What do you mean by Securitisation? Explain the Securitisation Structure.

Securitization is the transformation of financial assets into securities. Securitization is used by financial entities to raise funds other than what is available via the traditional methods of on-balance-sheet funding. There are four steps in a securitization: Special Purpose Distinct Entity (SPDE) is created to hold title to assets underlying securities; The originator or holder of assets sells the assets (existing or future) to the SPDE; The SPDE with the help of an investment banker, issues securities which are distributed to investors; and The SPDE pays the originator for the assets with the proceeds from the sale of securities A Securitization structure typically is as under: