The commodity world is divided into two groups: actual goods (services) and money. Money, in turn, can simply be money and capital, that is, money that brings in 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 material 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 no worse, and even better, than the money or goods themselves.
A security is a special product that circulates on a special, its own market - the securities market, but has neither real nor monetary consumer value, that is, it is neither a physical product nor a service. In an expanded 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 the object of purchase and sale and other transactions, and serves as a source of regular or one-time income. Thus, securities act as a type of monetary capital, the movement of which mediates the subsequent distribution of material assets.
In the Civil Code Russian Federation contains the classic definition of a security. “A security is a document certifying, in compliance with the established form and required details, property rights, the exercise or transfer of which is possible only upon presentation.”
The security must contain provided for by law mandatory details and comply with the requirements for its form, otherwise it is invalid. The details of a security can be divided into economic and technical. Technical details - numbers, addresses, seals, signatures, names of service organizations, etc. Economic details: form of existence (paper or paperless), period of existence, affiliation, obligated person, nominal value, rights granted.
The characteristics of a security are:
1. Documentation - a security is a document, that is, a record officially compiled by an authorized person in accordance with the details that has legal significance.
2. 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 a ratio of the loan of the person who owns the document to the person who issued it.
3. Necessity of presentation - presentation of a security is mandatory for the exercise of the rights enshrined in it.
4. Negotiability - a security can be the object of civil transactions.
5. Public reliability - in relation to the owner of a security, the person obligated under it can only raise such objections that arise from the content of the document itself.
6. A security is documentary evidence of the investment of funds. Thanks to it, monetary savings become material objects.
CLASSIFICATION OF SECURITIES
Classification of securities is their division into types according to certain characteristics that are inherent to them. In turn, species can in some cases be divided into subspecies, and these are even further apart. Each lower classification is part of one or another higher classification. For example, a share is one of the types of securities. But a share can be ordinary or preferred. An ordinary share can be single-voted or multi-voted, with or without par value, etc.
Securities can be classified according to the following criteria:
1. By duration of existence: fixed-term (short-term, medium-term, long-term and revocable) and unlimited.
2. By form of existence: paper (documentary) or paperless (undocumented).
3. By 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.
4. According to 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).
5. According to the form of issue: emission or non-emission.
6. By registration: registered (state registration or registration of the Central Bank of the Russian Federation) and unregistered.
7. By nationality: Russian or foreign.
8. By type of issuer: government securities (this is usually various types bonds issued by the state), non-state or corporate (these are securities that are issued by companies, banks, organizations and even individuals).
9. By negotiability: market (freely circulating), non-market, which are issued by the issuer and can only be returned to him (cannot be resold).
10. By purpose of use: investment (the goal is to generate income) or non-investment (serve turnover in commodity markets).
11. By risk level: risk-free or risky (low-risk, medium-risk or high-risk).
12. Based on the availability of accrued income: non-income or income-generating (interest, dividend, discount).
13. At face value: constant or variable.
14. By the form of raising capital: equity (reflecting the share in the authorized capital of the company) and debt, which are a form of capital loan ( cash).
TYPES OF SECURITIES
Securities are divided into 2 classes: basic securities and derivative securities (derivatives).
Basic securities are securities based on property rights to any asset, usually to goods, money, capital, property, various types of resources, etc. Such securities include: shares, bonds, bills of exchange, bank certificates, bills of lading , check, warrant, mortgage, shares of mutual funds and others.
Basic securities can be divided into primary and secondary.
1. Primary is based on assets, which does not include the securities themselves (asset-backed). This is, for example, a stock, a bond, a bill, a mortgage.
2. Secondary - these are securities for the securities themselves: warrants, depository receipts, etc.
Promotion 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 part of the property remaining after its liquidation. Generally, shares are divided into two groups: common shares and preferred shares.
Bond is a security that is a debt obligation to return an invested amount of money after a specified period with or without payment of a certain income. If a bond is issued by the government, then such a bond is called a government bond. If local governments - then municipal. Legal entities also issue bonds: banks - bank bonds, other companies - corporate ones.
Bill of exchange(from German Wechsel - exchange) - a security in the form of a long-term obligation, drawn up in writing in a certain form, certifying an unconditional obligation of the drawer (promissory note), or an offer to another payer specified in the bill (bill of exchange) to pay upon the due date a bill of exchange for a specified amount of money.
Bank certificate- a security that is a freely negotiable certificate of a monetary 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 savings book is essentially a type of bank certificate (along with deposit and savings certificates).
Bill of lading- a security, which is a document of a standard form accepted in international practice, which contains the terms of the contract for the carriage of goods by sea, certifying its loading, transportation and the right to receive it. Types of bills of lading: liner, charter, shore and onboard.
Check- a security document certifying a written order from the drawer of the check to the bank to pay the check holder the amount of money specified in it during the period of its validity. The drawer of the check is a legal entity that has funds in the bank, which it has the right to dispose of by issuing checks, and the holder of the check is the legal entity in whose favor the check is issued. There are the following types of checks: personal, order and bearer.
