Following the GFC, regulators and policy makers as well as many academics and market participants concluded that one of the key problems with US sub-prime RMBS was that of originate-to-distribute.
To ensure that originators maintained an economic interest in the securitised assets they had originated even after the securitisation had been completed (skin-in-the-game) regulators and policy makers in multiple jurisdictions prohibited originators from securitising assets without retaining a minimum economic interest in those assets.
This obligation is referred to as the retention obligation and the economic interest retained as the retention. This minimum, agreed by the Basel Committee, is set at 5%.
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