Inside Wall Street’s ‘SRT’ phenomenon
Behind the Money
Topher Forhecz
4.4 • 350 Ratings
🗓️ 22 January 2025
⏱️ 22 minutes
🧾️ Download transcript
Summary
Every so often a cool new financial innovation springs up and gains popularity on Wall Street, promising juicy returns for investors. That’s why “synthetic risk transfers” or SRTs are in fashion. But ever since the financial crisis, trendy acronyms have also made some people nervous. And it’s recently caught the attention of organisations such as the IMF. The FT’s Alphaville editor Robin Wigglesworth explains why he’s been following this and whether regulators should be raising the alarm.
- - - - - - - - - - - - - - - - - - - - - - - - - -
For further reading:
Inside Wall Street’s booming $1tn ‘synthetic risk transfer’ phenomenon
Private credit is even larger than you think
Make Europe (securitisation) great again
- - - - - - - - - - - - - - - - - - - - - - - - - -
Follow Robin Wigglesworth on Bluesky (@robinwigglesworth.bsky.social) or on X (@RobinWigg). Michela Tindera is on X (@mtindera07) and Bluesky (@mtindera.bsky.social), or follow her on LinkedIn for updates about the show and more.
Read a transcript of this episode on FT.com
Hosted on Acast. See acast.com/privacy for more information.
Transcript
Click on a timestamp to play from that location
| 0:00.0 | If there's one ghost that's haunted Wall Street since the 2008 financial crisis, it would be the three-letter acronym. |
| 0:14.0 | There's this natural, understandable fear of three-letter acronyms and finance. |
| 0:20.0 | You know, I've heard people say beware of bankers and their acronyms. |
| 0:24.4 | That's Robin Wigglesworth. |
| 0:26.1 | He's the editor of the FT's financial blog, Alphaville. |
| 0:29.2 | I talked to him the other day from our office in London, and what he's referring to |
| 0:33.6 | are things like CDOs and MBSs, these complex financial products that brought the whole system |
| 0:41.1 | crashing down. And Robin says that recently, there's a new three-letter specter that's |
| 0:47.7 | spooking Wall Street's watchers. Well, it goes by the acronym SRT or synthetic risk or synthetic risk transfer. And SARTs, it almost sounds tragic, |
| 0:58.9 | comically obtuse and dangerous, right? It even has synthetic in there, which definitely in finance |
| 1:05.7 | historically has always been a code word for head to the hills. Right. It's like synthetic. |
| 1:11.5 | It's not real. |
| 1:12.4 | Yeah, exactly. |
| 1:13.4 | It sounds like this is like the fever dream of some financial engineer and no good will ever come |
| 1:19.0 | of it. |
| 1:21.6 | Robin says that SartTs are so hot right now that they're in the process of moving from a wonky niche trend |
| 1:30.0 | into the broader global financial system. |
| 1:33.3 | But their popularity is also causing organizations like the International Monetary Fund |
| 1:39.0 | to start raising its eyebrows. |
| 1:42.5 | Top line, what do you think of this fear of SRTs? |
| 1:46.9 | Is it warranted? |
| 1:48.5 | I think it's always warranted. |
... |
Please login to see the full transcript.
Disclaimer: The podcast and artwork embedded on this page are from Topher Forhecz, and are the property of its owner and not affiliated with or endorsed by Tapesearch.
Generated transcripts are the property of Topher Forhecz and are distributed freely under the Fair Use doctrine. Transcripts generated by Tapesearch are not guaranteed to be accurate.
Copyright © Tapesearch 2025.