What is a Cabinet Security?

A cabinet security is an inactive security (often a bond) that is listed on an exchange.

How Does a Cabinet Security Work?

Before the advent of computers, it was necessary to move physical evidence of securities and orders. When securities didn't trade often, the trading orders for them were stored in cabinets (hence the name) until they expired or the broker executed the trades.

Why Does a Cabinet Security Matter?

Cabinet securities are infrequently traded, which means they are primarily for buy-and-hold investors and carry significant liquidity risk. However, people who own cabinet securities often have no intention of trading them, so the liquidity can be less of an issue for them.

Ask an Expert

All of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Cabinet Security.

Paul Tracy
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers.

Verified Content You Can Trust
   Certified Experts   5,000+ Research Pages   5+ Million Users