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Derivatives

Morgan Stanley Readies Korean Drive

Morgan Stanley is preparing to kick start an onshore derivatives effort in Korea after recently receiving a banking license.

Morgan Stanley is preparing to kick start an onshore derivatives effort in Korea after recently receiving a banking license. "We'll soon begin offering Korean won denominated products including bonds, fx derivatives and interest rate swaps," said an official at the firm. For the effort, the firm recently tapped Citigroup and hired Kim Soo Hoon, interest rate trader and Sung Gun Lee, marketer, both based in Seoul. Kim will run both fx and fixed income derivatives trading while Lee will handle corporate sales. Morgan Stanley will likely begin trading in the next few months, once systems are fully in place.

The U.S. house has been plotting its entry since last year, and it brought in market veteran Jang Ho Park, head of debt capital markets at UBS, to spearhead the effort (DW, 10/22). The move follows rival security houses Merrill Lynch and Lehman Brothers who launched onshore fixed income operations last year to take on established banks such as Citi and Deutsche Bank (DW, 6/27/04). While a late entrant into the Korean market, rivals said Morgan Stanley should be able to gain market share next year if it focuses more on structured and high yield products. Additionally, one fixed income head remarked that with four major derivative houses, including Deutsche Bank and JPMorgan, facing regulatory action (DW, 7/11), Morgan Stanley is coming in at an opportune time.

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