True Sale

A transfer of assets constituting a legal sale (not a secured loan) so that the assets are excluded from the originator's insolvency estate. Requires: (1) intent of parties; (2) no obligation to repurchase at par; (3) no practical control retained; (4) supported by a true sale legal opinion. See also: VIE/ASC 810 for US GAAP consolidation consequences.

Risk Retention (5% Rule)

EU SR Article 6 / UK SR requirement: originator, sponsor, or original lender must retain ≥5% material net economic interest. Can be: (a) vertical slice; (b) random sample; (c) first-loss tranche; (d) first-loss in each tranche; (e) seller's interest in revolving structures.

Securitisation

The process of pooling financial assets (loans, leases, receivables) into a special purpose vehicle, which issues tranched securities backed by the cash flows from those assets. EU definition (SR 2017/2402 Article 2): a transaction where the credit risk associated with an exposure is tranched.