Securities and related liabilities (TALC 52)

A1A.340.

Securities and related liabilities (TALC 52) is further classified into:

• debt securities (TALC 521);
• financial derivatives (TALC 522);
• employee stock options (TALC 523);
• equity including contributed capital (TALC 524); and
• investment fund shares or units (TALC 525).

A1A.341.

Debt securities (TALC 521) consists of negotiable financial instruments serving as evidence of a debt.

Includes: Treasury bills; negotiable certificates of deposit; bankers’ acceptances; promissory notes; commercial paper; bonds and debentures; bonds that are convertible into shares; zero-coupon bonds; deep-discount bonds; loans that have become negotiable from one holder to another and where there is evidence of secondary market trading; non-participating preferred stocks or shares; asset-backed securities; collateralised debt obligations; stripped securities; and index-linked securities.

A1A.342.

Financial derivatives (TALC 522) consists of financial instruments that are linked to another specific financial instrument or indicator or commodity, through which specific financial risks, such as interest rate risk, foreign exchange risk, equity and commodity price risks and credit risks, can be traded in their own right in financial markets.

Includes: Options, warrants including detachable warrants, forward-type contracts such as futures, forward rate agreements and forward foreign exchange contracts; swap contracts such as currency swaps, interest rate swaps and cross currency interest rate swaps; credit derivatives such as total return swaps and credit default swaps; non-repayable margin payments; repurchase agreements; securities repurchase agreements which involve the sale of securities for cash, at a specified price, with a commitment to repurchase the same or similar securities at a fixed price either on a specified future data or with an open maturity; securities lending which involves security holders transferring securities to another party, subject to the stipulation that the same or similar securities be returned on a specified date or on demand; gold swaps which involve an exchange of gold for foreign exchange deposits with an agreement that the transaction be reversed at an agreed future date at an agreed gold price; and off-market swaps which involve swap contracts that have a non-zero value at inception as a result of having reference rates priced differently from current market values.

Excludes: Insurance and standardised guarantees (classified to insurance, superannuation and standardised guarantee schemes (TALC 54)); contingent assets such as one-off guarantees (classified to loan and other debt instrument guarantees (ETF 7211) or other one-off guarantees (ETF 7212) and letters of credit (classified to other one-off guarantees (ETF 7212); instruments with embedded derivatives (classified according to the primary characteristics of the instrument); central bank swap arrangements (classified to advances other than concessional loans (TALC 533)); repayable margin payments made in cash (classified to cash and deposits (TALC 511); repayable margin payments made in assets other than cash (not recorded as a transaction or change in stock position because no change in economic ownership has occurred).

A1A.343.

Employee stock options (TALC 523) consists of options to buy the equity of a company, offered to employees of the company as a form of remuneration.

Includes: Stock options provided to suppliers of goods and services.

Excludes: Stock options granted to employees that can be traded on financial markets without restriction (classified to TALC 522 Financial derivatives).

A1A.344.

Equity including contributed capital (TALC 524) consists of all instruments and records that acknowledge claims on the residual value of a corporation or quasi-corporation, after the claims of all creditors have been met. Equity is treated as a liability of the issuing institutional unit (a public corporation or other government unit). it is recorded at market value if listed or set equal to assets less non-equity liabilities if not listed.

Includes: Listed and unlisted shares; stocks; participations; depository receipts which are securities that represent ownership of securities listed in other economies.

A1A.345.

Investment fund shares or units (TALC 525) consists of collective investment undertakings through which investors pool funds for investment in financial or non-financial assets. These funds issue shares (if a corporate structure is used) or units (if a trust structure is used). Investment fund shares or units refer to the shares issued by mutual funds and unit trusts, rather than the shares they may hold.

Includes: Money market funds; non-money market funds.

A1A.346.

Loans and placements (TALC 53) is further classified into:

• finance leases (TALC 531);
• advances - concessional loans (TALC 532);
• advances other than concessional loans (TALC 533); and
• loans and placements not elsewhere classified (TALC 539).

A1A.347.

Finance leases (TALC 531) consists of contracts under which the lessor, as legal owner of the asset, conveys substantially all risks and rewards of ownership of the asset to the lessee.

A1A.348.

Advances - concessional loans (TALC 532) consists of loans with concessional interest rates.

A1A.349.

Advances other than concessional loans (TALC 533) consists of loans and other non-equity financial assets received from government authorities for policy rather than for liquidity management purposes. As a general rule, all loans made by general government to other government bodies, except loans made by central borrowing authorities, are deemed to be for policy purposes.

Includes: Long and short-term loans; non-marketable debentures; long and short term promissory agreements (bonds and bills) issued to public sector units for the purposes of achieving government policy objectives.

Excludes: Government equity in public corporations (classified to equity including contributed capital (TALC 524)); grants (classified to revenue from current grants and subsidies (ETF 1141, SDC) or revenue from capital grants (ETF 1151, SDC)); non-repayable funds (classified to revenue from current grants and subsidies (ETF 1141, SDC) or revenue from capital grants (ETF 1151, SDC)); concessional loans (classified to advances – concessional loans (TALC 532)); investment for liquidity management and income generation purposes.

A1A.350.

Loans and placements not elsewhere classified (TALC 539) consists of financial instruments that are created when a creditor lends funds directly to a debtor and receives a non-negotiable document as evidence of the asset.

Includes: Overdrafts, mortgage loans; loans to finance trade credit and advances; claims on the IMF in the form of loans.

Excludes: Concessional loans (classified to advances - concessional loans (TALC 532)); trade credit and advances (classified to accounts payable (TALC 552 )); accounts payable (classified to accounts payable (TALC 552)); loans that have become negotiable from one holder to another and where there is evidence of secondary market trading (classified to debt securities (TALC 521)); financial assets created by finance leases (classified to finance leases (TALC 531)); and loans acquired for policy rather than for liquidity management purposes (classified to advances other than concessional loans (TALC 533)).