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Goldman Sachs plans to hire two convertible bond arbitrage traders to expand its proprietary trading desk to London. At the moment the firm only has proprietary traders in New York, according to an official familiar with the move. He added Goldman expects to have the convertible bond prop desk up and running by year-end.

The auction for Gen Re Securities' credit derivatives portfolio is down to the last two firms: BNP Paribas and Société Générale, according to a senior banker. The firms are rumored to be bidding USD12-15 million for the portfolio, which consists of 400 single-name credit-default swaps and eight portfolio swaps. The auction is expected to end Friday.

Howard Tong, director of global equity markets at Merrill Lynch in Hong Kong, resigned two weeks ago. Market officials said Tong, who focused on equity derivatives marketing for Hong Kong and Taiwan primarily covering warrants, is looking to take a break from the industry. Tong could not be reached for comment.

A 30-strong team of former Gen Re Securities managers, traders and structurers are shopping themselves around the major financial institutions in London, Bermuda and New York. The team, which is led by Kevin Lecocq, managing director and global head of marketing and structuring in London, has interviewed at Swiss Re, HypoVereinsbank and Goldman Sachs, according to officials familiar with the situation. Press officers at the three firms declined comment. Lecocq could not be reached.

ArvinMeritor, an auto parts manufacturer in Troy, Mich., is considering entering an interest-swap on the back of its USD400 million bond offering last month. "We feel now is an ideal time to examine the possibility of doing an interest rate swap. Nothing has been set in stone. But it's definitely something we're considering," said a company official. The company held off on going ahead with a swap immediately following the offering because there was still a high level of uncertainty over the course the Federal Reserve might take after lowering interest rates consistently throughout 2001. "We wanted to be certain the Fed would not look to raise rates over the next eight months, at least. The latest comments seem to support that," the official said.

Dupont Securities Group, a subsidiary of Dupont Direct Financial Holdings, plans to hire six interest-rate derivatives marketers in New York in a move to offer more relative-value trade products for its clients. The firm has hired Steven Block, head of interest-rate trading at Commerzbank Securities in New York, as a managing director of derivatives trading. Before Block joined Lewis Goldman, senior managing director of capital markets and new business development, handled the responsibilities. The firm created Block's position to increase the scope of its relative-value department.

Two Credit Suisse First Boston equity derivatives marketers plan to set up a long/short hedge fund in New York next month. Joe Vencil, managing director and marketer to high-net-worth individuals and corporations, andManit Rye, a marketer for CSFB in London, plan to raise USD15-25 million in seed capital to launch the fund and employ a long/short strategy that focuses on small and mid-cap corporations, Vencil said. The total capacity of the fund has yet to be determined, but increasing the fund above USD50 million would likely require the hiring of additional professionals, added Vencil.

Lehman Brothers has hired Peter Hammack, equity derivatives structurer at Credit Suisse First Boston in New York, as a v.p. of equity volatility trading. He will focus on trading structured products, according to an official. Hammack had been out of the industry since leaving CSFB six months ago.

Credit derivatives dealers, including JPMorgan, BNP Paribas and Société Générale, are bidding for a portfolio of synthetic CDOs that Gen Re Securities has put on the block. The portfolio is believed to include a significant portion of deals that Gen Re purchased from Enron Credit following the energy company's collapse, according to a market official. Tim Frost, head of European credit derivatives at JPMorgan, declined comment. Le Liepvre Hubert, head of credit structuring at SocGen in Paris, declined to confirm or deny the move and Kate Webster, a spokeswoman at BNP in London, declined comment. Officials at Gen Re did not return repeated calls.

Chase Trust Bank has bought JPY11 billion (USD82.3 million) (notional) of interest-rate caps as a hedge in a securitization it structured for Japanese consumer finance company AEL Corp. It bought the caps from ING Barings, according to Udo van der Linden, v.p. of the Asian securitization group at ING in Tokyo.

Deutsche Bank has restructured its flow and structured equity derivatives departments as a global unit. The department is now headed by the European head, Yassine Bouhara, managing director and head of structured and flow equity derivatives, according to Rick Goldsmith, co-head of global equity derivatives.