, in [[bearer]] or [[registered]] form and which the holder may freely [[Title transfer|transfer]] by delivery. These days transferable securities are cleared electronically through clearing systems like [[Euroclear]], [[Clearstream]] and [[DTC]]. The days of security-printed bearer bonds are over. | A [[negotiable investment]]<ref>I say [[negotiable investment]] not [[negotiable instruments]] because a cheque is a [[negotiable instrument]], and I don't think you would commonly call that a [[transferable security]].</ref>: A [[share]], [[bond]], [[note]], [[warrant]], [[certificate of deposit]] — that kind of thing — evidencing [[indebtedness]] or an [[Equity securities|equity interest]] in an undertaking, in [[bearer]] or [[registered]] form and which the holder may freely [[Title transfer|transfer]] by delivery. These days transferable securities are cleared electronically through clearing systems like [[Euroclear]], [[Clearstream]] and [[DTC]]. The days of security-printed bearer bonds are over. | ||
To be contrasted with [[indebtedness]] or [[exposure]] in the form of, say, a [[loan]] or [[over-the-counter]] [[derivative]], where [[creditor]]/[[counterparty]] cannot easily sell its right to repayment. (Yes, yes, I know it can novate it, or sub-participate it). | To "[[securitise]]" an income stream or asset is to convert it into such a form. | ||
To be contrasted with [[indebtedness]] or [[exposure]] in the form of, say, a [[loan]] or [[over-the-counter]] [[derivative]], where [[creditor]]/[[counterparty]] cannot easily sell its right to repayment. (Yes, yes, I know it can novate it, or sub-participate it, or indeed [[securitise]] it). | |||
Also called a [[physical security]] (to distinguish it from a [[synthetic trade|synthetic]] one. | Also called a [[physical security]] (to distinguish it from a [[synthetic trade|synthetic]] one. | ||
{{c2|Securities|Collateral}} | {{c2|Securities|Collateral}} | ||
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Revision as of 11:19, 6 April 2018
A negotiable investment[1]: A share, bond, note, warrant, certificate of deposit — that kind of thing — evidencing indebtedness or an equity interest in an undertaking, in bearer or registered form and which the holder may freely transfer by delivery. These days transferable securities are cleared electronically through clearing systems like Euroclear, Clearstream and DTC. The days of security-printed bearer bonds are over.
To "securitise" an income stream or asset is to convert it into such a form.
To be contrasted with indebtedness or exposure in the form of, say, a loan or over-the-counter derivative, where creditor/counterparty cannot easily sell its right to repayment. (Yes, yes, I know it can novate it, or sub-participate it, or indeed securitise it).
Also called a physical security (to distinguish it from a synthetic one.
==References==
- ↑ I say negotiable investment not negotiable instruments because a cheque is a negotiable instrument, and I don't think you would commonly call that a transferable security.