Warrant– a) a document issued by the warehouse and confirming ownership of the goods located in the warehouse; b) this is a security that gives its owner the right to buy from a given issuer a certain number of its shares (bonds) at a price set by it during a period of time specified by it.
Mortgage- this 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 the property specified in it.
Investment share- a registered security certifying its owner’s share in the ownership of the property constituting a mutual investment fund.
Depository receipt- this is a security indicating ownership of a certain number of shares of a foreign issuer, but issued for circulation in the investor’s country; This 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 a property right (obligation) arising in connection with a change in the price of the underlying exchange asset. Derivative securities include: futures contracts (commodity, currency, interest, index, etc.), freely traded options and swaps.
futures contracts(commodity, currency, interest, index, etc. - obligations to buy or sell a product 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. The futures become a security and can be repurchased many times during its entire validity period.
Option- this is a security, which 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 refuse the transaction, and the seller undertakes, at the request of the counterparty for a monetary premium, to ensure the exercise of this right. An option gives the right to choose, which is what gave this security its name. An option, unlike a futures contract, gives the acquirer a right, not an obligation. Options are exercised if they are cash options at the time of exercise.
Swaps represent an agreement between two parties to conduct a future exchange of underlying assets or payments for these assets in accordance with the terms specified in the contract. Swaps can be currency, interest rate, stock (index) and commodity.
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 costs of managing a securities portfolio.
All types of swaps are over-the-counter contracts, they are not traded on an 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 OF SECURITIES
A security is a form of existence of capital, different from its commodity, productive and monetary forms, which can be transferred instead of itself, circulate on the market as a commodity and generate income. Properties of securities:
1. Tradability – the ability to be bought and sold on the market, and in many cases to act as an independent payment instrument.
2. Availability for civil circulation – the ability of a security to be the object of other civil transactions.
3. Standard and serial.
4. Documentation - a security is always a document, and as a document it must contain all the mandatory details provided for by law.
5. Regulated and recognized by the state.
6. Marketability - inextricably linked with the corresponding market and are its reflection.
7. Liquidity - the ability of a security to be quickly sold and converted into cash.
8. Risk – the possibility of loss associated with and inevitably inherent in investments in securities.
9. Mandatory performance.
10. Profitability - characterizes the degree of realization of the right to receive income by the owner of the security.
FUNCTIONS OF SECURITIES
Securities perform a number of socially significant functions:
1. They have a clear information function and indicate the state of the economy. Stable securities prices or their increase, as a rule, indicate a normal economic situation.
2. Play an important role in the flow of capital between various areas economy (redistribution function).
3. Used to mobilize temporarily free cash savings of citizens (mobilizing function).
4. Used to regulate money circulation (regulatory function).
5. Banks, enterprises and organizations use securities as a universal credit and settlement instrument (settlement function).
Issue of securities
An issue is a set of procedures established by law that ensures the placement of securities between investors. Its purpose is to attract additional financial resources by the issuer on borrowed terms (in the case of issuing bonds) or by increasing 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 bodies regulating the securities market.
The issue is usually carried out by attracting professional stock market participants, called underwriters, who, under an agreement with the issuer, undertake certain obligations for the issue and placement of its securities for an appropriate fee.
From the point of view of priority, emissions are usually divided into primary and secondary. A primary issue occurs either when a business entity issues its securities for the first time, or when a security is issued for the first time by that entity.
Subsequent issue is the repeated placement of certain securities of a given commercial organization. According to the placement method, the issue can be carried out through distribution, subscription and conversion.
Conversion of securities
Conversion is the placement of one type of security by exchanging it for another under predetermined conditions. Participation in the conversion can only be taken by persons who, prior to its implementation, have ownership rights to the securities already placed. Conversion can be divided into the following types:
a) conversion of shares into shares with a higher par value,
b) conversion of shares into shares with a lower par value,
c) conversion of shares into shares with other rights,
d) conversion of bonds into shares,
e) conversion of bonds into bonds,
f) conversion of securities during the reorganization of commercial organizations.
Conversion of common 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.
SECURITIES MARKET
The securities market is a system of economic relations between those who issue and sell securities and those who buy them. Participants in the securities market are issuers, investors and investment institutions. Enterprises that issue and sell securities are called issuers.
The stock market is an institution or mechanism that brings together buyers (demand providers) and sellers (suppliers) of stock values, i.e. securities. The concepts of the stock market and the securities market coincide.
According to the definition, the goods traded on this market are securities, which, in turn, determine the composition of participants in this market, its location, operating procedure, regulatory rules, etc.
In a market economy, the securities market is the main mechanism for the redistribution of monetary savings. The stock market creates a market mechanism for the free, albeit regulated, flow of capital into the most efficient sectors of the economy.
One of the areas of investing capital for the purpose of generating income or making settlements is securities. Some people are very well versed in the variety of securities, while for others this is an unexplored field of activity. You can’t talk about securities and their types in one material, so only them are concentrated here brief descriptions. And more detailed description securities with which banks work will be presented by me in separate articles.
So, before talking about the types of securities, let's first give the definition of a security, which is set out in Article 142 of Chapter 7 of the Civil Code of the Russian Federation (Civil Code of the Russian Federation):
Security- this 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 presentation. A security can only appear as a result of an issue. The issue of securities is a sequence of actions by the issuer to place issue-grade securities.
