Editing Security (finance) (section)

== United Kingdom and United States ==
In the United Kingdom, the [[Financial Conduct Authority]] functions as the national [[competent authority]] for the regulation of financial markets; the definition in its ''Handbook'' of the term "security"<ref>{{Citation | url= https://www.handbook.fca.org.uk/handbook/glossary/G1061.html | title= security | work= FCA Handbook | publisher= [[Financial Conduct Authority]] | access-date= 2016-11-11}}</ref> applies only to equities, [[debenture]]s, alternative debentures, government and public securities, warrants, certificates representing certain securities, units, stakeholder pension schemes, personal pension schemes, rights to or interests in investments, and anything that may be admitted to the Official List.

In the United States, a "security" is a tradable [[financial asset]] of any kind.<ref>The United States [[Securities Exchange Act of 1934]] defines a security as: <blockquote>"Any [[Note (finance)|note]], [[capital stock]], [[treasury stock]], [[Bond (finance)|bond]], [[debenture]], certificate of interest or participation in any [[profit-sharing agreement]] or in any oil, gas, or other mineral [[Royalties|royalty]] or [[lease]], any [[Collateral (finance)| collateral]] [[Trust certificate (finance)|trust certificate]], preorganization certificate or subscription, transferable share, [[investment]] [[contract]], voting-trust certificate, [[certificate of deposit]], for a security, any [[Put option|put]], [[Call option|call]], [[straddle]], [[Option (finance)|option]], 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 [[Exchange (organized market)| securities exchange]] relating to [[Currency|foreign currency]], or in general, any [[Financial instrument| 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 banker's acceptance which has a [[Maturity (finance)|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."</blockquote></ref> Securities can be broadly categorized into:

* Debt securities (e.g., [[banknote]]s, [[bond (finance)|bonds]], and [[debenture]]s)
* [[Equity securities]] (e.g., [[common stock]]s)
* [[Derivative (finance)|Derivative]]s (e.g., [[Forward contract| forwards]], [[futures contract| futures]], [[option (finance) |options]], and [[swap (finance) |swaps]]).

The company or other entity issuing the security is called the [[issuer]]. A country's regulatory structure determines what qualifies as a security. For example, private investment pools may have some features of securities, but they may not be registered or regulated as such if they meet various restrictions.

Securities are the traditional method used by commercial enterprises to raise new capital. They may offer an attractive alternative to bank loans - depending on their pricing and market demand for particular characteristics. A disadvantage of bank loans as a source of financing is that the bank may seek a measure of protection against default by the borrower via extensive financial covenants. Through securities, capital is provided by investors who purchase the securities upon their initial issuance. In a similar way, a government may issue securities when it chooses to increase [[government debt]].