A fungible, negotiable instrument that represents a financial value, and is categorized into equity securities, debt securities, and derivative contracts. That is it signifies an ownership position in a corporation (a share of stock or share of mutual fund), a creditor relationship with a corporation or governmental body (a debenture or bond), or right to ownership (an option, futures, forward contract, subscription right, or subscription warrant). Generally, a financial security will have the potential to generate a return above face value for either the holder or the issuer of the security. Financial securities are traditionally issued as physical certificates that prove ownership. However, non-certificated (dematerialized) securities are also issued, whether in an electronic or “book entry” form.

Certificates may be bearer, that is the holder is entitled to rights under the security merely by holding the security- having it in his possession without his name being shown on its face. Besides, certificates could be registered, i.e. the holder is entitled to rights only if his name is listed on a security register maintained by the issuer or an intermediary.