Securities are the broad legal category covering everything an investor can hold instead of the underlying asset itself: shares (equity), bonds and notes (debt), fund units, and derivatives. Each type carries a different claim and a different position if an issuer runs into trouble. A crowdlending claim resembles debt economically, but on most European platforms it is not itself a tradable security.
Types of Securities: Equity, Debt, and Crowdlending Claims
What Is a Security in Finance?
A financial right and interest represented by an investment instrument is called a security. The investor owns the instrument connected to the underlying asset. If the investor wants to buy a share, it does not mean that they have ownership over an interest in the company. A bond can give the investor a debt claim against the issuer, not the ownership of the issuer.
The securities that the investors commonly encounter are equity securities, debt securities, derivatives, and fund units. Crowdlending makes the investor own the claim in a different way — the investor has a contractual claim against a borrower, typically an SME.
Is "security" the same as "a security"?
No, security is not the same as security. Security for a loan uses the term "security" and means the asset, like the collateral or any other asset, that can support the investor‘s claim. Property that is subject to a charge can provide security to the lender. A security, on the other hand, is an investment instrument like shares, fund units, and bonds.
The context in which the term is used is revealing the intended meaning. The terms that involve the collateral may be "secured against“ or "secured by," while such statements as "issuing securities“ and "holding securities“ include financial instruments.
What are the main types of securities?
The main types of securities include debt securities that represent the claims giving ownership, fund claims that represent the interest of pooled assets, and derivatives that have a value that depends on another asset or reference variable. The structure of the assets, including economic and legal, differs, and perceiving the assets as only the „investments“ can distort the differentiation between the forms of the claims.
Equity Securities vs. Debt Securities: What's the Difference?
The main difference between equity securities and debt securities is the relationship that the investor has with the entity that receives capital. The investor who invests in equity claims attains ownership. Having a share in the company may give the investor the dividends and the returns if the company grows in terms of the market value. Yet, the investor directly has to carry a business risk.
Meanwhile, the investor who provides loans to an enterprise is a debt investor. This claim usually gives the investor the right for returns in interest payments that are fixed and, on Maclear, are made on a monthly basis. Usually, early liquidity is limited, as the assets are typically held until maturity.
What is the difference between debt and equity securities?
Debt securities create a claim from the creditor that gives the borrower the obligation to repay the debt under defined terms of the loan contract. Equity securities, on the contrary, create an interest of ownership where the value depends on the financial performance of the company and the market price.
Types of Securities Compared: The Full Map
The types of the securities are compared in the table below.
| Type | What the investor owns | Where the return comes from | Priority if the issuer or borrower fails | Liquidity |
|---|---|---|---|---|
| Equity securities (shares) | Ownership interest in a company | Dividends and potential capital appreciation | Shareholders typically rank behind creditors, and the priority is generally residual | Can be high for listed shares, varies |
| Debt insecurities (bonds and notes) | Contractual debt claim against an issuer | Coupon payments and repayment, including market-price charges that may affect return | Ahead of equity, although the exact position depends on the particular instrument | Varies |
| Fund units | Interest in pooled investment vehicle | Performance and distributions generated by underlying assets | Depends on the structure of the funds in the holding | Varies (fund structure) |
| Derivatives | Contractual rights linked to another asset of reference value | Changes in the underlying price or contractual settlement | It depends on the contract and the structure of the counterparty | Varies |
| Crowdlending loan claim | Contractual claim against the borrower | Borrower interest and repayment of the principal | Depends on the structure of the loan, collateral, and jurisdiction | No exchange liquidity, limited early exit through the Secondary Market |
Categories are simplified for comparison; treatment, priority, and enforcement order vary by instrument, issuer, and jurisdiction. This data is general information, not legal or investment advice, and capital is at risk across every row.
Fund Units and Derivatives: Where They Sit on the Map
The investor and the underlying layer interact differently when taking fund units into consideration. The investor of a fund unit owns an interest while holding a portfolio of assets, yet they do not select every bond or share in it directly. The structure of the fund and the financial performance of the portfolio contribute to the returns.
Derivatives paint a different picture because they are a contract that has a value connected to another asset, like the price of the asset, the rate, and the index. If the investor owns a derivative, it does not mean that they respectively own the referenced asset.
Where a Crowdlending Claim Fits — and Where It Doesn't
A crowdlending claim comes in the form of private debt because the investor provides the capital and the borrower is obligated to transfer fixed interest payments and agrees to repay the principal when it reaches maturity. Yet, a crowdlending claim does not automatically become debt security.
Is a loan a security?
Many platforms that are European lending arrangements treat contractual debt claims as a claim rather than a security that is tradable. Yet, a particular jurisdiction determines whether a particular loan qualifies as a security. The structure of a particular tool is also important for defining the structure of the loan. The distinction matters when the difference involves retail investors who operate on digital platforms.
