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What is Securitization?

Securitization is the procedure where an issuer designs a marketable financial instrument by merging or pooling various financial assets.

What is Securitisation?

In Securitisation, we repackage loans into a bundled new product that can be sold to investors on the secondary markets. Securitisation is one of the critical concepts of modern-day financial risk management. It is the general process that is followed for all financially engineered products.

Example of Securitisation

Credit Mortgage Obligations, Credit Debt Obligations are examples of the Securitisation process.

Why is it important to know about Securitisation?

While it’s easier to understand the Risk Management behind plain vanilla products, risk management becomes interesting for products created after Securitisation. Hence, it is critical for Risk Professionals to understand the product first to understand its risk management.

Owais Siddiqui
1 min read
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