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Credit Suisse First Boston is looking to add its name to the growing ranks of firms entering the Chinese 'A' share market and will likely offer derivatives by year end. The mainland opened up earlier this summer to qualified foreign investors with Citigroup, Morgan Stanley, Nomura Securities and UBS (DW, 6/15) marking the initial foray. Subsequently, Deutsche Bank, Goldman Sachs, HSBC and ING have also gained approval. An official said CSFB plans to offer derivatives that give synthetic exposure to the performance of the shares and may also offer capital guaranteed notes.

Mickey Bhatia, a correlation trader at JPMorgan in New York, has jumped ship to Deutsche Bank in a similar role. Bhatia joins the firm as a director and senior correlation trader, according to Harriet Benson, spokeswoman in New York. Michael Dorfsman, spokesman at JPMorgan in New York, confirmed his departure.

Deutsche Bank recently hired Edmund Chan, equity derivatives marketer at Merrill Lynch, in a similar role in its Hong Kong office. Officials familiar with the move said Chan has been brought in to boost the German bank's hedge fund sales coverage presence in the region on the back of renewed interest in the regional equity markets. He reports to Denis MacCarthy, head of institutional sales in Hong Kong. Both MacCarthy and Chan declined all comment.

One-month euro/dollar implied volatility leapt to 12.2% on Monday last week from 10.6% but then sunk back to 10.65% by Thursday. The move came as a knock-on effect from the sharp moves in dollar/yen spot rates and one-month vols. The dollar depreciated against the euro, with spot rising to USD1.149 last Thursday from USD1.1255 the previous week.

An increase in the amount of business being executed electronically will likely mean more clients trade directly with the major derivatives houses, according to Jonathan Chenevix-Trench, ISDA board member and managing director and head of European fixed income and global head of interest rates and foreign exchange at Morgan Stanley in London.

Europe's sovereign debt community, namely debt management offices, are increasingly turning to derivatives as a means of managing their duration risk. Jonathan Chenevix-Trench, ISDA board member and managing director and head of European fixed income and global head of interest rates and foreign exchange at Morgan Stanley in London, explained that the phenomena is relatively new with the approach of the agencies differing from traditional users, such as corporates. While corporates focus on individual trades, debt management offices are evaluating their overall portfolio, he noted.

Harry Silver, former senior index equity options trader at Morgan Stanley in New York, has resurfaced at hedge fund manager Galleon Group. Silver resigned from Morgan Stanley in the summer whilst under scrutiny by the Chicago Board of Exchange for a customer transaction he executed in 2001 (DW, 6/22). Silver confirmed his appointment at Galleon, saying he is a managing director in trading, which includes equities and equity derivatives. Galleon is the 63rd largest hedge fund manager with some USD2.1 billion in assets according to Institutional Investor's 2003 hedge fund rankings.

The U.S. Financial Accounting Standard 133, which requires derivatives hedges to be marked-to-market, is "not working as planned," according to Patrick Parkinson, associate director at the Federal Reserve Board in Washington. Parkinson, speaking at the International Swaps and Derivatives Association's North American Regional Member Conference, said the rule distorts economic hedges. As would be expected, there was widespread support for his comments at the derivatives gathering.

CITIC Pacific, a Hong Kong-based conglomerate with business lines including aviation, telecommunications and property, recently purchased a structured interest rate note to boost yield for its asset portfolio. The note offers leveraged exposure to market risk without taking on additional credit risk. "It's a straight forward structure--with bonds you have both market risk and credit risk," said Betty Chuk, senior officer in the treasury department.

HSBC has hired Derek Awyoung, credit derivatives trader and structurer at Citigroup in Singapore, as a senior dealer for regional currency derivatives in Hong Kong. He now reports to Samuel Koh, head of Asian domestic derivatives trading in Hong Kong.

U.S. dealers are seeing more interest in inflation-linked products, according to John Kapustiak, managing director and head of rates trading at Bank of America. Corporates in industries, including utilities and auto manufacturing are likely players to come to the market and as the two sided inflation-linked cash market develops so too will a market in inflation-linked derivatives, he said. Accounting rules that require trades to be marked to market, will also have the likely consequence of spurring an options market linked to inflation in order to deal with bottom-line volatility, he added.

Some of the derivatives industry's biggest movers and shakers gathered in New York last week for the International Swaps and Derivatives Association's annual North American member conference. Karen Brettell, senior reporter, attended.