The European Central Bank has published amendments to its rules on money market operations that will increase the number of asset-backed securities eligible to be used as collateral for repo operations.

The new rules, which are slated to go into effect on May 1, broaden the ABS/CDO eligibility. The rules previously did not apply specific eligibility criteria to asset-backed securities, which fall under the category of tier one debt instruments, according to the ECB. The previous rules on tier one debt instruments stipulated that bonds must have "fixed, unconditional principal amounts," thus excluding asset-backed securities in which the credit risk has been transferred to a special purpose vehicle using credit derivatives.

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