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 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.
{{g}}A [[negotiable investment]]<ref>I say [[negotiable investment|negotiable ''investment'']] not [[negotiable instrument|negotiable ''instrument'']] because a [[cheque]] is a [[negotiable instrument]], and I don’t think you would commonly call that a [[transferable security]].</ref> in [[bearer]] or [[registered]] form and which the holder may freely [[Title transfer|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 securities|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<ref>Yes, yes, I know it can novate it, or sub-participate it, or indeed [[securitise]] it</ref>.
===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.


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).
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.
===[[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.
 
{{c2|Securities|Collateral}}
 
{{ref}}

Latest revision as of 19:18, 23 February 2020

The Jolly Contrarian’s Glossary
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A negotiable investment[1] in bearer or registered form and which the holder may freely transfer by delivery:

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

  1. ↑ 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.
  2. ↑ Yes, yes, I know it can novate it, or sub-participate it, or indeed securitise it
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