Swelling volumes of U.S. CDO issuance have drawn more intense regulatory scrutiny and raised the need for standardization across both cash and synthetic sectors, market participants say. In the cash flow segment alone, CDO volume is up 65%, to $55.1 billion, so far this year compared to last year's record numbers. And as the credit derivatives market catapults growth within the CDO sector, more communication, and some say more regulations, are needed.
"The market has gone through different stages of growing pains," said Louis Lucido, group managing director at the Los Angeles-based money manager Trust Company of the West. Lucido is also the newly appointed head of the American Securitization Forum's CDO manager subcommittee, a group that was announced last week, he added: "We've seen it evolve and morph and change since its inception, and now that we approach a trillion dollar market, we want to make sure there is a continuity in its evolution, and an opportunity to broaden the depth and breadth of people participating in this market - and we want to be catalysts for that."