A financial instrument that represents money invested in bonds or stocks, it can pay interest (bonds) and/or capital gains (stocks). derivative contracts, such as forwards, futures, options and swaps, are also securities. Securities may represent debt, equities or property.

Certificates of securities are those represented in paper form and they may be bearer (not registered in the issuing corporation’s book but it is payable to the person possessing it) or registered (the issuer keeps a record of the security-holder and mails out payments to him/her).

Bearer securities entitle the holder to the rights of the security, and they are completely negotiable. They may also be transferred from person to person. These types of securities are not very common in the US because of the negative tax implications that they have both for the issuer and for the holder. Registered securities consist of issuing certificates containing the name of the holder and they exclusively represent the securities. As mentioned before, the issuer has a register where information related with the holder and the security is kept. For the transfer of these securities, a modification in the registry is needed; a person does not acquire legal ownership of the security by simply having the certificate. Nowadays, there are electronic options to avoid having to issue certificates; non-certificate securities and depositories through the Depositary Trust company (DTC). In Europe the equivalent of DTC is Euroclear and Clearstream. If the asset is “fungible” it means that is transferable, if it is not transferable it is “non-fungible”. debt securities are securities that give their holder the right to receive fixed interest rates and transferred to a refund in the amount of the debt, allowing the issuer to finance its investments through the placement of these securities in the capital markets. debt securities are issued in mass and all grant identical rights to its holder if they belong to the same class. The issuer is obliged to return all the capital invested at a certain date. An example of a debt security is a bond.