Federal law dated April 22, 1996 N 39-FZ “On the Securities Market” regulates the relations arising during the issue and circulation of issue-grade securities, regardless of the type of issuer, as well as the features of the creation and activities of professional participants in the securities market. Depending on who issues the securities, they can be classified as bank securities, government securities, or securities of legal entities. The issue of securities cannot be carried out by individuals, but they can be holders.
Issuer- a legal entity or executive authorities or local governments that bear, on their own behalf, obligations to the owners of securities to exercise the rights assigned to them.
Owner- a person to whom securities belong by right of ownership or other proprietary right.
And Article 143 of Chapter 7 of the Civil Code of the Russian Federation lists the main types of securities. The main securities include:
- Government bonds;
- Bonds;
- Bills of exchange;
- Bill of lading;
- Stock;
- Privatization securities and other documents.
When working with bank securities, you must always remember that funds invested in securities are not subject to Federal Law No. 177 of December 23, 2003. “On insurance of deposits of individuals in banks of the Russian Federation”, i.e. are not covered by insurance. And in Art. 5 clause 2 of the same law specifically emphasizes that funds placed by individuals in bank deposits payable to bearer, including those certified by savings certificates and (or) savings books payable to bearer, are not subject to insurance.
Most types of securities (documentary), as a rule, are drawn up on standard forms of strict reporting and must contain the mandatory details established by the relevant laws, which include the following:
- Name of the security;
- Date of registration of the security (deposit of funds);
- Full name and location of the legal entity - issuer;
- Nominal value of the security;
- Name of the holder (owner), only for registered securities;
- Deadline for payment (claim) of the amount;
- Type of return on a security – interest rate, which indicates the interest rate and the amount of interest due; discount; interest-free.
- Other details depending on the type and purpose of the security.
- Registered issue-grade securities that carry information about the owners, which must be available to the issuer in the form of a register of owners of securities, the transfer of rights to which and the exercise of the rights assigned to them require mandatory identification of the owner.
- Issue-grade bearer securities, the transfer of rights to which and the exercise of the rights secured by them do not require identification of the owner.
Now we can give a definition for each type of security, as well as give a brief description of them:
Bonds. Government bonds
Bond- this is a security that is a debt obligation issued by the state or an enterprise under certain conditions when they issue an internal loan and gives its holder (owner) income in the form of a fixed percentage of its face value. The meaning of the term “bond” is legally enshrined in Part 2 of Art. 816 of the Civil Code of the Russian Federation, and the relationship between the issuer and the bond holder is regulated by Art. 807 – 818 Civil Code of the Russian Federation.Depending on the issuer, i.e. of the person who issued the security, bonds are distinguished into the following types:
- government bonds, which are issued on the basis of the Law of the Russian Federation of November 13, 1992 “On the State Internal Debt of the Russian Federation”,
- municipal bonds, which are issued on the basis of the Law on general principles local government organizations,
- commercial bonds of legal entities, which are regulated by the Law on Joint Stock Companies.
- registered or bearer,
- free circulation or limited circulation,
- with or without security (collateral or other),
- with a one-time repayment period or with repayment in series at certain dates,
- with a fixed or floating coupon rate,
- regular or convertible.
Bills of exchange
Bill of exchange is a security that certifies the unconditional monetary debt unilateral obligation of the drawer (bank) to pay a certain amount of money to the holder (owner of the bill) upon maturity. A bank bill is basically of a deposit nature, and is issued by the issuing bank on the basis of the client depositing a certain amount of funds with the bank. The legislative meaning of the term “bill” is enshrined in Part 2 of Art. 815 of the Civil Code of the Russian Federation. Commercial banks issue bills of the following types:- promissory notes, which represent a unilateral, unconditional obligation of the bank to pay a certain amount specified in the bill within a specified period;
- bills of exchange for which payers indicate third parties - debtors or guarantors of the bank.
The bill is used as:
- means of payment;
- collateral and means of payment for lending.
Checks
Check- this is a security containing an unconditional order from the drawer to the bank to pay the amount specified in the check to the check holder. The definition of a check is set out in Article 877 of Chapter 46 of the Civil Code of the Russian Federation and Chapter 7 of the Regulations Central Bank No. 2-P dated 04/12/2001 “On non-cash payments in the Russian Federation.”Checks are of the following types:
- nominal,
- order
- bearer
The issuance of checks is carried out on the basis of an agreement (check agreement) between the drawer and the payer, according to which the paying bank undertakes to pay the checks if there are funds in the drawer's account.
Savings (deposit) certificates
Savings (deposit) certificate- this is a security certifying the amount of the deposit made to the bank and the right of the depositor (certificate holder) to receive, upon expiration of the established period, the amount of the deposit and the interest stipulated in the certificate in the bank that issued the certificate or in any branch of this bank. This definition of a savings (deposit) certificate is set out in paragraph 1 of Article 844 of Chapter 44 of the Civil Code of the Russian Federation.Savings (deposit) certificates are of the following types:
- personalized
- to bearer
- Special view fixed deposit interest rate, which is established when issuing a security. Payment of interest on a savings certificate is made simultaneously with the redemption of the certificate upon presentation.
