It stands for collateralized mortgage obligation swap. An interest rate swap (specifically an index amortizing swap) in which the amortization of notional principal follows a fashion consistent with the amortization of a mortgage or CMO pool. While a standard mortgage swap replicates the cash flow payments of a mortgage pass-through instrument, the CMO swap replicates the cash flows of a collateralized mortgage obligation (CMO) tranche. Furthermore, the amortization schedule in a CMO swap doesn’t follow the underlying prepayment hand in hand. Instead, there is typically a lock-out period of one year during which no amortization takes place regardless of the prepayment rates.