Free content

Bank One plans to hire a few equity derivatives marketers at the managing director level as part of its plan to beef up its investment banking presence. Thomas Kelly, spokesman in Chicago, confirmed the move, noting that while the firm has made strong inroads in its debt expertise there is still room to grow in equity derivatives. The new recruits will report to David Stowell, head of origination in equity products, who did not return calls.

Bear Stearns has hired Kevin Kelly, former managing director in credit derivatives sales at Morgan Stanley in New York, for a similar role and Robert Canning, managing director and senior credit derivatives marketer responsible for U.S. agencies, has left the firm. Kelly declined comment while Canning could not be reached.

Crédit Agricole Indosuez has started marketing a synthetic collateralized debt obligation referenced to convertible bonds. The CDO, dubbed Cabrio, will be EUR300-400 million (USD350-470 million), according to Loic Fery, managing director and global head of credit derivatives and structures in London. The CDO will lay off risk from CAI's convertible bond stripping desk (DW, 3/30).

Jason Bajaj,Nikko Citigroup managing director and head of Japanese program trading, plans to set up a USD500 million hedge fund. The Tokyo-based fund will pursue a range of investment strategies and use over-the-counter derivatives, including equity options and variance swaps, he said.

Westmoreland Capital Management, a structured credit boutique founded in December 2001, has shut up shop after falling victim to the market slowdown caused by tightening credit-default swap spreads. The firm had been planning to introduce its first product, a USD1 billion managed synthetic collateralized debt obligation, since last year when tightening spreads reduced the arbitrage and made the deal unfeasible. Carter Rise, founder and ceo of Richmond, Va.-based Westmoreland, did not return calls.

John Romanelli, managing director in fixed income at Credit Suisse First Boston, has crossed town to Bear Stearns where he will be a senior managing director charged with establishing a capital advisory group. The group will sit within the firm's structured products division and Romanelli will report to Lesley Goldwasser, senior managing director, according to Michele Agostinho, spokeswoman at Bear Stearns in New York. Romanelli could not be reached while Goldwasser did not return calls.

Trading volumes in options on credit-default swaps have rocketed in recent weeks after the underlying market has become rangebound. The directionless market means investors are shying away from paying the full cost of default swaps to make fundamental bets. One credit derivatives trader estimated that option volumes have doubled.

The International Accounting Standards Board made its most controversial proposals for derivatives accounting more palatable to this industry last week at a meeting in Rome. The IASB will bring revenue recognition rules more in line with U.S. GAAP and give accounting recognition for macro hedging, according to Wayne Upton, research director in London.

Four convertible arbitrage staffers on JPMorgan's proprietary trading desk in New York have left to start a hedge fund. Joe Wong and Yuri Omelchenko, a senior and associate trader respectively, are founding members of the newly forged fund manager, dubbed Linden Advisors, said an official familiar with the move. Tycho von Rosenvinge, v.p. in convertible quantitative research, and Volkan Gulboy, who worked in the technology part of the convertibles and relative value group, are also working on the fund, he said. All declined comment or did not return calls.

As a result of the volatile investment climate and with the value of Australian retail and international share funds falling, a risk adverse investment strategy is becoming a vital core component of any balanced portfolio. Increasingly, investors are looking for products that provide exposure to the stock market, yet offer the security of maintaining their initial capital outlays.

The International Swaps and Derivatives Association is looking at establishing operational and risk management committees for non-Japan Asia in the coming months. "If the critical mass is there, this may well happen this year," said Angela Papesch, head of the Asia-Pacific office at ISDA in Singapore. Papesch added that there has been some discussions in recent months to add operational and risk management working committees to focus on issues such as the effects of the impending Basel Accord. "With the Basel review process coming to a conclusion, it will become relevant for the jurisdictions to consider regional implications," said Papesch.