- It can be given as a gift or transferred to another person. A savings certificate issued to the bearer is transferred to another person by simple delivery, and a registered certificate is transferred simple design assignment (assignment of a claim).
- Certificates can be bequeathed to your heirs.
- It can be used as collateral for loans.
- Used to store money while traveling.
- Used as a means of payment between individuals.
Bearer savings books
Bearer savings book is a security that certifies the deposit of a sum of money into a banking institution and the right of its owner to receive this amount in accordance with the terms of the cash deposit. The issuance of a bearer savings book is carried out in cases where this is provided for in the bank deposit agreement, and only citizens can be the owners of such a security. The procedure for issuing and circulation of a bearer savings book is enshrined in Art. 843 of the Civil Code of the Russian Federation and Chapter 6 of the Law on Banks and Banking Activities.The transfer of rights to another person, certified by a bearer security, in this case, a bearer savings book, is carried out by simply delivering the security to this person, which is enshrined in Art. 146 clause 1 of the Civil Code of the Russian Federation.
In accordance with Federal Law No. 177 - FZ of December 23, 2003 “On insurance of deposits of individuals in banks of the Russian Federation,” deposits registered with a bearer savings book do not participate in the bank deposit insurance system.
In addition, it is worth noting that transactions involving the placement of funds of certain amounts into deposits with the registration of a bearer savings book are subject to mandatory control in accordance with Federal Law No. 115 of 08/07/2001. “On combating legalization (laundering) of proceeds from crime.”
Bill of lading
Bill of lading- this is a transport document, which is a security that contains the terms of the contract of carriage by sea and expresses ownership of the specific goods specified in it. A bill of lading is a document the holder of which receives the right to dispose of the cargo. The basic rules for the circulation of a bill of lading and its details are enshrined in Art. 123 - 126 of the Merchant Shipping Code.The bill of lading is issued by the carrier to the sender after acceptance of the cargo and certifies the conclusion of the contract. A bill of lading is issued for any cargo, regardless of how the transportation is carried out: with the provision of the entire ship, individual ship premises, or without such a condition. Under a bill of lading, the delivery of goods by water is carried out in accordance with the Hague Rules contained in the International Convention for the Unification of Conditions of Bills of Lading of August 25, 1924, unless any other state law applies.
Types of bills of lading:
- Linear bill of lading. Linear bill of lading (linear B/L) is a document that sets out the will of the sender aimed at concluding a contract for the carriage of goods. A line bill of lading defines the relationship between the carrier and a third party - the bona fide holder of the bill of lading. A bill of lading is a receipt issued by the carrier to the sender confirming acceptance of cargo for carriage by sea, as well as a document of title. In this case, the contract for the purchase and sale of goods, as well as other transactions in relation to the goods, are carried out through a bill of lading without the physical transfer of the goods themselves.
- Charter bill of lading. A charter bill of lading (charter B/L) is a document issued to confirm acceptance of cargo transported under a charter. A charter is a charter agreement, i.e. an agreement to hire a vessel for a voyage or for a specified period of time. The charter bill of lading does not serve as a document for the execution of a contract of sea carriage, since in this case it is concluded separate agreement to charter a vessel in the form of a charter. The charter bill of lading defines the relationship between the carrier and the third party - the bona fide holder of the bill of lading. A bill of lading is a receipt issued by the carrier to the sender confirming acceptance of cargo for carriage by sea, as well as a document of title. In this case, the contract for the purchase and sale of goods, as well as other transactions in relation to the goods, are carried out through a bill of lading without the physical transfer of the goods themselves.
- Shore bill of lading. Coastal bill of lading (custody B/L) is a document issued to confirm the acceptance of cargo from the sender on shore, usually at the carrier's warehouse. When cargo is accepted on board a ship for which a shore bill of lading has been issued, a note is made in it about the loading of the goods on the ship and the date of loading and other marks are indicated. Sometimes, when cargo is accepted on board a ship, the shore bill of lading is replaced by an onboard bill of lading.
- On-board bill of lading. On board B/L is a document issued when goods are loaded onto a ship.
The consignee is identified in the bill of lading in three ways. Depending on this, bills of lading differ in:
- Personal bill of lading(straight B/L) - a security that indicates the name of a specific recipient.
- Order bill of lading(order B/L) - a security for which the cargo is issued either by order of the sender or recipient, or by order of the bank. An order bill of lading is the most common in maritime transport practice.
- Bill of lading to bearer(bearer B/L) - a document indicating that it is issued to bearer, i.e. it does not contain any specific information regarding the person entitled to receive the goods, and therefore the goods at the port of destination must be released to any person presenting them.
Stock
Promotion 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 part of the property remaining after its liquidation.Today, shares of the largest Russian companies and banks are perhaps one of the most profitable assets that can be available to a private investor.
