Cellular platforms: GENTWO sets new safety standards for securitization platforms

News - 02.03.2021 - 4 min read time

Securitization specialist GENTWO is upgrading its capabilities to provide its customers even greater security. Starting now, the off-balance sheet securitization solutions offered by this Zurich-based Fintech firm not only reduce risks at the platform level, but also at the product level.

 
Today, modern securitization platforms can be used to securitize any kind of asset, subsequently bringing a conventional investment product directly to the market, complete with its own Swiss ISIN. This has given banks, asset managers and family offices a chance to offer their clients the powerful opportunity of meeting not only the increasing need for diversification in their investment portfolios, but also fulfilling heightened safety standards that clients expect when it comes to individual investment products as well. In line with good risk management practice, off-balance sheet platforms are becoming increasingly relevant, as banks and securities dealers, for example, have recognized that this is an avenue for reducing their capital costs as well as lowering the burden of credit and interest rate risks on their balance sheets.

GENTWO's off-balance sheet platforms are set up in a segregated manner

Securitization platforms offer yet more possibilities for reducing risk – namely at the product level. A recognized pioneer in the securitization and platform building segment, GENTWO provides its customers infrastructure with a uniquely valuable attribute: the issuing platforms are not only set up off-balance sheet, but also completely separate from one another. This results in advantages that make individual products even more interesting from a risk perspective. On the one hand, products launched are no longer exposed to the default risk of a bank issuer. And on the other hand, the product risks of one platform cannot be transferred to another platform. The use of a dedicated securitization solution is thus extremely flexible. If desired, it can even be used by several asset managers at the same time. But what about the platform-to-platform transfer of risks?

GENTWO's platform upgrade now also segregates individual products on the same platform

GENTWO studied this issue in detail and developed an innovative solution to address it, bringing to the securitization market another step in the evolution of so-called “Generation Two” financial products. As of March 2021, this rapidly growing securitization firm will upgrade its product range in order to assure a “two-step segregation”: in addition to the securitization solutions being set up so that they are segregated one from the other, within the same platform, a product shield is established by means of segregated units that keep the individual, integrated asset-backed securities away from each other. This means that successful segregation is no longer achieved only at the platform level, but also at the individual product level.

A new level of security in the provision of structured products has been achieved

This upgrade affects all previously launched as well as all upcoming securitization platforms. The two-step segregation serves as an additional safeguard, almost entirely eliminating the issuer risk of the individual investment products. With this innovation, a further stage in the evolution of the structured product segment has been reached. GENTWO is announcing that the upgrade will affect all previously launched securitization platforms – and all those to be launched in the future.

Representing a practical outlet for innovations on the financial market, GENTWO's securitization platforms have allowed companies to realize new growth potential. Now GENTWO is enriching the market with yet another platform innovation. Thanks to this new two-step segregation, this up-and-coming Fintech company has taken a further evolutionary step towards greater security in the range of structured investment products on offer. The result: a significant strengthening of the performance of investment solutions, which in turn can lead to even more flexibility and diversity in the investment market – not to mention pleasing investors who want to exercise more caution in their investment decisions.

These aspects make the use of GENTWO's innovative securitization platforms interesting from the point of view of return and risk:

  • Opportunity to securitize any type of asset: Innovative securitization platforms provide efficient investment access to many new (or alternative) assets.
  • Portfolio management: In day-to-day business, the securitization platforms are easy and flexible to deal with. Thanks to the possibility of securitizing all types of assets, they facilitate a high degree of portfolio diversification as well as achieving the effective diversification of risk within an investment portfolio.
  • Profitability: Conventionally, financial products in very specific but promising niche areas would be expected to generate only low investment volumes, but now they become economically interesting. Investors can benefit from improved price-performance ratios and take advantage of an expanded product universe, thanks to a higher number of products now eligible for selection.
  • Issuer risk: The financial products launched on these platforms do not bear any of the default risk of a bank issuer, since the platforms are set up off-balance sheet.
  • Independent issuers: Segregated securitization platforms are set up separately and independently of one another. In this way, risks from one platform cannot be transferred to another platform.
  • Platform-integrated product segregation: By means of this new two-step segregation, asset-backed securities can also be set up at the platform level within individual product units – completely separate from one another.

Click on the picture to read the article (in German) appeared on the 2nd of March on Moneycab.ch. 

"GENTWO setzt neue Sicherheitsstandards bei Verbriefungsplattformen"

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