This, in turn, paralysed the new issuances and trading in these papers, eliminating the market liquidity in these instruments. The attempt of some of the large investors in such products, facing redemption pressures and margin calls, to liquidate their portfolio, also sharply depressed the market prices.
The drying up of market liquidity affected the funding liquidity of the SIVs and other conduits, which were unable to roll over / renew their market funding, raised predominantly through asset-backed commercial paper (ABCP).