Talk:Security (finance)

October 2005

Could I get an appreciation of how physically secure financial instruments are, in the global industry.

For example, I understand that counterfeiting is pervasive and from a survey done by Gieshen Consultancy on the global theft of Intellectual Property, that just in one month something like $570million dollars of counterfeiting took place for currencies, checks, money orders, treasury bonds, credit and debit cards.

I'm particularly interested in the documentation and whether solutions are possible to ensure the authenticity of valuable instruments - since I represent a company that has tamper-evident technology.

In a nut-shell - what type of organisation has a need in this industry to know whether a particular instrument is a forgery or not, say even before the instrument is presented for payment or redeemed? For example if valuable instruments are transferable I would assume each party in the chain link would want to know whether the document is the original.

But is there a market for having the security or peace of mind in knowing that the document is the original in this industry?

I'm not sure whether this is the correct forum to discuss new business opportunities for your company. I'll respond anyway as the answer might be of general interest. It is extremely rare nowadays that actual bearer bonds (i.e. physical documents) are printed. They are viewed with great suspicion by authorities and market participants, as they facilitate money laundering, tax evasion, theft and forgery. The number of outstanding bearer securities is dwindling, as old bearer bonds mature, and companies move to completely electronic registration systems for their shares. ICMA keeps a list for its member of forged securities on its website [1]] - DocendoDiscimus 11:00 AM, 6 October 2005 (UTC)

this is weird?

Grammar issues

I've noticed that in several of these "security" related articles the grammar is lacking. I'd love to go in and change things (I have in a few cases) but am wary of changing meaning in an arena where I am far from an expert. Any takers? —The preceding unsigned comment was added by 24.143.162.40 (talk) 05:42, 12 December 2006 (UTC).

In the "Collateral" section, reference is made to "the past decade", as if this is a news article appearing in The Times. Traditionally, encyclopedia articles didn't make such assumptions, and made date references explicit (i.e. "in the decade from 1998-2008"). Perhaps Wikipedia has more of a newspaper approach? I'm not a "Wikipedian", so I really don't know.

Synonym

Could someone clarify whether or not securities are the same, or similar to common stock?

Common stock is a type of security. Other examples of securities include preferred stock and bonds. Bond Head 12:08, 29 May 2007 (UTC)

I added some context to make the relationship clearer. - Taxman ^Talk 12:17, 29 May 2007 (UTC)

Orphaned word?

Securities may be represented by a certificate or, more typically, by an electronic book entry interest. Is the word, "interest," an orphaned word? Brian Pearson 01:43, 5 September 2007 (UTC)

Contradiction in definitions

The very first line of this article defines a security as a "fungible, negotiable instrument". However, the article on negotiable instruments explicitly defines securities as _not_ being negotiable instruments according to Article 8 of the Uniform Commercial Code. This seems like a contradiction to me.140.247.159.144 04:06, 16 September 2007 (UTC)

Not all securities are as fungible as others. For example unregistered securities, usually restricted securities, are not very fungible at all.74.96.35.243 (talk) 13:55, 1 April 2011 (UTC)JD/MBA Contributor

Security Pricing

The article requires contributions in terms of pricing elaborations of various security types like equity, mutual funds & exchange traded funds. —Preceding unsigned comment added by Shahidmbakshi (talk • contribs) 14:15, 26 February 2008 (UTC)

Ponzi schemes?? SEC??

If an investment company collects investors to buy shares so that they can develop land and buidings are they required to file with the SEC?

Is there an amount of money required before falling under the eye of the SEC?

I have reason to believe that a particular company might be working a Ponzi Scheme, but fear that if I am wrong I may be subjest to a libel lawsuit. How can I check on this company to see if they have filed with the SEC. and can they be policed for fraud by the SEC? —Preceding unsigned comment added by 76.21.7.124 (talk) 05:04, 17 December 2008 (UTC)

Ponzi schemes in themselves don't have anything to do with securities, unless the scheme itself deals or pretends to deal in securities. I believe you are misinterpreting basic corporate finance to be some sort of SEC violating "ponzi scheme". A ponzi scheme is a fraudulent system where a member's input (investment) is used to directly pay off outputs (other investors withdrawals) without any true business activity. Unless you count buildings and land to be fellow investors, you are not witnessing a ponzi scheme, what you are describing is a simple real estate purchase. Anyways, make sure you know what you're doing, and the procedure is to report the case to the SEC or other regulatory agency and not directly litigate.--138.16.88.11 (talk) 08:46, 17 February 2009 (UTC)

Can Gold be part of a security and why ?

