232 rpies rkf oorf mt haen fci er sf te leo, st sh et r tarnacnhceh. eT rheetya ianregru ae l, shoo bweenveef ri ,t st hf ar ot mb e es ixdc ee ss st hcea sshu bf loorwd i inna tt eh de securitization. This might create an incentive for the tranche retainer to buy riskier collateral to optimize its own profits. However, they find no significant rloeasnultosbbliegtawtieoennsth(CeLrOet)ensptiroenadmse. tIhnodlisn(ehworiitzhonBteakl tvis. vertical) and collateralized ć and Hachenberg, Tavakoli (c2a s0h0 8f l)oawl sso. Sshe ee seax pc ll ea ai nr sc ot hnaf lti ct ht oe rf ei nitse ar ersits kw ho ef nmtohrea ol rhiagzi na radt o; rt hr ee t ma i na ns at hg ee re gqauiint ys from high spread income of the portfolio when the losses exceed the initial equity iannvde sctaml le nt ht eo ft trha en sma ca tni ao gne rw. Bh ee sni dsepsr, et ahde se qa ur ei t yt iog wh tneenri nhga. s Kt ha ep tpaonw(e2r 0t 1o 1r )e f ai nr ag nu ce es twhha et na ni n ot rpotdi mu cailnagl iagnn imn ec ennt tbi veet -wmeaexni mr ei tzai ni ngerre at enndt iionnv esst trourc tcuarne . oHnel ys ub ge gaecsht si etvheadt hi ni gc ehne tri vdi ez fea turlat nrcaht ee sr es thaoi nu el dr sctoor rheasvpeobnedt t we ri tshc rheiegnhienrg rai ns kd rme ot enni tt oi or ni n, ga se f tf ho ri st sw. i l l Tt hoe sduimf f emr ae rnitz er i, stkh er erteegnut li ao tno rmy ertihs ok drse. tHe notwi oenv erru, leemdpoiersi cna ol te vdiids et inncgeu ii snh l ibt ee rt wa teuerne sr ehtoewn tsi otnh amt edtihf foedr es n. cNeesv edrot heexl iessts ,b teht we ef ei nnd itnhges roi sf kp pr ervoifoi lue s osf t ut hdei e sv aarri oe ursa trhi sekr mixed. Some find that the FLT method is best aligning the interest of the retainer ainntderiensvtess.tor, while others argue that the VES method is more suitable in aligning 6.2.3 Risk retention and incentives alignment The purpose of the risk retention rule is defined as follows: “The purpose of the requirement to retain a material net economic interest is to align the interests between two sets of parties in a securitisation: the sell-side
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