Derivs - People and Markets

A short-lived idea that guaranteed structured notes could make it within the scope of the Federal Deposit Insurance Corp. new government debt guarantee program was snuffed out Thursday.

Japan’s decision to dust off an old public funding law for banks will have a positive impact on capital adequacy, notably for those with smaller capital bases hit by losses on overseas collateralized debt obligation investments, according to market participants.

London-based alternative investment manager Amiri Capital plans to launch a Sharia-compliant global equity long/short fund of funds within weeks that will hedge positions via unconventional derivatives.

The price by which eligible credit default swaps referencing Washington Mutual Inc. will be settled in cash landed at 57% earlier today, meaning protection sellers will pay out 43 cents on the dollar. That figure is lower than the expectations of some Street players.

Colin Stewart has shifted to Merrill Lynch’s exotic credit trading team in New York as a managing director making markets for index exotics.

After not getting help in the U.K. or Irish government bailouts, derivatives dealers and end users are also concerned that structured notes will be left out of a temporary U.S. program guaranteeing unsecured debt.

Exotic credit structuring staffers at Merrill Lynch in Hong Kong left the firm this week. The three-person hybrid structuring team, headed by Carl Im, was shuttered and Vivek Mohindra, director of structured credit trading, and James Siegal, a structured credit official focusing on hedge funds, also left.

Jefferies & Co. has hired Jason Roelke as head of derivative sales as part of the firm’s plan to expand its sales and trading platform with institutional clients in mind.

Royal Bank of Scotland has appointed Brian Reid as its global head of financial institution sales in London, reporting to John Hourican, chief executive of global banking and markets.

With deadlines for transferring over-the-counter trade confirmation sheets on flow trades from paper to electronic drawing in, there is concern international banks based in Asia are lagging behind.

The practice of hedging cash positions by buying credit default swaps on monolines that have wrapped security issues is becoming uneconomic as the cost of protection on those companies rises.

Credit default swaps on utilities and independent power companies are gapping out on increasing concerns about refinancing challenges and counterparty credit risk.