Derivs - People and Markets

More end-users have started lobbying the U.S. Congress to change parts of the proposed over-the-counter derivatives bill, and a high-ranking Congressman last Tuesday said he believes dealers have been pressuring them to act.

The Obama administration’s proposed over-the-counter derivatives reforms have got some hedge funds pondering the future of synthetic prime brokerage under a mandate that could see standardized OTCs centrally cleared and traded on exchange.

The International Swaps and Derivatives Association, the Securities Industry and Financial Markets Association and the Managed Funds Association are close to completing a joint, eight-page proposal that will map out how decisions will be reached on critical issues relating to pre- and post-trade operational activities.

Nicholas Oxlade, head of North European investment grade credit sales at Deutsche Bank, left the firm two weeks ago and is reportedly set to join Nomura.

Luxembourg Financial Group, a structuring boutique, is launching a fund dedicated to trading equity/index correlation. The LFG Equity Correlation Fund will be managed by Chris Craig-Wood, the former head of equity index trading at Deutsche Bank. He left the bank in May to launch the fund.

Sen. Jack Reed (D-R.I.) introduced a new over-the-counter derivatives bill this afternoon, a month after the Obama administration presented its own OTC bill to Congress.

UBS has hired Jim Lanzilotti as head of Latin American fx and rates. He started recently in the Stamford, Conn., office and reports to Ritesh Dutta, global co-head of fixed income, currency and commodities for emerging markets.

Strategists at BNP Paribas are recommending institutional investors use an exotic over-the-counter derivative called a forward volatility agreement to take advantage of generally high volatility on the U.S. dollar/Canadian dollar currency pair.

Andrew Donohue, director of the Securities and Exchange Commission’s Division of Investment Management, has cautioned investment advisers on using derivatives to manage client portfolios.

Hedge funds have been shying away from longer-dated U.S. dollar plays due to uncertainty over whether U.S. interest rates will rise sooner than expected following the Federal Open Market Committee’s two-day meeting this week.

Credit Suisse this week began marketing a circa USD10 million issue of four-year notes linked to a basket of nine commodities.

Chinese state-owned entities--many of whom are out of the money on oil hedges and struggling to meet margin calls--should consider restructuring their OTC contracts with foreign bank counterparties, lawyers believe.