Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Securitisation definition

What does Securitisation mean? Securitisation is a financing technique that converts non‑tradable, income‑producing assets into tradable securities by pooling exposures and issuing notes backed by their cash flows. In practice, an originator sells receivables (for example, mortgages, consumer loans or trade receivables) to a bankruptcy‑remote special purpose vehicle (SPV/SSPE), which issues asset‑backed securities, usually in tranches (senior, mezzanine and junior). Alternatively, in a synthetic securitisation the credit risk is transferred by credit protection while assets remain on the originator’s balance sheet. Key legal features include: achieving a true sale or effective risk transfer; perfection/notification of assignments (assignation in Scotland); security and trust arrangements; servicing...

Security packages, enforcement, controlling class issues and waterfalls in UK securitisations, with key statutory frameworks: Insolvency Act 1986 s72B, CIGA 2020 and the National Security and Investment Act 2021

Published by a LexisNexis Banking & Finance expert

Practice notes

The purpose of security in securitisations

In a classic (non-synthetic) securitisation, security is broad in scope: the issuer charges all of its rights in favour of a security trustee for the benefit of all secured creditors, commonly under a single security deed. For guidance on synthetic securitisations, see Practice Note: Synthetic securitisations. Creating effective security interests over the issuer’s underlying assets (the ‘security package’) therefore supports both the credit and the legal assessment of a securitisation:

Credit analysis—A key strand of the credit review assumes value will be realised via enforcement rather than scheduled repayment. In the same way, a mortgage lender primarily prices and approves a loan by reference to the mortgage collateral—the asset to be enforced on default—rather than the borrower’s income capacity.
Legal analysis—Transaction counsel focus closely on ensuring each issuer asset is properly charged and that the enforcement mechanics are clearly articulated in the deal documentation...

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Web page updated on 21/05/2026

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