A security is an instrument that represents a certain financial value. There are two main types of securities, debt securities and equity securities.
Debt securities may come in the form of bonds and notes, among others. Equity securities, on the other hand, may come in the form of stocks.
Securities basically represent ownership and are traded in the stock and bond markets. It is important that these are declared under the Securities and Exchange Commission, and that all traders of such securities are duly licensed to buy and sell, and are likewise trained to comply with the regulations set by the SEC. From country to country, the criteria for securities may differ, so not all investments can be registered as such.
The SEC regulates securities, in the interest of protecting investors. It is crucial for investors to have correct information on the value of securities. The SEC sees to it that this is ensured, and that the trading of securities is facilitated. The agency also guards against fraud and manipulation. This is done through licensing and the regulation of issuers, brokers, and both institutional and individual investors.
There are two ways by which securities may be traded. This may be done either “over the counter,” or through trading in the stock exchange. The exchange also has its own regulations on securities besides those set by the government or law. It is necessary to be aware of the different processes to be followed. In any case, these additional rules are also monitored by the SEC.
