A standard recently issued by the Financial Accounting Standards Board is expected to increase the volume of synthetic CDO issuance.

The new standard, FAS 155 - or "Accounting for Certain Hybrid Financial Instruments" - amends the regulations FAS 133 and FAS 140 and takes effect on Sept. 15. The development comes at a time when synthetic issuance is booming. CDOs are increasingly referencing credits synthetically, and the release of synthetic home equity ABS and commercial mortgage-backed securities indices are anticipated to trigger even more liquidity in the sector.

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