Securitisation protects investors

Protection for investors – Board and Auditors, and optional regulated Risk Manager

The Securitisation's professional directors have legal obligations (fiduciary duties) to take appropriate actions to protect the investors' rights and interests. In addition, the Securitisation must be professionally audited each year by an independent external auditor, who must, among other things, obtain confirmations from the underlying assets (so there is in fact a double layer of audit if the underlying assets are themselves also audited).

In addition, the Securitisation may appoint an external risk manager, for example an external licensed and regulated Alternative Investment Fund Manager, to supervise it as if it were a regulated investment fund.

Protection for investors - investing directly (not via ISIN) into underlying assets

Many investment opportunities include in their terms and conditions certain rights for investors. However, in practice, it is often difficult for investors to exercise these rights. Securitisation can overcome some of these difficulties.

For example, investors may have a right to call an investors' meeting with the managers of the underlying asset, but only if a certain number of investors request it – and it may be difficult and time-consuming for an investor to find and coordinate with other investors to meet that threshold. In this case, a Securitisation which aggregates multiple investors may meet the threshold alone, then it is easy for the Securitisation to call the meeting.

As another example, if an investor has invested through their securities account in their bank, with the bank as "nominee" investor, the bank may be hesitant to do the administrative work necessary to exercise a right on behalf of the investor (especially if that investor does not by itself reach the threshold). Also, since communications with the investor pass via the bank, there can be delays in the transfer of important information. A Securitisation on the other hand can often invest directly and as a result can then interface directly with the asset managers without the bank having to be intermediary, and therefore be more effective for exercising investor rights to protect the investment if needed. (Asset managers may require individual investors to invest through their banks, while permitting the Securitisation to invest directly.)