BEARER SECURITY Meaning and
Definition
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Bearer security refers to a type of investment security that is owned by the investor who physically possesses the physical document or instrument representing the security. In this context, the term "bearer" refers to the person who holds the security, rather than it being registered in a specific person's name. Unlike registered securities, bearer securities do not have the owner's identity recorded with any issuing institution or repository.
These types of securities include physical documents such as bearer bonds, negotiable instruments like checks, and certain types of share certificates. The security becomes transferable to anyone who possesses it, enabling the holder to exercise all the rights associated with the security, such as receiving interest or dividends, and voting rights if applicable.
Bearer securities are often considered to carry a higher risk than registered securities since they can be easily stolen or misplaced. Moreover, as they do not have an owner's identity attached, they offer anonymity to the holder, making it difficult to track ownership or prevent illicit activities such as money laundering.
Bearer securities have become less common in modern financial systems due to the potential for abuse and the increased regulatory measures aimed at combating financial crime. Many jurisdictions have imposed restrictions or outright bans on issuing new bearer securities, and existing ones are gradually being phased out or replaced with registered securities to enhance transparency and security in financial transactions.
Etymology of BEARER SECURITY
The term "bearer security" does not have a specific etymology as it is a combination of two separate words.
1. Bearer: The word "bearer" comes from the Old English word "berere", which means "one who carries or bears". It derives from the verb "beran", which means "to bear or carry". Over time, it has taken on the meaning of someone or something that holds or possesses.
2. Security: The word "security" originated from the Latin word "securitas", which is derived from "securus", meaning "free from care" or "without worry". It entered English through the French word "securité" and refers to the state of being protected or safe from harm or danger.
