Merrill Lynch's Christopher Ricciardi, who heads the firm's global structured credit products group, had some choice words for dealers competing in the CDO market: put up or shut up.
With heightened market transparency efforts linked to increased liquidity of the CDO product and increased interest by new investor bases, Ricciardi specifically called upon dealers who do not post deal documents to the Bond Market Associations' new CDO Library (www.CDOlibrary.com) to start doing so. He went one step further and encouraged investors investigating new CDOs to ask dealers if they will post the documents online; if there are no plans to do so, simply do not purchase the security until those plans are underway, he said.
Why purchase from a dealer who won't contribute to the secondary market of that deal?
Dealers identified as not posting deal documents online were Banc of America Securities, Deutsche Bank Securities, Goldman Sachs, RBS Greenwich Capital, Lehman Brothers, UBS and Wachovia Securities, according to a BMA press release.
"The question is why [don't they], but they should live by the agreement we all reached," Ricciardi said, noting the benefits to the market.
A recommendation has been made with the Bond Market Association for better standardization of the league tables, which was first reported in last week's ASR. Included in that recommendation: dealers who seek credit for deals placed in the 2 (a)7 or with their own conduits should not be credited with selling.
"It's only a few months into 2004....and already [we've] seen abuses in the system. We should call for a stop to that practice," Ricciardi said.
There is one other development from the keynote address that has been resisted by the trustees thus far - a move to streamline trustee reports in an effort to make them more standardized. There are some technical challenges to work through, but the group is continuing in the effort.