previous arrow
next arrow
Slider

Financial assets

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.

A financial asset or instrument is a tradable asset of any kind, whether it is cash; evidence of ownership in any entity; or a contractual right to receive or deliver or any other financial document with legal force.

Financial instruments can be classified by form, depending on whether they are cash instruments or derivative instruments.

A derivative instrument is a financial product whose value is based on the price of another asset. The asset on which it depends takes the name of underlying asset, for example the value of a future on gold is based on the price of gold. The underlying used can be very different, stocks, stock indices, fixed income securities, interest rates or even raw materials.

The general characteristics of financial derivatives are as follows:

Its value changes in response to changes in the price of the underlying asset. There are derivatives on agricultural and livestock products, metals, energy products, currencies, stocks, stock indices, interest rates, etc. In any case, transactions based on raw materials and basic products take on special relevance; we talk about commodities.

It requires a very small or zero initial net investment, compared to other types of contracts that have a similar response to changes in market conditions. Which allows higher profits as well as higher losses. They will be settled at a future date; they can be traded on organized markets (such as exchanges) or unorganized, OTC (acronym for Over The Counter, which means unofficial or over the counter)

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

Currency instruments and transactions are not based on debt or equity and are in their own category.

In the same way, we can divide the instruments depending on whether they are issued by banking entities or private corporations, or by governments and national banks.

The acronyms used in their names vary significantly depending on the country and language.

The most populars 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
Dollars

The backing reliability provided by everyday instruments such as BG's or SBLC's is that they are usually issued by the largest and most solvent banks in the world, issued according to the internationally accepted set of contractual rules of the ICC International Chamber of Commerce.

BG's and MTN's, in addition to being collateral or collateral in a business, can be used as an investment vehicle.

We have the possibility of arranging the issuance and / or concession of any type of banking instrument in your favor.

We manage the issuance of your SKR and bankarization with the guarantee of all types of assets: Corporate and historical bonds, gems and precious metals, works of art, copper dust, nickel dust, real estate, etc.