All shares issued by any Joint Stock Company are registered. As a rule, stocks are divided into two groups:
- Ordinary shares. Owners of ordinary shares of a joint stock company can, in accordance with the Federal Law and the charter of the company, participate in the general meeting of shareholders with the right to vote on all issues within its competence, and also have the right to receive dividends, and in the event of liquidation of the company, the right to receive part of its property
- Preferred shares(one or more types). Owners of preferred shares do not have the right to vote at the general meeting of shareholders, unless otherwise established by this Federal Law.
Preferred shares of a company of the same type provide shareholders - their owners with the same amount of rights and have the same nominal value. The par value of the issued preferred shares must not exceed 25 percent of the authorized capital of the company.
The size of the dividend and (or) the value paid upon liquidation of the company (liquidation value) for preferred shares of each type must be determined in the company's charter. The dividend amount and liquidation value are determined in a fixed monetary amount or as a percentage of the par value of preferred shares. The size of the dividend and the liquidation value of preferred shares are also considered determined if the charter of the company establishes the procedure for their determination.
Owners of preferred shares for which the dividend amount is not determined have the right to receive dividends on the same basis as owners of ordinary shares.
The types and procedure for issuing shares, the procedure for creating and operating Joint Stock Companies, and protecting the rights and interests of shareholders are ensured by the Civil Code of the Russian Federation and the Federal Law of the Russian Federation “On Joint Stock Companies” dated December 26, 1995 No. 208-FZ (as amended).
The latest changes and additions were made on December 12, 2010.
The physiological characteristics of human vision predetermine the perception of the middle of the rectangle significantly higher than its geometric middle. Since the set bar is a rectangle, the perception of its individual elements by the eye obeys the above-mentioned pattern. If, for example, you place it on title page the main lines are at the geometric middle of the stripe height, then they will seem to be lowered too low, the same applies to placing cliches out of line on a text stripe and similar cases. Therefore it is accepted for better perception individual important elements place them on the so-called “optical middle” of the strip, i.e. in such a place in the strip in height in which this element would appear in the center of the strip. The optical center of the strip is considered to be the line distanced from upper limit the stripe is 3/8 of its height, i.e., to determine the line of the optical center, it is necessary to divide the stripe in height into 8 parts, with 3/8 of the height remaining above this line, and, respectively, 5/8 of the height below it. For example, if the height of the strip in a publication is 10 square meters, then the line of the optical center will pass through (10·3)/8 = 3¾ square meters. below the top edge of the strip (6¼ square meters above the bottom edge of the strip).
Classification of securities
Securities has rad classification characteristics, which are divided into temporary, spatial, market.
A).To temporary include: lifespan and origin.
By lifespan There are types of securities: fixed-term and perpetual.
Urgent securities - securities that have a lifetime established at the time of their issue (for example, bills, bonds), Short-term - have a circulation period of up to 1 year. Medium-term - from 1 year to 10 years. long-term - 10-30 years.
Indefinite securities - securities whose circulation period is not regulated in any way (for example, shares, bonds such as “French annuity”).
By origin securities are divided into primary and secondary.
Primary - These are securities that give the right to income or a share in capital (stocks, bonds, bills, mortgages).
Secondary securities are rights to any priced asset (for example, futures and options).
B) To spatial characteristics include: form of existence, national and territorial affiliation.
According to the form of existence securities are:
- documentary or paper(classical form in which a security exists in the form of a document);
- paperless e or undocumented(electronic form or as an account entry).
In relation to securities issued in documentary form, the owner is established on the basis of presentation of a security certificate, and in the case of its deposit - on the basis of an entry in the securities account. In relation to uncertificated securities, the owner is identified on the basis of an entry in the system of maintaining the register of securities owners or, in the case of deposit of securities, on the basis of an entry in the securities account.
By nationality There are domestic and foreign securities.
Territorial affiliation shows in which region the security was issued.
B) K market signs include: type of asset, order of ownership, form of ownership, nature of negotiability, economic entity, risk level, profitability, form of investment.
By asset type, underlying the security (commodity or money), securities are divided into investment and non-investment:
- investment(capital) are an object for capital investment (stocks, bonds, futures);
- non-investment - securities that serve monetary settlements in commodity or other markets (bills, checks, bills of lading).
By order of ownership Securities can be bearer or registered:
- bearer securities do not record the name of the owner, their circulation is carried out by simple transfer from one person to another;
- personalized contain the owner's name and are registered in a special register. When transferring a registered security to another person, a transfer inscription is made on it (endorsement). In this case, the security is called order
By type of ownership securities are divided into state, municipal and corporate.
Issuers state securities are federal authorities and constituent entities of the Federation (for example, federal loan bonds, domestic currency loan bonds, government short-term zero-coupon bonds, government savings loan bonds, gold certificate).
Issuers municipal securities - local governments.
Corporate securities are issued by companies, banks, and organizations.
By nature of appeal securities are divided into marketable and non-marketable.
- market - can be freely bought or sold on the market:
- non-market- their circulation is limited. For example, it cannot be sold to anyone other than the issuer, and even then after a specified period. Non-marketable securities include shares of the workforce.
According to economic essence differentiate the following types securities:
- PROMOTION- a single contribution to the authorized capital of a joint-stock company with the ensuing rights.
