Digital Securities Market Glossary

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Digital Securities Market Glossary

• A comprehensive report on current state of the
  market

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Financial Securities

• are tradable financial assets that gets their
  value from a contractual claim on an underlying
  asset that may be real or intangible.
• For example, commodities and property are real
  assets, but commodity futures, exchange-traded
  funds (ETFs) and real estate investment trusts
  (REITs) constitute financial assets whose value
  depends on the underlying real assets.
• Financial assets are usually more liquid than
  other tangible assets, such as commodities or
  real estate, and may be traded on financial
  markets.
• Generally, securities represent an investment and
  a means by which companies and other commercial
  enterprises can raise new capital.

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Derivative

• is a financial instrument whose value is derived
  from the value of an underlying security.
• The derivative itself is a contract between two
  or more parties, and its price is determined by
  fluctuations in the underlying asset.
• The most common derivatives include options,
  futures contracts, forward contracts, swaps,
  collateralized mortgage obligations (CMOs),
  rights and warrants.

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Digitization of Securities (Securities
Tokenization)

• is the process of the creation of a derivative
  instrument in the form of a blockchain token
  representing the rights to a financial security
  (underlying).
• Digitization targets increasing liquidity and
  efficiency in capital formation, enhancing
  transparency and reducing administration costs.

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Digital Securities (Security Tokens)

• are derivative instruments in the form of a
  blockchain tokens representing the rights to a
  financial security (underlying).
• Transactions with the token recorded on the
  distributed ledger cannot be undone or erased.
• Access to the information is customizable based
  on the ledger setup (public, private or hybrid).

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Compliant Ecosystem

• the entire set of procedures, actions,
  activities, processes and parties ensuring that a
  financial services business adheres to statutory
  rules and regulations and internal controls.
• Digitizing securities and using smart contracts
  enable automatic enforcement of the applicable
  financial markets rules and regulations.

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Digital Securities Issuer

• a legal entity that offers its digital securities
  directly to investors to finance its operations.
  Issuers are legally bound by the offering rules,
  representations and reporting requirements, and
  other covenants relating to financials, material
  developments and any other operational activities
  as required by the applicable regulations.

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Digital Securities Offering (DSO or Security
Token Offering, STO)

• the type of fundraising using Digital Securities
  as a instrument of raising capital within a fully
  compliant ecosystem.

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Digital Securities Issuance Platform

• a technology platform providing issuers with the
  tools to conduct a DSO, based on such platforms
  security token standard.

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Liquidity

• is the degree to which an asset or security can
  be quickly bought or sold in the market without
  affecting the securities' price. There are market
  makers for enhancing securities liquidity in the
  secondary market.

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Market Maker

• is a bank, brokerage company or a person that
  always stands ready to buy and sell securities.
  Without market makers, it would take considerably
  longer for buyers and sellers to be matched up
  with one another, reducing liquidity and
  potentially increasing trading costs as it became
  more difficult to enter or exit positions.

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Get exclusive insights to boost your investments

• Read our Digital Securities Market Report to be
  up to date with current Securities Token Offering
  (STO) market state.
• Kepler.Finance