What is Securities? This is the definition, types, and how to choose a good security

In carrying out stock trading activities in the capital market, securities are one of the important elements that must be present. However, do you know what securities are? Some of you who have been in the investment world for a long time must be familiar with this term.

However, for those of you who are new to the investment world, especially investing in buying and selling stocks, you will definitely be confused by the term securities. Well, in this article, we will discuss what securities are in full especially for you.


1 What is a Securities?
2 Business Activities of Securities Companies
2.1 1. Securities Trading Broker
2.2 2. Underwriter
3 Types of Securities
3.1 Debt
3.2 Equity
4 Parties Involved in a Securities Company
5 Tips for Choosing Securities
5.1 1. Registered with OJK
5.2 2. Ease of transaction
5.3 3. Research provided
5.4 4. Fee
5.5 5. Customer Service

What is Securities?

Everyone who wants to invest in stocks, of course they will always be attached to securities or securities companies. Reporting from the official website of Investopedia, what is meant by securities are financial instruments that represent the position of share ownership in a public company.

That is, securities are evidence of share ownership in a public company. But in our country, securities are often claimed to have the same meaning as securities companies.

Quoted from the website of the Financial Services Authority (OJK) , a securities company is a company that has obtained a business license from the OJK to be able to carry out business activities as a securities broker, securities underwriter, or other activities in accordance with the provisions and regulations of the capital market supervisor.

So, you cannot directly buy shares in a public company that is already listed on the Indonesia Stock Exchange (IDX) without a securities company. For this reason, securities companies act as intermediaries between investors and companies that carry out share buying and selling activities on the IDX.

Currently, there are two types of securities companies operating in Indonesia, namely foreign securities companies and local securities companies.

Reporting from the official CNBC Indonesia website, currently many market players tend to follow the movements of foreign securities companies. Why? Because they tend to make transactions whose value is quite large, so they have the opportunity to move certain stock prices.

Various researches conducted by foreign securities companies are also very deep, so that they can be used as the main consideration for investors.

But behind this, buying and selling activities in foreign companies are generally higher, around 0.25% for the value of the purchase transaction, and 0.35% for the value of the sale transaction. For comparison, the cost of buying and selling shares at local securities companies currently only ranges from 0.15%-0.25%.

Securities Company Business Activities

Still reported from the official OJK website, there are at least two business activities carried out by securities companies, namely securities trading intermediaries and securities underwriters.

1. Securities Trading Broker

Companies have a role as securities trading intermediaries or broker-dealers so that they will carry out securities buying and selling activities in the form of securities for their own interests or for other people. In addition, securities companies will also usually carry out stock and bond buying and selling activities that can be carried out on the IDX or outside the IDX.

2. Underwriter

Another activity carried out by securities companies is guaranteeing the issuance of securities. This means that securities companies have full responsibility in helping prospective issuers to carry out public offering activities, known as initial public offerings (IPOs), with or without an obligation to buy the remaining unsold securities in the market.

Types of Securities


Debt security is a proof of ownership of debt in the form of securities depending on the payment due date or other characteristics listed therein.


Equity securities are forms of ownership held by shareholders in a particular entity, for example in a company, which are obtained in the form of shares including common shares and preferred shares.

Usually, each shareholder will have the right to be able to control the company with voting rights in it.

Parties Involved in Securities Companies

In a securities company, there is a broker or broker who will carry out stock trading activities between the client and the stock buyer. There. The broker will only act as an intermediary in the transaction, and will not have the task of buying and selling investors’ shares directly.

Another job of a broker is to give recommendations to clients about when they should buy or sell shares, or recommend any interesting stocks to buy.

The broker will provide recommendations to its clients based on analysis of market activities, the reputation of shareholder companies, financial analysis, and market analysis. So, they will not provide recommendations based on assumptions alone.

Later, the results of the analysis can be used as the basis for recommendations given to the client along with other information related to shares on the IDX or on the market.

Some securities companies also have perfunctory analytical research, but they will use research results from several trusted sources and summarize them into good recommendations for their clients.

The results of recommendations given by a securities company will affect the reputation of the securities company itself. If the recommendation is able to bring stable profits, the client will certainly have more confidence and the selling value of the securities company will also automatically increase.

Tips for Choosing Securities

1. Registered with OJK

The first thing you should pay attention to in choosing a securities company is to make sure the securities company is registered with the OJK and the IDX. That way, all transaction activities that you carry out are guaranteed safe because they are supervised by official financial institutions.

2. Ease of transaction

Today, you could say almost all companies implement an online buying and selling system. For that, you can consider this in choosing a securities company. So, you can find out in advance about the transaction process that you have to do at the securities company.

3. Research provided

In general, securities companies will provide various analyzes related to market conditions at that time on a regular basis. For that, you can take the various securities company research into consideration. If you feel that their analysis is deep enough and suits your needs, then you can consider the securities company.

4. Fee

Another tip that you should consider before choosing a securities company is the fees they apply. A transaction fee is the income earned by each securities company. They have different terms of fee value.

5. Customer Service

You should also consider the customer service provided by a securities company. Why? Because in investing with the company, you may get some obstacles or problems. For that, you have to make sure the customer service they provide is good enough.

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