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Sept. 7 (Bloomberg) -- Regulators are unable to quantify losses from collateralized debt obligations, the fastest growing part of the credit markets, according to France's financial markets watchdog.

``Structured finance products have become considerably more complex and difficult to understand,'' Michel Prada, president of Autorite des Marches Financiers, told delegates at an investor conference in London today. ``Regulators do not have a global view on all the instruments and positions in the market.''

Prada called for global regulators, banks and investors to develop an information warehouse where all CDOs, bonds based on pools of debt and other assets, would be recorded so that the risk of losses can be quantified. The CDO market should replicate the Depository Trust & Clearing Corp., which has monitored credit-default swap trades since last year, Prada said.

Concerns that banks may be damaged by losses on CDOs backed by mortgages to U.S. borrowers with poor or limited credit history caused investors to withdraw lending, driving commercial paper yields to a six-year high and forcing central banks to provide more than $350 billion of emergency cash.

CDOs group mortgages, corporate loans and other assets to provide an income for investors. The securities are sliced into bonds with different credit ratings and maturities. Investors buy and sell CDOs outside of exchanges, in the so-called over-the- counter or OTC market.

``It is time in Europe to join the fray and develop an approach to these issues that can encompass structured finance instruments, that will help clarify risk in the global OTC markets,'' Prada said.

London-based analysts at Dresdner Kleinwort are predicting a ``sharp rise'' in CDO downgrades by year end, as losses mount on subprime mortgages. So far Standard & Poor's and Fitch Ratings have lowered ratings on 44 CDOs since July, according to a Dresdner report published today.

To contact the reporters on this story: Neil Unmack in London at nunmack@bloomberg.net; Hamish Risk in London at hrisk@bloomberg.net.

Last Updated: September 7, 2007 15:20 EDT