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I know nothing about money except how to save and how to spend them. Can someone explain the gist of what "securities" are and what the goal of blocking specifi

I know nothing about money except how to save and how to spend them. Can someone explain the gist of what "securities" are and what the goal of blocking specifically sales of them is?

misja111 5y ago
Securities are company shares. The goal of blocking foreigners from selling them is more or less to confiscate the money that they paid to own those shares.
- wcoenen 5y ago
  It's not just company shares. Bonds and derivatives are also securities.
  - nickles 5y ago
    Derivatives are not securities and are regulated differently. For example, futures are regulated by CFTC in the US.
    - wcoenen 5y ago
      I was going off the investopedia definition, which claims warrants and convertible bonds are securities [1]. As far as I understand, those are a type of derivative. But I hadn't understood that some other types of derivatives are not considered securities. It all makes a bit less sense to me now... [1] https://www.investopedia.com/terms/s/security.asp https://www.investopedia.com/terms/s/security.asp
- Lendal 5y ago
  Yeah this is how I understand it. The goal for Putin is to steal as much as possible while he still can from the only people in the world who believed in him, the people who invested in Russian securities over the past two decades.
einarfd 5y ago
I would recommend having a look at the Wikipedia page on the topic at https://en.wikipedia.org/wiki/Security_(finance) https://en.wikipedia.org/wiki/Security_(finance) . It seems to explain the topic fairly clearly.
jussij 5y ago
A "security" is something that has a notional value. You can buy and sell the different types of securities on an exchange. So it's synonymous to an asset (i.e. something of value that you are prepared to buy or sell). The exchange does nothing more that manage the buying and selling of these securities to guarantee no one gets ripped off. One party hands over the security, the other party hands over the cash and the exchange manages the deal on behalf of both parties (for a small fee). Now the exchange can call a halt to trading (i.e. stops all buying and selling) when it see the market is in trouble. The exchange just calls a halt in an attempt to slow the fall of the market. These halts are used to try and smooth out extreme fluctuations in the market. So in this case it looks like the price of Russian securities has collapsed (i.e they are becoming dramatically worth less than they were a few days ago) and the exchange has been temporarily blocked the buying and selling Russian securities in the hope their value stabilises. Currently the exchange is just seeing a collapse in price of the Russian securities and they want to slow that fall.
- misja111 5y ago
  No this is not a 'normal' blocking of trading in securities due to turbulance in the market. It is still allowed to buy Russian securities. It is also allowed to Russians to sell Russian securities. The Russian exchange has specifically forbidden foreigners to sell Russian shares. https://www.politico.eu/article/russia-central-bank-bans-sales-securities-foreigners/#:~:text=The%20Russian%20central%20bank%20immediately,cardinal%20change%20in%20external%20conditions.%E2%80%9D https://www.politico.eu/article/russia-central-bank-bans-sal...
  - jussij 5y ago
    So if this is the case (and I don't doubt what you are saying) then that means Russia has decided to turn it's functioning market into something that is no longer a market. Only because we now have a situation where any foreigner holding a Russian security can no longer sell that security. That action has instantly made the security worthless (i.e. value of zero) to the foreigner. So while these actions might stop the price drop in the short term, it will never last only because the market created is no longer reflecting the true value of the security. They are now only being held artificially high because no one can buy and sell them.
onlyrealcuzzo 5y ago
https://en.m.wikipedia.org/wiki/Security_(finance) https://en.m.wikipedia.org/wiki/Security_(finance) I'm not sure there's a good definition of a security - since it's a legal/financial concept that's slightly different in basically every jurisdiction. Basically, it's any tradable investment. To explain why it's weird - currently in the US (AFAIK) Crypto isn't yet considered a security.
- ajoseps 5y ago
  to the best of my knowledge, crypto isn't considered a security because it is in a legal grey area of definitions. It acts like both a currency and an investable asset. Also, the security denotation has regulatory implications. In the US, securities are regulated by the SEC. An alternative to a security is a commodity. Commodities are essentially raw materials that are used to produce other goods/services such as wheat and oil. Commodities are regulated by the CFTC, which has its own set of regulations which is normally less stringent than the SEC's. Normally, any new asset that is considered a security needs to pass the [Howey Test](https://www.investopedia.com/terms/h/howey-test.asp https://www.investopedia.com/terms/h/howey-test.asp). Some cryptocurrencies currently do, but are still not considered a security necessarily since it's still an ongoing discussion.

