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Derivatives

CSFB Takes Japanese Equity Back Onshore

Credit Suisse First Boston is moving its Japanese equity derivatives desk onshore for the first time since Credit Suisse Financial Products lost its license for derivatives trading across asset classes.

Credit Suisse First Boston is moving its Japanese equity derivatives desk onshore for the first time since Credit Suisse Financial Products lost its license for derivatives trading across asset classes. "We're now in the process of moving all derivatives trading onshore," said Todd Sandoz, managing director and Asian head of equities in Hong Kong. CSFB plans to start shifting five or six equity derivatives traders to Tokyo by the end of the quarter.

Credit Suisse stopped onshore derivatives trading after CSFP was found by regulators to be obstructing a government investigation regarding the concealment of client losses through structured product transactions in 1999. Since then Japanese equity derivatives trading has been out of its Hong Kong hub. Another unit, Credit Suisse First Boston Japan Securities, however, received an OTC derivative license for all products in early 2001 and restarted fixed income derivatives trading onshore (DW, 7/30/01).

CSFB wanted to keep all its equity trading offshore because regulations in Japan had prohibited firms from booking discretionary trades into offshore affiliates until last summer. "The clarifications by the [Financial Services Agency] were a welcome move and now we're very comfortable with the legalities," said Sandoz. "We've put a huge focus on getting this right and building the foundation," he added.

Rivals think CSFB will be able to grow its business from Tokyo and several bankers are seeing now as a good time to rekindle their Japanese desks. "We're still seeing a positive Japan story," said one equity head.

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