- BOND- a single debt obligation to return the invested amount of money after a specified period with or without payment of a certain income.
- BANK CERTIFICATE- a freely circulating certificate of a deposit (savings) deposit in a bank with an obligation to pay this deposit and interest on it within a specified period,
- BILL- a written monetary obligation of the debtor to repay the debt.
- CHECK - a written order from the drawer of the check to the bank to pay the recipient of the check the amount of money specified in it.
- BILL OF LADING- a document (contract) of a standard form for the carriage of goods, certifying its loading, transportation and right to receive it.
- WARRANT - a) a document issued by the warehouse and confirming ownership of the goods located in the warehouse; b) a document giving a preemptive right to purchase shares or bonds of a company within a certain period at a set price.
- OPTION- an agreement according to which one of the parties has the right, but not the obligation, to sell (buy) a corresponding asset from the other party within a certain period at a price established at the conclusion of the agreement, with payment for this right of a certain amount of money, called a premium.
- FUTURES CONTRACT- a standard exchange agreement for the purchase and sale of an exchange asset after a certain period in the future at a price established at the time the transaction was concluded.
By risk level There are risk-free, low-risk and risky securities.
By profitability There are income and non-income securities.
In terms of yield, securities are generally profitable, but may also be non-yielding. TO highly profitable Most often they are high-risk securities, so they are mainly used for speculative transactions. In Russia, government securities are considered high-yielding, while in other countries they are considered low-yielding.
TO medium- And low income in Russia include corporate securities.
No income there may be many securities, which is stipulated by the terms of issue.
According to the form of investment securities are divided into debt and equity;
- debt- securities that are issued for a limited period with the subsequent return of invested amounts (bonds, bank certificates, bills);
- equity- securities that give ownership of the relevant assets (shares, warrants, bills of lading).
Security is a document certifying, in compliance with the established form and required details, property rights, the exercise or transfer of which is possible only upon presentation.
To give full description category such as a security, it is necessary to consider main inherent properties:
– a security indicates ownership of capital (share);
– a security reflects the loan relationship between the investor and the issuer (bond, bill);
– a security gives the right to receive a certain income from the issuer;
– securities in the form of shares give the right to participate in the management of the joint-stock company;
– securities give the right to receive a share in the property of the issuing enterprise upon its liquidation.
One of the essential properties of a security is its ability to serve as a subject of purchase and sale on the stock market.
Securities can be classified according to various criteria.
Emission and non-emission securities. Issue-grade securities include shares, bonds, and investment shares. Their issue (unlike non-issue ones) must be registered with financial authorities. Another feature of them is that they are posted in editions; have equal terms and volumes of rights realization within one issue.
Depending on the form in which the investor provides capital to the issuer and how these funds are reflected in the property complex of the enterprise, a distinction is made between equity and debt securities.
Equity security secures the owner’s rights to part of the enterprise’s property during its liquidation, confirms the owner’s participation in the formation of the authorized capital, gives the right to receive a portion of the profit and to participate in the management of the enterprise.
Equity securities include shares, share certificates, and investment units. Debt security reflects the loan relationship between its owner and the issuer, who undertakes to repurchase it within a specified period and pay a certain percentage. An example of debt securities are bonds.
The classification of types of securities by major issuers is as follows:
– government securities that are issued by the federal government;
– municipal securities, which are issued by local authorities;
– corporate securities issued by private businesses (mainly joint-stock companies). Depending on how the rights secured by the security are exercised, the following are distinguished:
– bearer securities – the rights under this security belong to the person who provides it;
– registered securities provide for unambiguous identification of the owner;
– order securities – the rights under them may belong to the person named in the security, who himself exercises these rights or appoints another authorized person (bill and check) to dispose of them. Rights under an order security are transferred by making a transfer signature on this paper - endorsement. A special type of securities is paper money (banknotes). These are a kind of debt obligations of the country's Central Bank.
The Civil Code of the Russian Federation provides a legal definition securities as a document of the established form and details, certifying property rights, the implementation or transfer of which is possible only upon its presentation. This definition reflects a certain set of economic relations that arise in the process of circulation of securities.
In market conditions, its participants enter into numerous relationships with each other, including regarding the transfer of money and goods. These relationships are fixed, formalized and consolidated in a certain way. In this sense, a security is a form of fixation of economic relations between market participants, which itself is the object of these relations. The conclusion of any transaction or agreement consists of the transfer or sale of a security in exchange for money or goods. But a security is not money or a material commodity. Its value lies in the rights it gives to its owner. The latter exchanges goods or money for a security only if he is sure that this paper is no worse than the money or goods themselves. Since money and goods are different forms of existence of capital, the economic content of a security can be expressed as follows.
Security - This is a special form of existence of capital, which replaces its real forms, expresses property relations, can independently circulate on the market as a commodity and generate income.
This form of capital functions alongside monetary, productive and commodity forms. The owner of the security does not have real capital, but has all the rights to it, which are fixed by the security. It makes it possible to separate ownership of capital from capital itself and, accordingly, to include the latter in the market process in such forms as are necessary for the economy itself.
