Derivs - People and Markets

A group of eight traders from dealer firms, referred to as the Default Management Group, have been seconded to the LCH.Clearnet’s clearing system for inter-bank interest rate swaps with a mandate to distribute legacy Lehman trades to new, qualifying counterparties.

Jeffrey Mayer, the former global co-head of fixed income at Bear Stearns, is set to join UBS on Wednesday as joint global head of fixed income, currencies and commodities and related derivatives.

The notional outstanding value of credit derivative business decreased by 12% in the first six months of the year to USD55 trillion from USD62.2 trillion at the end of December, according to a mid-year survey by the International Swaps and Derivatives Association.

Merrill Lynch is seeing pension fund interest in auto-callable notes linked to the Standard and Poor’s 500 index as investors look to make gains on market volatility in the uncertain economic environment.

Allen & Overy is preparing a series of position papers on behalf of unnamed investment banks that want to have their say as state and federal plans to regulate the credit default swap market gather momentum.

Berkshire Hathaway’s move to bolster Goldman Sachs with a $5 billion capital injection led to a temporary tightening in five-year credit default swap spreads on the name, but the initial bounce quickly wore off.

Credit default swaps on Korean financials may trade tighter if U.S. government’s proposal to create a USD700 billion vehicle to unburden its financial sector of toxic subprime assets kicks in.

With a raft of fund derivatives players exiting the space, the remaining players taking on deals are imposing tighter restrictions on the business they write, according to one senior official in the New York market.

NDF Administration is marketing two new plans, hedged by Citigroup and Morgan Stanley.

Now that the Securities and Exchange Commission has banned the practice of short selling on certain financial stocks, the credit default swap market is expected to pick up.

The Securities and Exchange Commission’s ban on short selling caused the flow of over-the-counter variance swaps to slow to a trickle today as banks began turning away hedge fund business due to uncertainty over the ruling.

Sylvain Lebre, an iTraxx trader at SG Corporate & Investment Banking in London, is expected to join Morgan Stanley.