283 that parts of the current regulatory framework might be suboptimal and could benefit from revisions. 7.1.4 The beauty of securitization One might argue that, in and of itself, the securitization technique is a beautiful tsoy os tl e fmo r. Tfhi neatneccihanl i qe nu ge i anlel oe wr i ns gb atnhkast apnrdo voitdheesr fbi ne na ne fciitasl itnos tai t uc toiuo nn tsr tyo’ st rfai nn as fnocrima l illiquid assets to tradable capital market instruments. This reduces the reliance of i nn adnec pi nogs i ct so sat nfdo r c lreenadt eesr s f us un cdhi n ag s dbi va enrkssi.f iTc ahtei osno l wv ehni cc yh omf ibg ahnt krse sc uo lut l di nb leonwe fei rt from the enhanced liquidity and higher asset turnovers, thereby increasing their pmriogfhi tt arbei sl iut yl t. iBnu lto nwoetr of ni nl ya nbcai nn kg sc ob se tn feof ri t .c oDmu ep at on i tehsea enfdf i coitehnecry bgoari rnoswoef rbs .a Int kasl, s iot provides benefits for investors, who can diversify their investment portfolio by not only investing in, e.g., government and corporate bonds but also in securitized ab sesneetfsi t (s K, iat r ias ente cael . s, s2a0r y1 4( )b. aHs eodw oe nv etrh, ei nf i on rddi ne rg st oi n stuhsitsa idni as sbel yr t aptri oo fni t) ft roo imm pt hr oe vs ee the (fine lines of the) current market structure and regulation. 7.2 Answering research questions Tq ou aslui tmy mi s ai nr idzeeeadnadf faenc tsewdebr yt hf aec ot ovresr abrecyhoi nn dg trhe es ecar recdhi t qrua et isnt gi oann, ds ewc uh ri liet i iensv’ ec sr teodrist do still rely upon ratings, they also price risks that are perceived beyond it. Ir na tt ei nr ge ss ,t ibnugtl ym, wo er ef isnod i tnh at ht ei nUv Se smt oar rskient .bLoitkhe twhies eU, Swaen fdi nEdU t mh aat r iknevt erset loyr os ni nc rbeodt iht markets take other security design factors beyond the credit rating into account when pricing securities, but again more so in the US market (first sub-question). Furthermore, we see that the complexity of a security’s design has an impact Chapter 7 - General Discussion and Conclusion
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