ABX is an index of prices of subprime securities, primarily determined by credit-default swaps (that is, agreements in which one party pays another to bear the credit risk of a security). An article in the Wall Street Journal indicates that this index may result in overstated losses on sub-prime investments: http://online.wsj.com/article/SB122020948016886713.html?mod=hps_us_whats_news .
What is ABX's relation to losses? In the absence of a readily available market value to use to value securities, companies with illiquid investments must now use an index to value these investments if one is available. The index that is prescribed for subprime-backed securities is the ABX index, maintained by BIS. The requirement of using this index went in to effect this past year -- hence, all the losses reported by Citigroup, Bear Stearns, etc.
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