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Some 50 credit derivatives professionals met at London's Jury's hotel last week for IBC's credit derivatives conference, Jeremy Carter, managing editor, reports.

Barclays Capital has lost Stephen Hancock, commodity derivatives marketer in London. An individual familiar with the group said Hancock left to pursue other interests outside of banking and commodities. Orrin Middleton, head of European commodity derivatives marketing in London, referred calls to Michelle Cook, spokeswoman in London, who declined comment. Hancock could not be reached.

CDO managers are turning to new types of asset-backed securities as reference entities for synthetic deals, according to panelists from Fitch Ratings. Jill Zelter, managing director, said new reference entities include residential mortgages, credit cards, agricultural loans and aircraft loans and leases.

Indosuez W.I. Carr Securities, a subsidiary of France's Crédit Agricole Indosuez, is relocating its equity derivatives trading desk to Tokyo from Hong Kong. The firm had originally planned to make the move in late summer, but has decided to up sticks in the coming weeks due to the outbreak of SARS in Hong Kong, according to a firm official.

Merrill Lynch has transferred two New York-based collateralized debt obligation structurers, Ken Margolis and Scott Bohner, into sales roles, and is sending Bohner to its San Francisco office. Doug Mallach, co-head of credit sales in New York, to whom the sales pros report, said the transfers were made "in response to explosive demand for dedicated structured credit sales expertise."

Nomura International plans to start taking basis risk in its credit derivatives book through buying protection with one set of documentation and hedging it with a contract with different documentation. Mark Crawley, credit derivatives structurer in London, said the most likely trades will be to buy credit protection without the restructuring credit event from clients and sell protection in the inter-dealer broker market using standard documentation, including the restructuring credit event.

The debate over the definition of restructuring as a credit event refuses to lie down even though the proposed International Swaps and Derivatives Association 2003 definitions allow for three different types. "The debate comes down to whether this a death contract or a deterioration contract," according to Mark Timmis, director and head of credit derivatives trading at Credit Suisse First Boston in London.

The Royal Bank of Scotland is in the process of establishing its first Chinese mainland-based office and is looking to place derivatives marketers onshore within a year. "This is for strategic positioning," said Anthony Yuen, managing director and Asia Pacific regional head in Hong Kong. The branch in Shanghai should be open within six months. After installing a skeleton crew to meet regulatory requirements, such as a financial controller and auditors, Yuen noted that the bank will place derivative marketers for non-renminbi products onshore. Currently, coverage of mainland China is handled out of its Hong Kong office.

The Royal Bank of Scotland last week hired Celia Rountree, v.p. in dollar-bloc fixed income sales at the Royal Bank of Canada in London, in a new role as a senior saleswoman for Asia Pacific in Melbourne. "I'm thrilled to be back home," said Rountree, an Australian native. She has been given a broad mandate for the Australasian region to market primarily non-Australian dollar fixed income products ranging from government bonds to structured credit notes. She now reports to Robert Edgely, Asia Pacific head of sales in Melbourne, who did not return calls.

Schroder Investment Management is marketing a relative-value fund, structured with derivatives, in which investors win even if both equity baskets tank. The fund is thought to be the first of its kind because previous relative-value funds have required investors to pick a basket which increases in value more than another, whereas in this fund the investor still wins if both baskets suffer a negative performance as long as the favored basket falls by less, according to John McLaughlin, head of the structured investment team in London.

David Schwartz, a researcher of collateralized debt obligations at Morgan Stanley in New York, has left the firm. Schwartz researched synthetic CDOs, as well as structures backed by asset-backed securities and real estate, according to an official in New York.

Société Générale is structuring what is thought to be the first synthetic collateralized debt obligation referenced to high-yield corporates. The deal references a pool of 70 North American corporates rated B plus to BBB plus. Synthetic high-yield deals have not been done before because the credit derivatives universe is predominately investment grade and there is little liquidity in the high-yield sector, according to an investor. An official at SG, however, said it can use correlated products such as bonds and equities if liquidity in a name completely dries up.