The segregation of the cover assets is a necessary component of the dual, recourse mechanism in.That only by an effective segregation of the cover assets the priority claim of the covered bond.Investor on the cover pool can be ensured in the event of issuer default or resolution. While the.Report identifies different models of covered bond, jurisdictions issuer across, EBA the identifies as.An underlying principle of best practice the legally binding and enforceable arrangements.Establishing the existence and maintenance of a cover register and / or the transfer of the cover.Assets to a legally remote vehicle (an SPV). The segregation arrangement adopted depending on, the.Issuer 's model and other factors should include, not only the primary assets against which the.Covered bond is collateralised also but, applicable if, assets substitution and derivative contracts.Entered into to hedge the risks arising within the programme. Both substitution assets and derivative.Contracts are equally relevant assets used in the programme with the primary aim of ensuring.Complete and timely fulfilment of the payment obligations towards the investor. As such their,,Segregation is deemed equally relevant.
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