The concept of a security is multifaceted, since economic relations, which are expressed by it, are very complex and are constantly changing and developing. All this finds expression in new forms of existence of securities. In this regard, it is often difficult to give a strictly scientific legal definition of a security in all cases. Therefore, Russian legislation may provide a list of specific types of securities recognized by the state that are available in practice.
Properties of securities. A security has a number of properties:
- * redistributes funds between industries and areas of the economy; territories and countries; groups and segments of the population; economic entities and the state, etc.;
- * provides certain additional rights to its owners in addition to the right to capital. For example, the right to participate in management, to receive information, to have priority in certain situations, etc.;
- * provides income on capital and (or) return of capital itself.
A security has a number of properties that make it similar to money. The main property is possibility of exchange for money V various forms(by redemption, purchase and sale, return to the issuer, assignment, etc.). It can be used in calculations, be the subject of a pledge, be stored for a number of years or indefinitely, be inherited, serve as a gift and participate in other acts of civil circulation.
Initially, all securities were issued only in documentary form, i.e. in the form of special paper forms, which is where their name comes from. However, the development of market relations in recent decades has led to the emergence new form existence of a security - undocumented. This transition is due to the fact that the number of circulating securities, primarily shares and bonds, is increasing;
- * many rights that are assigned to the owners of a security can be exercised regardless of its form. For example, the payment of income on a security, the purchase and sale of a security can be carried out without its presence as a material carrier of these rights;
- * the book-entry form of a security can speed up, simplify and reduce the cost of its circulation in terms of settlements, transfer from one owner to another, storage, accounting and taxation;
- * this form is closely related to structural changes in the securities market (in particular, with an increase in the number of registered securities and a decrease in the share of bearer securities).
Classification of securities. There are registered, bearer and order securities.
In a registered security, the name of the owner is recorded on its form and (or) in the register of owners. IN bearer In a security, the name of the owner is not recorded directly on it, and its circulation does not require any registration. The rights under an order security belong to the person named in it, who exercises these rights or appoints another authorized person by his disposal.
From the point of view of market participants, a bearer security has significant advantages over a registered one, since the process of transferring rights to capital is accomplished immediately by transferring the security from its owner to the buyer. Apart from the costs of redemption of such a security, its circulation requires almost no other expenses from market participants. In this sense, at the first stage of market development, the issue of bearer securities in documentary form is the fastest, cheapest and easiest way to form a market.
A registered security, unlike a bearer security, has two important properties. Firstly, its owner is always known, and secondly, due to the fact that all transactions with this paper are subject to registration, these transactions become available for control and taxation by the state. Therefore, in a developed market there is a tendency to increase the issuance of registered securities, since, on the one hand, issuers are interested in this, since this allows them to control all transfers of property rights, and on the other, the state, since it is expanding its tax base.
Depending on forms of property relations, expressed by a security, a distinction is made between equity and debt securities. Share a security confirms the ownership relationship of its owner to part of the issuer's property. Debt a security expresses a loan relationship between its owner and the issuer, who undertakes to repurchase it within a specified period and pay a certain interest.
In modern world practice, there are two large classes of securities: basic and derivatives.
Basic securities are based on property rights to any asset: goods, money, property, etc. They are based on any assets, which do not include the securities themselves (stocks, bonds, bills, mortgages, etc.). Derivatives are issued on the basis of the underlying securities (warrants, depository receipts, etc.) or in connection with changes in the price of the exchange asset underlying this security (futures contracts, options, etc.).
Signs of securities. Each type of securities represents a certain set of them, for which all the characteristics inherent in the securities are common.
A security has a certain set of characteristics:
- * the period of existence of a security - the time of issue for circulation, for what period of circulation or indefinitely;
- * form of existence - documentary or non-documentary;
- * nationality - domestic or foreign security;
- * territorial affiliation - in which region of the country this security was issued;
- * the type of asset underlying the security, or its original basis (commodities, money, total assets and others);
- * ownership order - a security to bearer or to a specific person (legal entity, individual);
- * release form - emission, i.e. issued in separate series, within which all securities are exactly the same in their characteristics, or non-issue (individual);
- * form of ownership and type of element;
- * nature of negotiability - freely circulates on the market or there are restrictions;
- * economic essence in terms of the type of rights that the security provides;
- * degree of risk - high, low, etc.;
- * availability of income - whether some income is paid on the security or not;
- * form of investment - investing money in debt or to acquire property rights.
Main types of securities.
1. One of the main types of securities is shares. The purpose of the stock market is to bring together savings and relatively small capital to form large monetary capital and finance profit-generating production. A share expresses the relationship of ownership, co-ownership of an enterprise in joint stock form. Income on shares is paid in the form of a dividend, which the shareholder can receive from part of the net profit of the current year of the joint-stock company, distributed among shareholders in the form of a certain share of their nominal value.
Promotion - This is an issue-grade security that secures the holder’s rights to receive part of the profit of the joint-stock company in the form of dividends, to participate in management and to part of the property remaining after its liquidation.
Based on the form of income assignment, a distinction is made between ordinary and preferred shares.
