FRM Part II · FRM Exam Part II · An Introduction to Securitisation
In a typical securitisation, which participant is primarily responsible for acting on behalf of noteholders to enforce the transaction documents and hold the SPV's assets in their interest?
The trustee fills this role. It represents noteholders, holds or oversees security over the SPV's assets, monitors compliance with the transaction documents, and enforces investors' rights if a default or breach occurs.
- AThe trusteeCorrect
- BThe arranger
- CThe originator
- DThe liquidity provider
Explanation
The trustee safeguards investors' interests, holds security over the assets, monitors compliance with the documents and acts on noteholders' behalf on default. The arranger structures the deal, the originator sells the assets, and the liquidity provider supplies short-term funding for timing gaps.
Did you get it right without looking?
One question tells you little. A timed set on An Introduction to Securitisation shows your real accuracy, how long you take and where you lose marks.
More An Introduction to Securitisation questions
- A CDO is backed by mezzanine tranches of subprime RMBS, each rated BBB. A risk manager finds that the CDO's senior tranche was rated AAA bas…
- A bank holds a securitisation exposure that cannot be assessed under SEC-IRBA, SEC-ERBA or SEC-SA because it lacks the required information …
- A regulator introduces a rule requiring securitisation originators to retain 5% of the credit risk of each securitised pool. What is the pri…
- A securitisation pool of USD 500 million of loans is tranched as follows: equity tranche USD 25 million, mezzanine USD 75 million, senior US…
- A bank pools 5,000 residential mortgages and sells them to a newly created legal entity that funds the purchase by issuing notes to investor…
- An originator retains the equity tranche of its own securitisation rather than selling it to investors. Which statement best describes the m…