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Bear Stearns is considering structuring its first synthetic collateralized fund obligation referenced to a basket of hedge funds, according to an official familiar with its plans. The deal is expected to hit the market in the second half of the year, probably in the fourth quarter. Officials at Bear Stearns in London declined all comment.

Credit-default swap volumes tripled last week on electronics giant Fujitsu on the back of an upcoming convertible bond issuance. "Fujitsu's the highlight this week," said Ralph Orciuoli, head of credit trading at Bear Stearns in Tokyo. Traders noted that the spread on the five-year yen-denominated default swap blew out to 135-140bps last Tuesday from 85-95 basis points two weeks ago. The credit then settled around 99-103bps Thursday.

Raymond James & Associates, a St. Petersburg, Fla.-based brokerage house with USD1.7 trillion in revenues, is planning its first foray into equity derivatives. The firm has hired David Dami, head of the private client group in the equity derivatives marketing division at Commerzbank Securities in New York, as a managing partner to lead the effort. Dami said he plans to hire several professionals to form a high-net-worth and corporate marketing team over the next few months. He added that there are also plans to begin structuring equity derivatives products after the marketing team is established. Dami declined to detail the type of products the firm would be offering.

Deutsche Bank has hired Shingo Tadakoro, head of equity derivatives trading at Daiwa Securities SMBC in Tokyo, as a senior equity derivatives trader, according to Tadaaki Tano, general manager of the planning division in the products section at Daiwa. "At Daiwa he was one of the biggest players in the OTC index products market," said a rival at Nomura Securities.

Implied volatility on one-week euro/U.S. dollar options popped to around 9.25% Wednesday from 8.5% after Morgan Stanley and Goldman Sachs were seen piling into the euro/dollar options market. Dealers in New York said both firms were active buying a combined total of around USD1 billion of euro puts/dollar calls struck at USD0.90 in an extraordinary three-hour feeding frenzy. Spot was at USD0.91 when the trades were executed. Traders at Morgan Stanley and Goldman referred calls to their respective press offices. Melissa Stonberg, a spokeswoman at Morgan Stanley, and Bruce Corwin, a spokesman at Goldman, declined to comment.

One-month euro/yen implied volatility rose last week to 8.50% on Wednesday from 7.6% Monday as the yen rose to JPY127 against the dollar and investors feared Japanese intervention. The dollar weakened against most currency pairs, but investors were most concerned about the yen, as the Japanese authorities have set a target ceiling of JPY130. Rob Hayward, a foreign exchange strategist at ABN AMRO in London, predicted the Bank of Japan would not intervene unless the yen strengthens to JPY120.

Goldman Sachs is structuring its first catastrophe bond that will securitize Hawaiian hurricane risk. The USD200-400 million CAT bond is being structured for San Antonio, Texas-based insurer USAA and is expected to hit the market next month, according to a CAT bond professional in New York. Kathleen Baum, spokeswoman for Goldman Sachs, declined to comment because the issue is a private placement, and a spokesman at USAA also declined to comment.

Hamon Investment Group, with over USD300 million under management in Hong Kong, plans to use over-the-counter equity options for its newly launched long/short fund. The fund, dubbed Hamon Oriential Long/Short Fund, started investing last month with USD25 million under management and will use up to USD5 million (notional) in single-stock options to hedge downside risk for cash positions, according to Vincent Cheng, cio. "This will be for hedging positions in addition to other stocks and index futures," noted Cheng.

HSBC is preparing its first synthetic arbitrage collateralized debt obligation as part of the firm's plan to grow its ABS and CDO group. HSBC has already completed a cash arbitrage CDO, but the next deals could be synthetic if there is client demand. Rick Watson, head of the CDO group who recently joined from Bear Stearns, said the bank will also structure balance sheet CLOs for banks, which will be primarily synthetic, and cash CLOs backed by residential mortgages, consumer loans and mortgage warehousing facilities that will mainly involve a true sale.

The demand for structured and plain-vanilla Korean won/dollar options has doubled as the dollar slides against the Asian currencies. The trades have also caused 25-delta risk reversals to flip to favor dollar puts. The boost in volumes has been most prevalent in won/dollar but, "There's an increase in demand for options across all Asian currencies," said Peter Redward, Asian currency strategist at Deutsche Bank in Singapore.

JPMorgan has hired Kim DiSpigna, a senior marketer in Credit Suisse First Boston's equity derivatives group in New York, in a similar position. DiSpigna, who joined JPMorgan's New York team about a week ago, reports to Nicholas Kello, managing director and head of investor coverage. Kello said DiSpigna is filling a newly created position as a senior marketer. There are about four additional pros on the team. He added that the firm is not looking to make any additional hires.

JPMorgan is thought to be the first derivatives house to start marketing a collateralized fund obligation to investors in Asia. The CFO, dubbed Man Glenwood Alternative Strategies I, referenced to USD500 million of hedge fund investments, is being marketed globally but several tranches will be sold to Asian clients in the next two to three months, according to an official at JPMorgan. The manager of the portfolio is Man Investment Products.