APRA plans to move the securitisation market to a disaggregated model, in which funders and arrangers would operate at a greater distance from each other. APRA executive general manager Charles Littrell told the Australian Securitisation Conference that the failure of the local securitisation market was a surprise, given that there were no credit or liquidity defects.He put it down to unsophisticated debt investors, whom he described as lemmings. "If it was AAA, people bought it. Then they swung to US Treasuries. International debt investors have been poor in their performance for 10 years."They bought everything they should not have bought and then stopped buying everything they should have bought."The other factor contributing to market failure was the "opaque" nature of the securitisation process. In a typical securitisation deal the lender and arranger were related parties and provided management, servicing and liquidity to the security trust.Littrell described this relationship as the originator putting the trust structure in a "bear hug". This situation could result in manipulation. He said regulators wanted to see that relationship change. "A more robust industry would be less integrated. It would have specialist securitisation arrangers at arms length, like the underwriters of equities."I am not saying APRA is going to put rules in place that will make this happen. But our rules will encourage the disaggregation of some of the services in securitisation."