Financial Instruments

Stocks

Bonds

Mutual funds

Venture Capital Funds

Securitization Trust

Securities are marketable and fungible financial instruments that can be listed on the stock exchange. There are two categories of securities: stocks and bonds.

Stocks (shares)

A Stock is a security representing a unit of equity ownership in a company. It represents a claim on the company's assets and earnings.A Stock is a security representing a unit of equity ownership in a company. The holder of the stock (or share) is a stockholder (or shareholder),owner of a unit of equity of the company capital proportional to the number of shares held.He therefore enjoys the rights associated with the shares (information, voting rights, dividend etc.).Stocks can be registered shares or bearer shares. In the latter case the identity of the shareholder is known to the issuer.

Bonds

A bond is a debt security, representing a claim on the issuer. The bondholder is entitled to receive regular interests’ payments until the maturity of the bond. Bond Instrument can take many forms defined by the issuer depending on the funding structure and the intended target (fixed rate, floating rate, convertible bonds ...).

Are considered as securities funds units comprising UCITS, CIF in venture capital, and CIF on securitization.

Mutual funds

A Mutual fund is an investment company whose funds are invested in securities and/or other liquid financial assets.

Two legal corporate forms can be found: open ended mutual funds (SICAV) and mutual funds.

  • Open ended mutual funds (SICAV)area limited company with variable capital whose sole purpose is to manage securities and cash portfolio.
  • Mutual Fund is a joint ownership of securities and cash.

UCITS are savings products offering to their shareholders or unit holders a perfect liquidity for their savings through the subscription mechanism (creation of new shares to investors) and redemption (the acquisition of existing shares from investors). Subscriptions and redemptions are based on a price called Liquidation value. This liquidation value can be obtained by dividing the total value of net assets of the fund by the number of units or shares outstanding. The liquidation value is calculated and published at predefined frequency. UCITS are classified in categories according to the investment strategy, the composition and the nature of assets.

  • Equity UCITS:  investments mainly made on equity, investment certificates, subscription and allotment rights, and traded subscription warrants;
  • Bond UCITS: predominantly invested in debt instruments;
  • Money UCITS:  invested mainly in short term debt securities;
  • Contractual     UCITS:  holders are entitled, contractually, to a predetermined performance or guarantee;
  • Diversified UCITS: include all the funds that do not belong to the previously listed categories.

Venture Capital Funds (VCF)

venture capital funds are investment funds that makes venture investments. There are two kinds of VCF- venture capital companies and CIF in venture capital. The venture capitalists are expected to bring financing to small and medium enterprises (SMEs), under the form of equity, convertible/ debt securities as well in advance deposits to shareholders.  CIF in Venture capital are managed by a management company and are owned collectively as units or shares by investors. The legal forms for CIF in Venture capital are:

  • Venture Capital companies: typically structured as partnerships, the general partners serve as managers of the firm;
  • CIF in Venture Capital: structured as limited liability companies.

Securitization Trust

Securitization is a financial transaction throughout which a securitization trust acquires contractual debts from one or more originators through the issuance of shares and/or via debt issuance.
Debt instruments eligible for securitization are:

  • Debt securities, and negotiable debt securities;
  • The mortgage secured claims held by agencies other than those holding the claims listed below, according to their governing provisions;
  • The claims by credit institutions and similar bodies;
  • The claims by public institutions, state companies and public subsidiaries;
  • The claims by corporate appointees or licensees for operating public utility, subject to the prior approval of the delegating authority;
  • The claims by companies governed by Law No. 17-99 concerning the Insurance law, relating to insurance transactions and similar transactions in the insurance business;
  • Securitization trust is not a legal entity. It is a joint ownership that is intended solely to invest in the above mentioned claims and offer thus the originators (sellers of such claims) a financing alternative.

Text Resize