The complexity of asset-backed securities (ABS) and collateralized-mortgage obligations (CMOs) has played a major role in Wall Street's current difficulties valuing the assets, and it has also created processing complexities resulting in operational and potential reputation risks as well as millions of dollars in unnecessary costs.

The Depository Trust & Clearing Corp., which processes the vast majority of securities transactions in the U.S., outlined these issues in a recently published third installment of white papers about the growing problem of processing structured transactions. The white paper also describes a series of steps the New York-based industry utility is taking-some requiring Securities and Exchange Commission approval-to limit problematic transactions. One of those steps could significantly hike up processing fees for the transactions' underwriters.

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