Securitization and Structured Finance Post Credit Crunch: A Best Practice Deal Lifecycle Guide

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CapitalTrack

14.1 CHANGING THE DATA MODEL USED FOR STRUCTURED FINANCE INSTRUMENT ADMINISTRATION

“25 years ago it was comparatively easy to acquire a sound knowledge of the general investment field—[but now] the different types of securities have multiplied in number to an almost unlimited extent . . .”

John Moody, 1910

 

The hybrid (structured) instrument market started as far back as the 1850s with bonds containing equity-based variations. Today, the same industry has exploded into a wide range of instruments that make the above quote still look very contemporary.

The international structured finance instrument market is indeed vast, boasting a “footprint” that now exceeds U.S.$8tn and is still growing in terms of volume and product innovation. At one end of the market, hordes of rate-hungry investors continue to bet on instruments of all shapes and sizes and, at the other, issuers run a formidable global factory producing all manner of instruments on a seemingly endless conveyor belt. In between the two (the “middle ground”), the sector administrators make their money offering a range of services to keep the whole “machine” ticking over. They are typically banks, their affiliates (lawyers, accountants, and administrators), stock exchanges, and regulators who are charged collectively with all aspects of safekeeping, accounting, income gathering, funds transfer, jurisdiction rules, full disclosure, and, ultimately, for providing a formal marketplace where buyer and seller ...