I have been asked if Gold can be prt of a Security not futures but real pure Gold. —Preceding unsigned comment added by 88.207.140.90 (talk) 09:30, 11 March 2009 (UTC)

Understanding the article

Obviously this article covers a very complex topic.

I have read and re-read the main article, and I'm still baffled.

How is anyone supposed to understand what a security actually is? Yes it describes them superficially, but what are they? How do they originate? If a security for, say, $1,000,000 is issued, where does the $1,000,000 come from? Does it even exist? Or is 'money' being generated out of nowhere?

Perhaps the article can draw together salient points in a way that leaves the reader with a better understanding of what a security actually is and how it works. Or perhaps someone proficient could include a working example.

Sorry to sound really dim. I'm not, honest! 21stcenturypolitix (talk) 22:07, 24 May 2009 (UTC)

I concur. Some more clarification would be greatly appreciated. TurboChan (talk) 02:12, 15 February 2011 (UTC)

Understanding the article: A further opinion

Having read the introductory paragraph, I expected the article to describe three different broad groups of securities: debt securities, equity securities and derivative contracts. It was confusing, therefore, when in the section titled 'classification', not one of these terms were used. They do re-appear in the section titled 'Debt and Equity' and confusingly, the first sentence in this section runs as follows: 'Securities are traditionally divided into debt securities and equities (see also derivatives)'. Huh? I thought we had already covered how securities are classified?

Overall, I find the tone too technical for the casual reader. However, I don't expect each article to explain every piece of jargon it uses or to explain financial concepts upon which the topic 'securities' would be based. Rather, I think the onus is on Wikipedia to arrange the articles in some kind of 'conceptual order' so that interested readers can move from basic ideas to more advanced ones.

72.27.107.89 (talk) 08:48, 16 December 2012 (UTC)D.M.D.

I agree. This article's style is way too technical, especially in the introduction, which is supposed to be the most accessible segment. I would recommend whittling down the introduction to more closely resemble something like Investopedia's article, and then describe in more technical depth deeper in the article. →ozhu (talk·contribs) 07:05, 3 June 2014 (UTC)

Merge proposal

It seems that financial instrument and security (finance) cover the same ground, so much so that, when I edited the lede to this article to remove what was clearly stated to be an outdated definition, I found no real difference in meaning. Since Wikipedia articles are about things, not terms, having two articles is a form of content forkery. I'm not sure what term is more appropriate, but this is the more developed article and so a merge would go to here with a subsequent rename to preserve the edit history. — Ƶ§œš¹ _{[ãːɱ ˈfɹ̠ˤʷɪ̃ə̃nlɪ]} 15:31, 7 January 2013 (UTC)

Agree to merger. I think "financial instrument" is more appropriate, as "security" in this context is rather vague as to what it covers, notwithstanding any definition adopted for the purpose of a particular piece of legislation. --Ehrenkater (talk) 16:48, 11 January 2013 (UTC)

I would accept merging the articles on the condition that the merged article makes clear that cash is a financial instrument but not a security. Also, I'm not sure that commodity options and commodity futures would qualify as securities although they would be financial instruments unless and until they are converted into the underlying commodities. I think the combined article should be named "Financial instrument" so if we merge into this article then I think we should rename it back to "Financial instrument". --Pine^✉ 19:00, 11 January 2013 (UTC)

I think this proposal misundertands what each defintion means. A security is an instance of financial instrument e.g. Barclays 25p Ord is a security instance of the financial instrument type 'Share' or 'Stock' — Preceding unsigned comment added by Ghanova (talk • contribs) 10:25, 7 February 2014 (UTC)

I would favor the merged article being financial instrument, explaining how a security is a form of financial instrument. "Financial instrument" is also easier for less financially technical articles to use, since many people may have little to no concept of what a security is and would have to click the link just to know we're talking about financial items, whereas people will at least know that a financial instrument is a financial something or other. Pdxuser (talk) 20:55, 12 March 2014 (UTC)

In the broadest sense, properties that worth a value are classified as tangible and intangible properties:

1. In law, tangible property is, literally, anything which can be touched.
   1. Real property, also referred to as immoveable property, (real estate, i.e. land, buildings, and fixtures).

