Bear Stearns plans to hire at least two foreign exchange salesman with a particular emphasis on options for its London team next year, as part of a firm-wide push to increase its presence in Europe. Bernd Broker, head of foreign exchange in London, said, "we want to develop a more corporate slant on the fx side, especially with derivatives," as an overall corporate finance offering. The U.S. firm may also look to add another options trader to bring its team to three.
Bear Stearns has traditionally focused on trading vanilla options with financial institutions but wants to expand and pitch more exotics to end users and concentrate on niche currency markets that incorporate non-deliverable forwards, such as Korea, Broker said. "We're not going to try and be the biggest or the best in [U.S. dollar/euro] options, we're going to focus on specialties," he added. Although he noted the premiums on exotic options are roughly 200-300 basis points lower than on vanilla structures, Bear Stearns hopes to increase its margins. For example, he said the firm would look to do more fx options where the notional value changes after predetermined events, such as interest-rate cuts.
The bank is also expanding its European derivatives presence in credit (DW, 11/12) and fixed income (DW, 10/22).