Japan's Daiwa Securities SMBC is looking to set up a credit derivatives trading desk in Tokyo and begin marketing synthetic collateralized debt obligations later this year. "We hope to get this running before year-end," said Hayato Kino, deputy manager of the derivatives and structured financial products department in Tokyo. Kino, who is heading the effort, said the firm is also planning to begin marketing yen-denominated synthetic CDOs in Japan, likely within two to three months, due to growing interest and queries from clients. He continued that Daiwa has had a structuring team in place for sometime, which has handled such products as credit-linked notes. Kino noted that it is too early to elaborate on specific CDO products as it is still in the early stages.
"We have a few bond traders that are very keen," added Kino, noting that for the initial stage it will transfer fixed-income traders at Daiwa to run the credit derivatives trading desk. The Japanese house has been considering establishing a trading operation since last year (DW, 10/14) but is now gearing up as the market matures and liquidity improves.