Is a P2P lending claim a security?
A crowdlending claim is not a tradable security: it cannot be sold on an exchange, and any exit through the Secondary Market depends on finding a buyer, may take time, and may only be possible at a discount of up to 50%, if it happens at all.
No, P2P is not a security; it comes in the sense of a contractual debt claim. A particular jurisdiction, however, determines whether a specific instrument would qualify as a security. For the investor who uses Maclear, the practical consequence carries more meaning than the terminology. A debt claim has no daily market repricing that will compare to the bond that has already been listed.
In case the market interest rate experiences ordinary price fluctuation, since the secured crowdlending debt is not listed, the price would not be prone to change due to market dynamics. Yet, the claim itself can still experience volatility due to the fluctuation of the price of the collateral. Since returns are not guaranteed, Maclear uses Annualized Returns on investment, or AROI, a metric that shows potential returns. The formula for AROI is:
AROI = (Expected Earnings / Remaining Period) * (365 / Principal Purchased)
Another important aspect of secured crowdlending is liquidity. A claim cannot simply be sold on an exchange to have early liquidity. Instead, the investor should list it on the Secondary Market. If the claim does not find a buyer in 14 days, it is automatically removed. If the claim is sold, Maclear charges a seller fee of 2.5%. However, the sale is not guaranteed and depends entirely on the interest of another investor.
How to Read What You Actually Own Before You Invest
To assess an investment before purchase, it is viable to try and assess the structure of the claim, the form of returns, and the implication this investment could have for a portfolio. For example, whether the contractual obligation or the ownership of the claim is purchased and how; how the investor maintains liquidity and what exit mechanisms exist; and how the creditor would rank in case of a borrower’s failure.
If the investment involves debt, the collateral may contribute to another question about what security is used to back the loan. How is the lender compensated or protected in case the borrower halts payments? For some crowdlending platforms like Maclear, you can have additional mechanisms like a Provision Fund that provides an additional layer of security. The Provision Fund is formed from the fees, 2% of which is taken from the funded projects. The Provision Fund serves as a shared reserve of funds and does not serve to protect the principal for the claim. As a member of SRO PolyReg, Maclear operates under a Swiss financial jurisdiction.
FAQ
What is a security in finance?
A security in finance is an umbrella term that describes a tool that gives the investor the right to something like revenues, debt claims, the share of the company, or the stocks instead of owning the referenced asset directly. This is not “loan” or “debt” security; that means that the loan is backed — these two notions are different.
What are the main types of securities?
The main types of securities include equity, debt, derivatives, and fund units. Equity means a share of a company that the investor can own. Debt is a loan commitment when a borrower is obligated to repay the principal to the investor. A fund unit is an asset that gives the investor one part of the assets in a particular pool. Derivatives mean a contract on the price of another asset, a referenced one. Every type gives different income and a different position of the investor in case the issuer or the borrower fails to meet their obligations.
Is a loan a security?
Whether a loan is a security depends on the jurisdiction and the composition of the investment relationship. Some structured debt instruments like secured crowdlending claims may be classified as securities; if a loan is just a standard debt requirement to the borrower, this type, instead, will not be generally classified as such in the European jurisdictions. This is general information, not legal advice.
What is the difference between debt and equity securities?
The difference between debt and securities is in the position of the investor. In debt securities, the investor is the lender with the right for the principal upon the claim’s maturity and the right to have fixed interest payments. With equity securities, the investor is a co-owner with a share in a business without fixed returns.
Is a P2P lending claim a security?
P2P lending claims are not classified as securities on most of the European crowdlending platforms. Since the investor holds the private debt obligation towards a particular borrower and the asset is not traded on the market, it falls within the debt category. The legal qualification of the instrument depends on the particular jurisdiction.
About Maclear
Maclear AG is a Swiss peer-to-peer (P2P) lending and crowdlending platform, headquartered in Switzerland. The company acts as a financial intermediary in the non-banking sector and is a member of PolyReg SRO, in accordance with Swiss financial regulations, particularly regarding AML, KYC, and GDPR. Maclear provides individual and qualified investors access to carefully selected business loan opportunities, with integrated risk assessment, a Provision Fund, and a Secondary Market for liquidity.
The content of this article is provided for informational and educational purposes only. It does not constitute investment, financial, tax, or legal advice. Peer-to-peer (P2P) lending and crowdlending investments carry a risk of partial or total loss of capital. Past performance does not predict future results. Liquidity on a secondary market is not guaranteed. Readers are encouraged to conduct their own research and consult qualified advisors before making any financial decisions. The availability of products and services may be restricted in certain jurisdictions.