UK Accounting Glossary
In financial terms, ABS stands for asset-backed securities. ABS are types of securities (i.e debt securities) that are collateralized by a group of assets. When you invest in ABS, your investment is backed by this group of assets. Those assets can be account receivables, leases, or loans. Although mortgage-backed securities (MBS) are not considered an ABS, MBS are a form of ABS since an investment in MBS is backed by mortgages. The idea behind ABS is that you can create a more liquid investment instrument by pooling together assets which would not be liquid on their own and therefore not as tradable. On a different topic, the ABS can also refer to the NYSE “Automated Bond System”. In this case, ABS is the electronic platform used by the NYSE to track the bids and offers of inactive bonds that are not yet traded. The NYSE ABS will keep those records until the cancellation or execution of those bond’s bids and offers.
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This glossary post was last updated: 4th February 2020.