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Melbourne, Australia-based mining company BHP Billiton is looking to hire five traders for its commoditized coal-trading desk in Amsterdam. Peter Sceats, head of the three-strong team in Amsterdam, said the company wants to more than double its coal-trading desk in what is a relatively new part of the market. The desk executes both proprietary and hedging trades for all types of coal derivatives, said Sceats, declining to elaborate.

Mitsui Sumitomo Insurance, a Tokyo-based insurer with JPY7.57 trillion (USD61 billion) in assets, is considering purchasing its first synthetic collateralized debt obligation in the coming months, likely referenced to Japanese credits. The firm is the result of a merger this month between Sumitomo Marine & Fire Insurance and Mitsui Marine & Fire Insurance. Both have previously invested in the synthetic CDO market, but the combined entity will be more active than the sum of its parts, said Akihiro Yoshikawa, deputy manager of the financial solutions department in Tokyo. The two insurers had a combined synthetic CDO portfolio of around USD3 billion prior to the merger.

The declaration of a war on terrorism and subsequent attacks on Afghanistan by the U.S. has prompted Lehman Brothers to recommend clients sell volatility on a basket of stocks it dubs "war" securities versus a basket of "peace" stocks. Implied volatilities for the stocks in the war basket have increased despite a decline in realized volatilities because there has been a perceived increase in systematic risk, said Paul Lieberman, v.p. of equity derivatives and quantitative research in New York.

Merrill Lynch and J.P. Morgan are leading an initiative to net credit-default swap contracts for the first time to reduce the amount of time traders have to spend settling contracts in the event that the reference asset defaults. "Net settling will be a great thing if we can do it because anything that will increase liquidity is good," according to Anjan Malik, a credit derivatives trader at Lehman Brothers in London. He added that an obstacle could be firms' reluctance to share information on positions with their competitors.

J.P. Morgan and Deutsche Bank separately plan to start offering derivatives based on economic statistics, such as inflation and productivity, published by the U.S., European and Japanese governments. The conracts will be based on a model, dubbed the parimutuel digital call auction model, which prices risk based on a commitment of capital and the cost of hedging the position. The products will allow investors to trade and get pricing on economic indicators, according to officials at both firms. They will start offering digital options and digital spread trades by year-end.

Royal Bank of Scotland has entered an interest-rate swap with Morgan Stanley on the back of a EUR500 million (USD452 million) bond as part of its regular funding process in the European market. Sanjay Sofat, treasury manager in London, said the company entered the 12-year swap to convert the fixed-rate bond into a floating-rate liability. In the swap, RBS will pay a spread over six-month Euribor and receive 6%, matching the coupon of the bond offering. A Morgan Stanley interest-rate official confirmed it entered the swap but declined further comment.

Liz Parminter, a power trader at RWE Trading in London, will join Aquila Energy on Jan. 2. Parminter has been hired as head of commodity and direct trading. In the role she will focus on structuring bilateral trades for clients and other power trading companies, rather than trading standardized contracts through the broker market, explained Parminter. She decided to join Aquila because of its "can-do attitude and willingness to commit to the market," she explained. Parminter will report to Rusty Smith, director of trading in London.

Morgan Stanley has hired David O'Malley, a buyside portfolio manager handling all derivatives use at Penn Mutual Life Insurance in Philadelphia, as v.p. of credit derivatives product management and marketing to U.S. clients in New York, according to an official familiar with the move. O'Malley joined the firm at the beginning of the month, filling a spot left vacant following the departure of Steven Olentine, who was hired by Swiss Re Financial Products last month as a structured credit derivatives salesman in New York (DW, 9/2).

Traditionally collateralized debt obligations (CDOs) involve a transfer of collateral assets. The CDO liabilities then reference the cash flows (principal and interest) of the collateral assets. But CDOs are increasingly issued in synthetic form, where there is no physical transfer of collateral. In these structures the CDO references default losses, rather than the cash flows of the referenced collateral.

Manila-based San Miguel Corp., a food and beverage company that distributes products such as San Miguel Beer and Coca-Cola, is considering using its first cross-currency interest-rate swap in the Philippines market on a USD80 million dollar portion of a floating-rate loan facility it arranged via J.P. Morgan two weeks ago.

UBS Warburg has repackaged a U.S. dollar bond into a Singapore dollar-denominated bond through a special purpose vehicle for the first time. The firm executed the transaction to give Singapore-based investors, who could not use derivatives or did not want to tie up derivatives lines, access to the OCBC Bank bond. "This is the first deal of this type we've done in Singapore," said Michael Pieri, director of local currency fixed income trading in Singapore. While UBS has executed similar transactions in U.S. dollar instruments, it has not entered this type of deal in Singapore before because the market is relatively new. He added that it has had the capability to pull the trigger on similar transactions for several months but investors could not agree on which bond to swap. Other candidates included Ford Motor Credit's global offerings, but some investors did not want exposure to the auto sector.

Westdeutsche Landesbank is beefing up its precious metals trading team in London. Michael Bushman, formerly at first-e, an Internet bank which has closed its U.K. portal and previously a market maker in gold options at UBS Warburg, starts next month in the new position of head of precious metals options trading. Bushman was on gardening leave and could not be reached.