Securitization refers to the process of transforming assets into securities that can be traded in the financial market. This enables financial institutions to eliminate assets from their balance sheets, thereby enhancing their capital ratio and liquidity. By selling these securities, the institution can generate funds to issue new loans. The term “securitized” is used to describe the past tense of securitize, while “securitization” is the noun form of the word.
The purpose is to convert assets into securities that can be sold in the financial market. This enables the issuing institution to remove the assets from its records, enhance its capital ratio and liquidity, and utilise the proceeds from the securities’ sale to make new loans. For instance, a bank may securitize a group of mortgages by bundling them together and selling them as mortgage-backed securities to investors. The bank can then utilise the funds obtained from the sale to provide new loans, while the investors receive regular payments based on the interest and principal payments from the underlying mortgages. In this scenario, the bank is able to eliminate the mortgages from its records and utilise the proceeds from the securities’ sale to provide new loans. The investors who purchase the securities receive regular payments based on the underlying mortgages, allowing them to earn a return on their investment.
Securitize is a leading compliance platform and protocol for issuing and managing digital securities on the blockchain.
Yes, Securitize is a regulated entity and operates under various regulatory frameworks, including securities laws and regulations.
Securitize utilizes its compliance platform to ensure that all digital securities issued and managed on its platform comply with relevant securities laws and regulations.
Yes, any company can issue digital securities through Securitize, subject to compliance with applicable securities laws and regulations.
Issuing digital securities through Securitize offers benefits such as increased liquidity, fractional ownership, automated compliance, and streamlined investor management.
Securitize has a robust investor onboarding process that includes Know Your Customer (KYC) and Anti-Money Laundering (AML) checks to ensure compliance with regulatory requirements.
Yes, investors can trade digital securities issued through Securitize on compliant secondary trading platforms, subject to any applicable restrictions or lock-up periods.
Securitize utilizes blockchain technology to provide transparency, immutability, and efficiency in the issuance, management, and trading of digital securities.
Securitize employs industry-leading security measures, including multi-signature wallets, cold storage, and rigorous security audits, to safeguard digital securities and investor assets.
Yes, Securitize has expertise in navigating regulatory requirements in various jurisdictions and can provide guidance and support to issuers to ensure compliance with local securities laws.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 17th April 2024.
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