EMIR

Assets - tradeable securities.

To convert non-tradeable assets into tradeable securities.

For example turning non-tradeable assets, like residential mortgage loans, into tradeable assets (such as mortgage-backed securities).

This is often undertaken through a securitisation special purpose vehicle.

The credit risk of the assets is divided into tranches, and payments to the investors are dependent on the performance of the assets.

When a special purpose vehicle is used, the assets are transferred to the special purpose vehicle, which then issues securities.

Non-performance of underlying assets is a key risk for investors, and was one of the triggers for the Global Financial Crisis (GFC).

Originators & Sponsors in securitisation

"For the purposes of the Securitisation Regulation, the Originator of an asset is either a party that was directly or indirectly involved in the original creation of the asset, or acquired the asset for its own account and then securitised it.

... the Sponsor of a securitisation is a party that sets up the securitisation and manages it, but does not securitise its own assets."

Originator - Sponsor - the Treasurer's Wiki.

See also

• Collateral
• Collateralise
• Covered bond
• Global Financial Crisis (GFC)
• Loan
• Mortgage
• Mortgage-backed securities (MBS)
• Originator
• Secured
• Securitisation
• Securitisation Regulation
• Securitisation special purpose vehicle
• Securitisation swap
• Security
• Significant Risk Transfer
• Sponsor
• Sukuk
• Whole business securitisation