I know nothing about money except how to save and how to spend them. Can someone explain the gist of what "securities" are and what the goal of blocking specifically sales of them is?

misja111 5y ago

Securities are company shares. The goal of blocking foreigners from selling them is more or less to confiscate the money that they paid to own those shares.

wcoenen 5y ago
It's not just company shares. Bonds and derivatives are also securities.
- nickles 5y ago
  Derivatives are not securities and are regulated differently. For example, futures are regulated by CFTC in the US.
  - wcoenen 5y ago
    I was going off the investopedia definition, which claims warrants and convertible bonds are securities [1]. As far as I understand, those are a type of derivative. But I hadn't understood that some other types of derivatives are not considered securities. It all makes a bit less sense to me now... [1] https://www.investopedia.com/terms/s/security.asp https://www.investopedia.com/terms/s/security.asp
Lendal 5y ago
Yeah this is how I understand it. The goal for Putin is to steal as much as possible while he still can from the only people in the world who believed in him, the people who invested in Russian securities over the past two decades.

einarfd 5y ago

I would recommend having a look at the Wikipedia page on the topic at https://en.wikipedia.org/wiki/Security_(finance) https://en.wikipedia.org/wiki/Security_(finance) . It seems to explain the topic fairly clearly.

jussij 5y ago

A "security" is something that has a notional value. You can buy and sell the different types of securities on an exchange. So it's synonymous to an asset (i.e. something of value that you are prepared to buy or sell). The exchange does nothing more that manage the buying and selling of these securities to guarantee no one gets ripped off. One party hands over the security, the other party hands over the cash and the exchange manages the deal on behalf of both parties (for a small fee). Now the exchange can call a halt to trading (i.e. stops all buying and selling) when it see the market is in trouble. The exchange just calls a halt in an attempt to slow the fall of the market. These halts are used to try and smooth out extreme fluctuations in the market. So in this case it looks like the price of Russian securities has collapsed (i.e they are becoming dramatically worth less than they were a few days ago) and the exchange has been temporarily blocked the buying and selling Russian securities in the hope their value stabilises. Currently the exchange is just seeing a collapse in price of the Russian securities and they want to slow that fall.

misja111 5y ago
No this is not a 'normal' blocking of trading in securities due to turbulance in the market. It is still allowed to buy Russian securities. It is also allowed to Russians to sell Russian securities. The Russian exchange has specifically forbidden foreigners to sell Russian shares. https://www.politico.eu/article/russia-central-bank-bans-sales-securities-foreigners/#:~:text=The%20Russian%20central%20bank%20immediately,cardinal%20change%20in%20external%20conditions.%E2%80%9D https://www.politico.eu/article/russia-central-bank-bans-sal...
- jussij 5y ago
  So if this is the case (and I don't doubt what you are saying) then that means Russia has decided to turn it's functioning market into something that is no longer a market. Only because we now have a situation where any foreigner holding a Russian security can no longer sell that security. That action has instantly made the security worthless (i.e. value of zero) to the foreigner. So while these actions might stop the price drop in the short term, it will never last only because the market created is no longer reflecting the true value of the security. They are now only being held artificially high because no one can buy and sell them.

onlyrealcuzzo 5y ago

https://en.m.wikipedia.org/wiki/Security_(finance) https://en.m.wikipedia.org/wiki/Security_(finance) I'm not sure there's a good definition of a security - since it's a legal/financial concept that's slightly different in basically every jurisdiction. Basically, it's any tradable investment. To explain why it's weird - currently in the US (AFAIK) Crypto isn't yet considered a security.

ajoseps 5y ago
to the best of my knowledge, crypto isn't considered a security because it is in a legal grey area of definitions. It acts like both a currency and an investable asset. Also, the security denotation has regulatory implications. In the US, securities are regulated by the SEC. An alternative to a security is a commodity. Commodities are essentially raw materials that are used to produce other goods/services such as wheat and oil. Commodities are regulated by the CFTC, which has its own set of regulations which is normally less stringent than the SEC's. Normally, any new asset that is considered a security needs to pass the [Howey Test](https://www.investopedia.com/terms/h/howey-test.asp https://www.investopedia.com/terms/h/howey-test.asp). Some cryptocurrencies currently do, but are still not considered a security necessarily since it's still an ongoing discussion.