collateral trust certificate
Collateral trust certificate is a security that is backed by a financial asset, like stocks or bonds. A collateral trust certificate is typically used by corporations that own subsidiaries. For example, a holding company, like Meta, might issue a collateral trust certificate in the form of bond to a trustee to manage for the bondholder. The collateral of the bond can be stocks in the major company’s subsidiary corporation, like Instagram (a subsidiary of Meta), that can be sold to repay the issuer’s debt should the issuer default.
[Last reviewed in March of 2026 by the Wex Definitions Team]
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