Securities

The Egyptian legislator has organized through some legislations represented by Law 95 of 1992 and Law 159 of 1981 and its executive regulations, which are considered as investment tools that represent either ownership rights in a company or debts owed by it. These securities are mainly used to finance commercial activities and provide investment opportunities for individuals and institutions.

Securities can represent an important source of income, and therefore they are attractive investments in financial markets, securities are considered an integral part of the global financial system, while securities enhance investment opportunities and vital sources of financing.

Understanding and using these Securities effectively depends on accurate knowledge of their characteristics and the rules governing them, which we will review in this article in detail.

Types of Securities

1. Shares: They represent ownership rights in companies and there are many types of shares, including common shares and premium shares, each of which represents different levels of rights and benefits for investors.
2. Bonds: Bonds are loans issued by companies or governments. Bonds provide their holders the right to receive periodic interest and redeem the capital upon maturity. Bonds are often used to finance major projects or cover the expenses.
3. Sukuk: Issued by companies or governments to finance their projects.

Main stages of issuing bonds

• Planning: Determining the financial need of the company or government, and determining the total value of the bonds.
• Determining the terms: Determining the terms such as the time frame, interest rate, and nominal value.
• Credit evaluation: Credit evaluation of the company or government by credit agencies.
• Issuing bonds: Issuing bonds in the market through the stock exchange or through discounting.
• Registration: Registering the bonds in the commercial register.

Trading process

• Purchase: Investors buy bonds on the stock exchange or through financial brokers.
• Sale: Investors sell bonds on the stock exchange or through financial brokers.
• Secondary trading: Trading bonds in the secondary market among investors.
• Acquisition: Purchase of bonds by investors or financial institutions.

Types of bonds

• Government bonds: Bonds issued by governments to finance public expenditures.
• Corporate bonds: Bonds issued by companies to finance their projects.
• Treasury bonds: Short-term bonds issued by governments.
• Debt bonds: Long-term bonds issued by governments.

Sukuk are Islamic financial papers that are considered debts, issued by companies or governments to finance their projects.

Main stages of issuing sukuk and their features

Advantages of Sukuk

1. Ease of trading.
2. Do not bear interest, but bear profits or losses.
3. Rely on real assets.
4. Enjoy improved financial liquidity.
5. Reduce financial risks.

Types of Sukuk

1. Credit sukuk: Represents debts.
2. Investment sukuk: Represents investment projects.
3. Financing sukuk: Represents financing projects.
4. Ijarah Sukuk: represents assets leasing.
5. Musharaka Sukuk: represents sharing profits and losses.

How Sukuk works?

1. Identify the project or assets.
2. Assets evaluation.
3. Issuance of Sukuk.
4. Distribution of Sukuk.
5. Investor acquisition.
6. Distribution of profits.

The role of securities in providing investments and investment portfolios diversifying

As for securities, they are important investment tools that enable companies and individuals to finance their projects or increase their capital. Stocks and bonds are two prominent examples of securities that are widely used in financial markets for such purposes.

Stocks represent shares in the company and provide investors with an opportunity to participate in the profits and growth of the company. On the other hand, bonds are a debt instrument that enables companies to raise money in exchange for a pledge to repay the amount with a specified interest. These securities enable investors to diversify their investment portfolios and reduce risks by investing in a variety of assets.

Commercial and financial securities are an integral part of the modern financial system, as they provide unique advantages and opportunities to facilitate commercial transactions and achieve investments. These securities are indispensable tools for achieving stability and growth in financial and commercial markets.

The role of commercial securities in facilitating commercial transactions and providing liquidity.

Commercial securities are vital tools that contribute significantly to facilitating commercial transactions. One of the main benefits of these securities is the ability to reduce the need for immediate cash liquidity, allowing transactions to proceed smoothly even in the absence of cash. This enhances the efficiency of trading in the market and reduces the risks of transporting large amounts of cash.

Furthermore, commercial securities are recognized and reliable means of credit, which reduces doubts and concerns in commercial transactions, the ability to transfer it from one party to another – makes them flexible and easy to use. They also offer a lower cost compared to banking credit and require only the amount owed, making them a preferred option for settling short-term financial obligations.

Features of Securities

1. Making a profit: Securities can make a profit through distributions or selling them at higher prices.
2. Risk Distribution: Securities allow distribution the of risk among investors.
3. Improved Liquidity: Securities allow for improved financial liquidity for companies and investors.
4. Diversification of Investments: Securities allow for diversification of investments for investors.

Risks Associated with Securities

• Credit Risk: The risk that a company will not be able to repay its debts.
• Market Risk: The risk that the price of a security will fluctuate.
• Liquidity Risk: The risk that an investor will not be able to sell the security
• Bankruptcy Risk: Risk of a company being bankrupt.