investment securities

Traditionally, securities have been categorized into debt and equity securities, and between bearer and registered securities.

However, the definition of a "security" carries a more broad range of financial instruments.

In addition to the banking definitions of a "security", one should note that the term has a separate legal definition.

Investment Securities - Classification

Securities are classified according to the following categories:

• Issuer
• Currency of denomination
• Ownership rights
• Term to maturity
• Degree of liquidity
• Income payments
• Tax treatment

Perhaps the most distinguishing one from these classifications is the one concerning the issuing body of the security.

Issuers of securities include commercial companies, government agencies, local authorities and international and supranational organizations.

To regulate the classifications and market action of the securities issuers and holders, there's a governing body in place called the U.S. Securities and Exchange Commission (SEC).

The SEC defines securities as

"any note, stock, treasury stock, security future, bond, debenture, certificate of interest or participation in any profit-sharing agreement or in any oil, gas, or other mineral royalty or lease, any collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, any put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or in general, any instrument commonly known as a 'security';

or any certificate of interest or participation in, temporary or interim certificate for, receipt for, or warrant or right to subscribe to or purchase, any of the foregoing;

but shall not include currency or any note, draft, bill of exchange, or bankers' acceptance which has a maturity at the time of issuance of not exceeding nine months, exclusive of days of grace, or any renewal thereof the maturity of which is likewise limited."


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