Responsibilities
Who performs each function of the transaction, and who carries the corresponding obligation. Read this before the structuring pages: it is the answer to the question a credit committee asks first.
The matrix
| Function | CARA7 | Originator | Investor |
|---|---|---|---|
| Origination and underwriting | Performs | ||
| Sale of the receivables to the issuer | Performs | ||
| Issuance of the notes | Performs | ||
| Subscription escrow and closing | Performs | ||
| Cash reserve | Holds | Funds, through the subordinated loan | |
| Servicing and collections | Performs | ||
| Reporting of collections | Performs | ||
| Calculation agency | Performs | ||
| Cash management and paying agency | Performs | ||
| Register of holders | Performs | ||
| Investor reporting | Performs | ||
| Independent reconciliation | Performs | ||
| Reference rate publication | Performs | ||
| Enforcement decision | Declares | ||
| Risk retention | Retains the junior class and the residual | ||
| Custody of the notes | Holds, or appoints a custodian | ||
| Eligibility and suitability | Assesses |
Two functions deserve their own note because the answer is not obvious.
Collections. The originator collects from its customers and reports the figure. CARA7 applies it. That means the originator's report is an input the platform relies on, exactly as a conventional transaction relies on its servicer. The mitigants are the same as in a conventional transaction, plus one: every consequence of the figure is derived and published at the payment date, so a discrepancy surfaces at the next reconciliation rather than at the next audit.
Enforcement. The decision to declare enforcement is the originator's, acting as servicer, under the conditions in the transaction documents. Once declared, the change of payment order is applied by the platform and cannot be reversed by the party that declared it.
What CARA7 cannot do
CARA7 does not originate, does not underwrite, does not collect, does not contact the originator's customers, and does not take a position in any transaction it operates.
Within a transaction, the platform provides no operation that changes a coupon, reorders the priority of payments, pays one holder ahead of another, withholds a payment, or moves the cash reserve outside the order. These are not permissions that have been withheld. There is no such function.
Structuring options per series
The functions above are the standard arrangement. The following are set at structuring and change who carries what.
| Option | Effect |
|---|---|
| Back-up servicer | A third party is appointed at closing to assume servicing on a trigger. Required for a rated issue |
| Eligibility gate | Transfers restricted at the register to a defined class of holder. Required for an issue restricted to qualified investors |
| Third-party custody | Investors hold through a custodian with policy-controlled signing rather than under their own keys |
| Amendability | Terms fixed at issuance by default. Where a series requires amendment rights, they carry a timelock and signatories who are not a single party |
| Payment frequency | Monthly by convention; set per series |
| Settlement asset | EURC by default; EURCV supported subject to primary access with the issuer |
Operator continuity
The question behind the matrix is what happens if CARA7 stops operating.
The register and the transaction state are readable independently of us: any party can read the outstanding nominal, the note factor, the register of holders and the payment history without our systems. Payment to holders can be initiated by any party, not only by CARA7.
For a rated issue the answer has to go further, and the market has already set the standard: KfW switched both its securities registrar and its underlying network mid-life on a live bond as a deliberate resilience test. A series requiring that assurance carries a documented register-migration procedure and a named successor operator, agreed at structuring.