Securitisation

Securitization is a process by which pooled assets or obligations (such as a mortgage or credit card debt) are converted into securities that can be traded by various retail and institutional investors. This process allows for the transference of risks and cash flows from the obligation originator to a new set of investors. This generally increases the liquidity and ownership interests of these securities, while distributing risk among a larger set of investors. The credit exposure of a financial institution can thus be improved.