SIVs are independent, bankruptcy-remote entities, often sponsored by large banks, that capitalize on the arbitrage between the highly-rated investment grade securities that they purchase, such as asset-backed securities, and the shorter-term commercial paper and medium term notes that they issue. The WestLB vehicle, named Harrier Finance Ltd., will integrate the Principia System with their existing portfolio and risk management tools to manage the entire SIV operation from the deal capture through to accounting. WestLB will leverage the systems advanced pricing, risk and analytical capabilities to produce the necessary regulatory and management reports required to sustain rating agency approval. Since a SIVs funding ability is dependent on the ratings of its financial offerings, the vehicle requires an advanced pricing/risk management and operations system to ensure it adheres to strict portfolio management and reporting policies of the rating agencies.
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