      Real estate is property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water; immovable property of this nature; an interest vested in this; (also) an item of real property; (more generally) buildings or housing in general. Also, the business of real estate; the profession of buying, selling, or renting land, buildings or housing.

   2. Personal property, also referred to as moveable property (ships, automobiles, tools, etc.).
2. In law, intangible property, also known as incorporeal property, describes something which a person or corporation can have ownership of and can transfer ownership of to another person or corporation, but has no physical substance. It generally refers to statutory creations such as copyright, trademarks, or patents.
3. A unique category of property is money, which in some legal systems is treated as tangible property and in others as intangible property. Whilst most countries legal tender is expressed in the form of intangible property (“The Treasury of Country X hereby promises to pay to the bearer on demand ...”), in practice bank notes are now rarely ever redeemed in any country, which has led to bank notes and coins being classified as tangible property in most modern legal systems.

>> Financial asset (or just asset), financial instrument, intangible property (intangible asset), security are all synonymous terms. <<

In finance, a financial asset is an intangible asset that derives value because of a contractual claim. Examples include bank deposits, bonds, and stocks. Financial assets are usually more liquid than tangible assets, such as land or real estate, and are traded on financial markets. According to the International Financial Reporting Standards (IFRS), a financial asset is defined as one of the following:

• Cash or cash equivalent;
• Equity instruments of another entity;
• Contractual right to receive cash or another financial asset from another entity or to exchange financial assets or financial liabilities with another entity under conditions that are potentially favourable to the entity;
• Contract that will or may be settled in the entity’s own equity instruments and is either a non-derivative for which the entity is or may be obliged to receive a variable number of the entity’s own equity instruments, or a derivative that will or may be settled other than by exchange of a fixed amount of cash or another financial asset for a fixed number of the entity’s own equity instruments.

In conclusion, any kind of financial assets can be listed under three groups:

1. Security

   A security is a tradable financial asset of any kind. Securities are broadly categorized into:

   1. Cash securities (or cash instruments, or cash assets):
      1. Debt securities (e.g. banknotes, bonds and debentures)
      2. Equity securities , or just equities (e.g. common/preferred stocks)
   2. Derivative securities (or derivative instruments, or derivative assets, or just directly derivaties):

      Derivatives (e.g. forwards, futures, options and swaps) are financial instruments which derive their value from the value and characteristics of one or more underlying entities such as an asset, index, or interest rate. They can be divided into exchange-traded derivatives and over-the-counter (OTC) derivatives.

2. Commodity

   Goods and servies

3. Currency

85.110.30.21 (talk) 20:42, 21 June 2014 (UTC)

Is the Banknote a right example for Debt Security ?

The Banknote as described in Banknote page of Wikipedia is no longer a tradable asset, all the countries of the world have taken Banknote as Fiat Money, so it can not be exchanged for gold or coins, so I think it is no more a viable example for Debt Security. — Preceding unsigned comment added by Aman.kharbas (talk • contribs) 08:10, 16 July 2013 (UTC)

@Aman.kharbas, I checked briefly Banknote and don't see that is no longer tradable. Just wondering if there is a wp:rs that supports your assertion? X Ottawahitech (talk) 00:51, 30 July 2013 (UTC)

Tradable?

I don't know if a British v. Amercian English thing, but "tradable" is not a word that is used in security definitions. The more common word is "transferable". "Trade" implies an an exchange of assets or rights. Some transfers are done without a exchange. patsw (talk) 00:32, 22 January 2022 (UTC)