The concept of “security” can be considered from an economic and legal point of view. The Civil Code of the Russian Federation states that this is a document of the established form, certifying the property rights of the holder to a share in the enterprise. As an economic category, the Central Bank has a number of isolated characteristics. Their classification helps to reveal the essence, types and rules of treatment.
Essence
A security is a certificate certifying the owner’s rights to property, the sale or transfer of which is carried out only upon presentation of the document. A striking example is the stock. The holder of the certificate has the right to receive part of the organization’s profit and assets in the event of its liquidation. As a legal category, the Central Bank certifies ownership, management, transfer or receipt of property.
Sign of an equity security:
- secures the totality of rights;
- issued by issues;
- has the same volumes, terms for exercising rights, regardless of the time of purchase of the certificate.
As economic, it is characterized by liquidity, profitability, exchange rate, reliability. Certificates issue (issue), sell and buy, and also redeem (revoke).
Kinds
Properly compiled classification of signs allows you to properly organize the accounting of transactions with the Central Bank, control their movement and effectively use them in circulation.
| Sign | Varieties |
| Origin | Primary (appearing on the market for the first time) and secondary |
| Term | Urgent and perpetual |
| The form | Paper and paperless |
| Affiliation | Domestic and foreign |
| Type of | Investment (stocks, bonds, futures, etc.) and non-investment (bills, checks) |
| Possession | Bearer, registered and order |
| Release | Equity and non-issue securities |
| Type of ownership | State, corporate |
| Turnover | Freely traded and non-market |
| Risk level | Riskless and risky |
Equity securities and issuing activities
In Art. 143 of the Civil Code of the Russian Federation presents a list of certificates that are issued in large batches on special forms with mandatory details. Equity securities are stocks, bonds, checks, savings certificates, bills of lading. Let's consider them in more detail.
Stocks - This is the Central Bank, fixing the holder’s rights to receive part of the income in the form of interest and participation in the management of the organization.
Bonds - these are equity securities, confirming the right of the owner to receive within the period indicated in the document face value certificate and fixed interest income.
Certificate of deposit - this is a written certificate of the bank on the deposit of funds, certifying the right of the holder after a certain period to receive money back, as well as interest.
Bill of lading - This is a document that contains the terms of the contract of carriage of goods.
Non-issuing securities
Bill of exchange - this debt obligation giving the owner the right to demand from the person who accepted the document, payment of the agreed amount within the specified period.
Check - This is a security containing an order to the bank to pay the specified amount.
Warehouse Certificate - This is a paper confirming the conclusion of a contract of storage of goods.
Warrant - This is a document that gives the owner the right to purchase the company's securities within a specified period at an agreed price.
Vouchers - These are certificates confirming the owner’s right to a part of state property.
Option - this is an agreement under which one of the parties has the right to acquire (sell) an asset at a set price within a specified period, with the payment of a bonus for this.
Futures - This is a standard contract for the sale of an asset at a specified time in the future at a fixed price.
Deposit receipt - This is evidence of indirect ownership by the Central Bank of foreign companies that are deposited with the bank of the issuing country.
Differences
All considered types of equity securities are issued by enterprises or state organizations in large quantities with equal (in one issue) terms for the exercise of rights. In contrast, non-issuing securities are issued individually or in small series.
For example, if the preference shares provide for the accrual of income once a quarter, it does not matter when they will be bought back in the market (within one day or one month). All holders of the same type of securities will receive income at the same time. But if the company issues two bills of exchange to two different counterparties on the same day, the amount and maturity of them will be different.
The nuances of treatment
Forms of equity securities:
- Documentary - owner data is indicated in the certificate;
- non-documentary - owner data is displayed in registries or in DEPO account records.
All central banks differ in the order of transfer of rights. Bearer certificates take effect upon delivery. The person issuing the Central Bank is liable only if a false document is submitted. All claims are presented to the issuer. The transfer of rights to a registered non-documentary certificate is carried out from the moment of entering data on the personal or DEPO account of the acquirer. In the case of the documentary securities - from the moment of transfer of the certificate. According to warrant documents, the transfer of rights is carried out using the endorsement and the signature of the endorser.
All equity securities enable owners to receive a constant or interest income. Holders of ordinary shares receive income depending on the level of profit of the organization for the reporting period. Holders of preferred securities receive income constantly, but in a fixed amount.
Equity securities may be in circulation from 1 year to 30 years. Unlimited certificates are limited by the issuer's life.
RZB
Economic relations participants on issues of issuance and circulation of certificates are sold on the securities market. Here, through the considered financial instruments, redistribution of funds occurs. To date, equity securities are issued in non-documentary form. Rights are fixed in a special registry, and the certificate itself is physically absent.
Through the RZB, as part of the financial market, the accumulation, concentration, centralization and redistribution of capital is carried out. Through internal sources (depreciation and reinvestment of profits), enterprises can attract an average of 50-75% of the required amount of financial resources. The remaining need is covered by loans and capital with RZB. To get income from the sale, you need to find a buyer. But capital can be invested in the foreign exchange market, the purchase of real estate or on a bank deposit. That is, the securities market should be attractive to the investor - to generate income commensurate with the level of risk, which is taxed less than the profit received from other markets.
In developed countries, approximately 25-30% of the population’s funds are invested in the stock market and the same amount is invested through insurance and pension funds.
Structure
Depending on the stage of circulation of certificates, the securities market is divided into primary (issue) and secondary (sale of previously issued securities). Sale can be carried out in an organized manner (in accordance with established rules) through the stock market and on a contractual basis. Almost all securities except stocks are traded outside the stock exchange.
The proportion of public bidding (direct discussion of the prices of the seller and the buyer in person) is very small.Most transactions are carried out through trading platforms on computers at any time of the day.
Depending on the timing, the securities market is divided into cash (“spot”) and derivatives markets. In the first case, the terms of the contract must be fulfilled within 1-3 days. In the second case, the terms are extended by several weeks or months.
In the stock market, stocks and long-term bonds have been circulating for more than one year. Therefore, it is also called the capital market. To quickly raise funds bank checks certificates and bills. They turn to money market.
