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Market professionals, including officials at Deutsche Bank and HSBC, expect the interest-rate derivatives market in Malaysia to bloom in the coming months, on the back of the Malaysia Derivatives Exchange listing bond futures at the end of March. "This has the potential to double the swap market," noted an official at Deutsche Bank. He noted that average monthly trading volumes now range from USD25-50 million.

UBS Warburg plans to soon expand its foreign exchange options trading Web site to include pricing and trading exotic options, said Ed Hulina, head of marketing for fx in London. "Now it's able to trade standard options but it will be soon able to trade basic knockouts and knock-ins," he said. Investors can now use the tool, dubbed the FX Options Trader, to calculate prices and place trades in vanilla options through the firm's Web site. UBS is expanding the variables that can be incorporated in the trading portal now because of client demand and as more business is shifted toward the portal. This allows UBS to concentrate its sales force on more complex structured products, according to Hulina.

Source: www.bondweek.com

Bear Stearns is preparing to market a synthetic collateralized debt obligation referenced to a USD500 million pool of bonds that will be both high-rated investment-grade credits and credits that are just above junk bond status. The deal is expected to come to market near the end of the second quarter, according to market officials. Such deals, including near-junk rated reference assets, are unusual because there is a dearth of liquid credit-default swaps referenced to low grade names. However, these structures likely will become more common because of a general deterioration in credit quality and in anticipation of proposed capital adequacy rules. Officials at Bear Stearns declined to comment.

BNP Paribas has started marketing hybrid synthetic collateralized debt obligations, such as CDOs of structured credit products, to clients in Japan and expects to issue its first deal in the coming months. "It's natural to have more structured products. The first stage was synthetic CDOs, the second stage is CDOs of CDOs," explained Go Yajima, senior structurer in Tokyo. "The market is getting used to new ideas."

BNP Paribas is planning to hire at least five foreign exchange marketers for its sales offices in San Francisco and Montreal. The move is an extension to its plan to hire about 20 marketers with knowledge of over-the-counter derivatives to offer more structured fx products in Paris, London and New York, according to an official at the firm (DW, 1/27). The firm has a team of four marketers in Montreal and five marketers in San Francisco.

BNP Paribas has boosted its focus on credit-default swap trading for European emerging markets with the hire of its first full-time trader. The move comes on the back of increased investor demand to buy and sell protection on high-yield and investment-grade names in the region, said Antione Chausson, head of credit structuring in London. Edouard Hervey, who previously was an emerging markets trader for cash and derivatives, has been moved and is now a dedicated synthetic default swap trader in London. Hervey referred queries to Chausson.

Six of Bank of America Securities' New York equity derivatives team resigned last week to set up a market-neutral multi-strategy hedge fund. The six plan to raise USD400-500 million for the fund and will use over-the-counter derivatives, according to market officials. The fund is hoping to secure seed capital from HBK, a hedge fund in Dallas, one of the officials added. A spokesman at HBK declined comment. The group will also hire additional researchers and quants for the hedge fund.

Credit-default swap spreads on U.K. television group Carlton Communications widened roughly 20 basis points Thursday after the company announced it would not merge with fellow British broadcaster Granada on Wednesday. Mid-market five-year protection on Carlton jumped to 270bps from about 250bps. "Carlton has spent an absolute fortune on [rights for] the Champions League but the merger would have helped spread the cost, plus advertising revenues keep falling," said one trader, explaining the jump in spreads. The Champions League is an annual European soccer competition.

Credit-default swap trading on Nippon Steel surged early last week after Japan Metals & Chemicals filed for court protection against creditors on Feb. 22. Nippon has an 8% stake in the company. Traders said that domestic corporates with exposure to Nippon Steel were behind the trades, which totaled around JPY7 billion (USD52.1 million notional) in five-year yen-denominated default swaps. In a typical week the average volume is JPY1-2 billion. The spread on five-year protection blew out to 120-135 basis points Wednesday from 105-115bps the week before.

Doug Hiscano, managing director of marketing for corporate equity derivatives at Banc of America Securities in New York, left the firm three weeks ago, according Chris Innes, managing director and global head of equity derivatives sales in New York. Innes confirmed Hiscano reported to him, but declined further comment. An official at the firm said it is looking to replace the marketer.