Ordinary share gives the holder the right to a share in the authorized capital of the company, to participate in the management of the company by voting when making decisions at the general meeting of shareholders, to receive a share of the profit from the company's activities after payment to holders of preferred shares.
Preferred shares give the holder an advantage over the holder of ordinary shares in the distribution of dividends and property of the company in the event of its liquidation. Preferred shares differ from ordinary shares in that their dividend is usually set at a fixed rate. Dividends on preferred stock are generally paid before dividends on common stock; holders of preferred shares have a preferential right to a certain share of the company’s assets upon its liquidation; holders of preferred shares, as a rule, do not have preferential rights to purchase shares of a new issue and do not have voting rights. These shares carry voting rights only if dividends have not been declared a certain number of times.
- 2. Bond - a security certifying the deposit by its owner of funds and confirming the obligation to reimburse him the nominal value of this security within the specified period, with payment of a fixed percentage (unless otherwise provided by the terms of issue). Bonds of all types can be distributed among enterprises and citizens only on a voluntary basis. Fundamental difference bonds from shares is that the owners of bonds, unlike the owners of shares, are not co-owners of the joint-stock company, but its creditors. It is believed that this circumstance generally reduces the riskiness of this type of investment, since the bond holder has the right of priority in receiving income or returning his fixed assets in the event of a decrease in the profit of the enterprise, its insufficiency to satisfy all legal claims of creditors and co-owners, and also in case of bankruptcy.
- 3. Important security - bill of exchange Currently financial markets operate with two main types of bills: simple and transferable.
- * Promissory note (solo bill) is an unconditional debt obligation of the established form, expressing the obligation (of the drawer) to pay a certain amount of money to the creditor (the holder of the bill) at a certain time and in a certain place. A promissory note is issued by the borrower.
- * Bill of exchange (draft) is a written order from the drawer (drawee) to the drawee (payer) to pay the latter a certain amount of money to a third party.
- 4. Another type of securities - deposit and savings certificates - a written certificate of the issuing bank on the deposit of funds, certifying the right of the depositor (beneficiary) or his successor to receive, upon expiration of the established period, the amount of the deposit (deposit) and interest on it. Only banks can act as issuers of deposit and savings certificates. Certificates of deposit are intended exclusively for legal entities, and savings certificates are intended for individuals. Certificates must be urgent. The circulation period for certificates of deposit (from the date of issue of the certificate to the day when the owner of the certificate receives the right to claim the deposit) is limited to one year. The circulation period of savings certificates is limited to three years.
- 5. Securities also include check - a written demand from the drawer of the check to the payer to pay the holder of the check the amount specified in it. Checks are always written on forms prepared by banks. It is known that the drawer is the person who issued the check, the check holder is the person in whose name the check is issued, and the payer is the bank or credit institution in which the drawer has an account.
There are other securities: warehouse receipt(a document certifying the storage agreement concluded between the parties) and bill of lading(a document of title certifying the right of its holder to dispose of the cargo specified in the bill of lading and to receive the cargo after completion of transportation).
Derivatives. These securities include warrant, depositary receipt, futures and options.
Warrant - this is an additional certificate issued along with a security and giving the right to special benefits to the owner of the security after a certain period (for example, to purchase new securities).
Depository receipt - A publicly traded security issued on shares of a foreign company deposited in a depositary bank. In world practice, there are two types of depositary receipts:
- * American Depositary Receipts (ADRs), which are admitted to circulation only on the American stock market;
- * global depositary receipts (GDR), transactions with which can be carried out in other countries.
Futures - a document that provides a firm commitment to buy or sell securities after a specified period at a pre-agreed price. Futures are one of the financial instruments for accounting for the future value of securities. An investor receiving a futures contract agrees to buy shares at a future date, with the date of purchase fixed in the contract. The seller of the contract agrees to sell the securities after the period of time specified in the contract at the price at the time the contract is entered into. Thus, a person planning to purchase securities in the future can avoid the risk that their price will increase. However, if their price falls, the buyer loses the opportunity to purchase these securities at low prices.
Option - a bilateral agreement on the transfer of the right to purchase (sell) securities at a pre-fixed price at a certain time. If the price of that security rises, the buyer exercises the option contract and buys the security at a price below the market price. If the price falls, the buyer may not exercise the option. Thus, by purchasing an option, the investor receives the right to buy from the seller of the option or sell to him an agreed amount of securities at an agreed price or to waive his right. For the opportunity to choose, the investor pays the option seller a premium. Prize - This is the option price paid by the buyer to the seller against the writing of the option contract. According to the expiration dates, the option is divided into two types: American, which can be exercised on any day before the expiration of the contract, and European, which can be exercised only on the day of expiration of the contract.
There are two types of options: put and buy.
Put option gives its owner the right to sell securities or refuse to sell them. Buy option gives its owner the right to buy securities or refuse to purchase them. An investor purchases a buy option if he expects the price of a security to rise, and a put option if he expects it to fall.
They occupy an important place in the market government securities (GS) - debt securities issued by the state. By their economic essence, all types of government securities are debt securities. In practice, each independent paper receives its own name, which allows it to be distinguished from other types: bonds, treasury bill, certificate and others.