A financial instrument is a tradeable asset of any kind; either cash, evidence of ownership in an entity or a contractual right to receive or deliver or any other legally enforceable financial document. 

 

Financial instruments can be classified by whether they are cash instruments or derivative instruments.

 

A derivative instrument is a financial product with a value that is based on the price of another asset. The asset it depends on is called an underlying asset; for example, the value of a gold commodity is based on the price of gold. The underlying used may be very diverse: shares, stock indexes, fixed income securities, interest rates or even raw materials.

 

Main features of financial derivatives are as follows:

 

Their value changes in response to changes in the price of the underlying asset. Derivatives exist on agricultural products and livestock, metal, energy products, currencies, shares, stock indexes, interest rates, etc. In any case, are particularly relevant the transactions based on commodities trading.

 It requires a very small or zero initial net investment with respect to other types of contracts with a similar response to changes in the market. This allows for higher gains as well as higher losses. They are settled at a future date; they may be traded on organised markets (such as stock markets) or un-organised markets or OTC (Over the Counter, which means unofficial or off-exchange trading).

 

On the other hand, financial instruments can be classified by the type of asset, depending on whether they are based on equity (which reflects the ownership of the issuing entity) or based on debt (which reflects a loan the investor made to the issuing entity). If debt is involved, they can be sub-divided into short-term (less than one year) or long-term.

 

Currency instruments and the transactions are not based on either debt or equity and fall under their own category.

 

Likewise, these instruments can be divided up depending on whether they are issued by banking entities or private corporations, or even by governments and national banks.

 

The acronyms used to name them vary greatly from country to country and language to language.Dollars

The most popular are:

  • BG. Bank Guarantee
  • SBLC. Standby Letter of Credit
  • MTN. Medium Term Note
  • Bond. Bond
  • CMO. Collateralized Mortgage Obligation
  • CD. Certificate of Deposit
  • GCD. Gold Certificate of Deposit
  • SKR. Safe Keeping Receipt. Not to be confused with CSC (Custodial Safekeeping Certificate) which is a simple holding document with no bank liability for the sum.  Private security banks often use the term SKR, but in all reality they are talking about simple holding.
  • PN. Promissory Note
  • IBOE. International Bill of Exchange

 

The security provided by the most habitual instruments such as BG’s and SBLC’s is that they are often issued by the largest and most solvent banks in the world and are issued pursuant to the set of contractual rules established by the ICC (International Chamber of Commerce) which are accepted internationally.

 

In addition to guarantees or collateral for a business, BG’s and MTN’s can be used as investment vehicles.

 

We are able to arrange the issue and/or concession of any type of banking instrument in your favor.

 

We deal the issuance of your SKR and introduction into the banking system, based on the guarantee of all kind of assets: corporate and historical bonds, gems and precious metals, works of art, copper powder, nickel powder, real estate, etc.

 

Main features