(b) Secondary participants play a vital role in strengthening securitization transactions. Explain.

(b) Yes, this statement is correct to some extent because each secondary participants play a vital role in securitization process as mentioned below: (i) Obligors: They are the main root of the whole securitization process. They are the parties who owe money to the firm and are assets in the Balance Sheet of Originator. The amount due from the obligor is transferred to SPV and hence they form the basis of securitization process and their credit standing is of paramount importance in the whole process. (ii) Rating Agency: Since the securitization is based on the pools of assets rather than the originators, the assets have to be assessed in terms of its credit quality and credit support available. Rating agency assesses the following: Strength of the Cash Flow.Mechanism to ensure timely payment of interest and principle repayment.Credit quality of obligors.Liquidity support.Strength of legal framework. (c) Receiving and Paying agent (RPA): Also, called Servicer or Administrator, it collects the payment due from obligor(s) and passes it to SPV. It also follows up with defaulting obligor and if required initiate appropriate legal action against them. Generally, an originator or its affiliates acts as servicer. (d) Agent or Trustee: Trustees are appointed to oversee that all parties to the deal perform in the true spirit of terms of agreement. Normally, it takes care of interest of investors who acquire the securities. (e) Credit Enhancer: Since investors in securitized instruments are directly exposed to performance of the underlying securities and sometime may have limited or no recourse to the originator, they seek additional comfort in the form of credit enhancement. In other words, they require credit rating of issued securities which also empowers marketability of the securities. (f) Structurer: It brings together the originator, investors, credit enhancers and other parties to the deal of securitization. Normally, these are investment bankers also called arranger of the deal. It ensures that deal meets all legal, regulatory, accounting and tax laws requirements.