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TMI Readies Credit Derivatives Push

Tokyo-Mitsubishi International is planning on becoming a market maker in credit derivatives. The firm anticipates making its first single-name credit default swap trades in the next three or four weeks and expects to have the business up and running by the start of next year, according to Robert Hammond, managing director and head of fixed-income trading and sales in London. He said the firm will not take a market-share approach and will instead focus on areas where it believes it has an advantage, such as in Asia excluding-Japan or highly rated European banking credits.

The firm currently uses credit default swaps as an end user for hedging purposes and to structure products, such as credit-linked notes, for its customers. It has two credit derivatives professionals on the team and is looking to hire another trader with a quantitative background. The team will report to Peter O'Neill, head of credit trading in London. TMI expects to also get involved in trading credit default baskets and structured synthetic securitizations down the road. Its parent Bank of Tokyo Mitsubishi (BTM) currently runs a Japanese default swap business in Tokyo.

The London-based subsidiary of BTM is planning the effort as part of a joint venture between its fixed-income and derivatives teams as the bank attempts to create a seamless international credit business on the cash side; the derivatives initiative comes as an extension of that, Hammond said.

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