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Dresdner Kleinwort Wasserstein has hired Chiaki Yoshiga, equity derivatives marketer at Goldman Sachs in Tokyo, as head of sales trading in Tokyo. The position is largely a sales role, but Yoshiga also executes the trades. He covers both cash and derivatives instruments. Yoshiga said he is looking to build the business and potentially hire additional staff in the coming months. He replaces Takamasa Endo, who could not be reached.

Passive hedging of currency exposure of non-domestic equity portfolios can be problematic because of fluctuations in the net asset value of the portfolio itself. The purpose of electing a passive hedging strategy is to eliminate currency risk. However, the portfolio volatility will continuously create a mismatch with the forward contracts that the manager has put in place to hedge portfolio currency risk. In practice, the impact from this can be significant. For example a sterling-based client investing into MSCI Europe and adjusting currency hedges quarterly could have lost a total of 8% in performance since 1988.

The greenback's appreciation against all the major currencies sent one-week euro/yen implied volatility jumping almost a full percentage point to 10% on Thursday from 9.25%. Over the week, the euro fell against the dollar to USD1.1225 from USD1.155 and the dollar appreciated against the yen to JPY120.54 from JPY119.43. As a result the euro weakened against the yen over the week. Euro/yen was trading at JPY137.75 at the beginning of the week but declined to JPY135.5 by the end.

Many corporate treasurers kicking back on summer vacation are missing out on the chance to snap up cheap floating rate financing due to widening swap spreads. As mortgage companies have found themselves with huge amounts of surplus cash due to the record mortgage refinancing volume in May they have dashed en masse to the interest rate swap market to put the cash to use, causing swap spreads to gap out, said Robert Gay, head of fixed income strategy at Commerzbank Securities. In the U.S. there is approximately USD6.2 trillion of mortgages outstanding, compared to the marketable U.S. Treasury bond market which sits at only USD4.5 trillion.

Joshua Siegel, co-head of credit structuring, and Matthew Mayers, structurer at Citigroup, plan to launch a hedge fund which invests in structured credit products, including synthetic collateralized debt obligations. The duo are forming a firm, dubbed Stone Castle Partners, which will run the fund, according to Siegel. He declined further comment. Mayers did not respond to messages.

KBC Financial Products (UK) has hired Moorad Choudhry, v.p. in sales and marketing for the structured finance services division of JPMorgan Chase, as its treasurer. Choudhry said he plans to beef up the firm's treasury operation, which is currently a single individual relying on the parent company and overnight money markets for funding. He has plans to establish repo and stock lending facilities within the treasury to diversify the firm's funding sources.

Merrill Lynch has set up a structured credit arm within its principal finance operation and has appointed Steve Padovano, former global head of credit derivatives in New York, to spearhead the effort. The initiative comes as more firms look toward principal finance as a means of competing in an increasingly crowded marketplace. Padovano declined comment. Michael DuVally, spokesman in New York, declined to comment.

Morgan Stanley has hired Mal Brooks, managing director in cross-rates sales at UBS in Stamford, as an executive director. He reports to Dennis Scurletis, managing director and head of interest rate sales, according to Mark Lake, spokesman in New York. Brooks could not be reached and Scurletis did not return calls.

"There is a perfect storm--refinancing and hedging activity on one side, and no one is at home on the other side in the corporate world."--Robert Gay, head of fixed income strategy at Commerzbank Securities, explaining why the U.S. swap spread has blown out so much. For complete story , click here.

Charles Annandale, has resigned from his role as head of equity derivatives at SG Securities in London to work as a consultant at XBZ, a London-based equity derivative boutique. He will also consult for the U.K. warrants division at SG in London, working with David Lake, head of U.K. warrants. Annandale said, "I felt like a change after my seven-year stint."

Singapore's Straits Lion Asset Management, with over SGD13 billion (USD7.42 billion) under management, is currently in talks with several investment banks in regards to investing in synthetic collateralized debt obligations. "Everyone's been knocking on our door," said Teresa Chan, marketing manager. The firm is looking to invest in another CDO before year end, but Chan declined comment on the details of possible transactions.