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Crédit Lyonnais has started offering institutional investors capital protected exposure to the equity tranches of synthetic collateralized debt obligations. Martine Boutinet, head of global investor sales in Paris, said the firm is selling medium-term notes in which the coupon is linked to the equity tranche, but the principle is invested in the AA or AAA MTN issuer.

Alex Seiler, managing director and head of technology sales at Morgan Stanley in New York, has left the firm and is reportedly joining a hedge fund being set up by former Morgan Stanley colleague Jordi Visser. Visser, who resigned from his post as managing director and head of hedge fund sales for Morgan Stanley's equity derivatives group earlier this year (DW, 2/2), is rumored to be setting up a global macro equity hedge fund, which will take long/short positions and use over-the-counter derivatives, said an official familiar with his plans.

Nomura International has added Herve Lagadec, senior manager in credit sales at RBC Capital Markets in London, for its fixed-income sales team. Lagadec will focus on marketing a range of debt products to French clients, including derivatives, according to Cameron Walker at Nomura in London. He will report to Barry Nix, head of fixed-income sales. Lagadec referred calls to the spokesman. Nix did not return calls.

Credit Lyonnais has hired Henry Chong, derivatives marketer for Korea at Banque AIG in Tokyo, for a similar role in Seoul covering Korean corporates. "I wanted to be closer to the market," said Chong, a native of Seoul. He now reports to Bruno Lebeda, treasurer in Seoul. "This is part of our strategy to leverage trading and further develop the sales desk," said Lebeda.

Equity-linked notes that pay investors the worst performing stock out of a basket of handpicked equities are increasing in popularity in non-Japan Asia. Nicolas Cohen-Addad, head of equity derivatives at Credit Lyonnais in Hong Kong, said over USD150 million has been sold in the last few weeks compared to only a handful previously. The popularity of the instruments shows investors think the market has bottomed out and are happy to speculate stocks will not plummet anymore, in return for enhanced yield, said another credit head.

Robeco plans to attract Dutch pension funds to its latest collateralized debt obligation by linking some of the notes to European inflation. Erik van Leeuwen, v.p. and CDO manager in Rotterdam, the Netherlands, said the AAA tranche of CDOs is now the hardest tranche to sell so it is offering the notes with inflation or in fixed and floating form.

Five-year credit protection on Sears Roebuck Acceptance Corp. narrowed to 250 basis points last Wednesday, in from 370bps where it had traded the previous day, on news it is considering selling its credit card business, said a New York-based trader. Reaction to the news was initially positive with spreads narrowing as tight as 200bps. Later in the day, however, Standard & Poor's announced it had placed the firm on negative watch, which blew spreads out to 275bps, before protection settled into a trading range of 240-250bps, he noted.

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JPMorgan has hired Mark Leung, director in Asian derivatives and bonds at UBS Warburg in Hong Kong, for its rates desk in Singapore. "It's an interesting opportunity," said Leung, noting that he will handle a wider array of products--including complex interest rate options in the regional currencies. Leung, who had a stint as an interest rate trader at JPMorgan in Singapore several years ago, starts next month. He will report to Edmund Ng, in Singapore. Ng was traveling and could not be reached. Joanne Shephard, spokeswoman at JPMorgan, declined comment.

"We stay away from the esoteric deals."--Pierre-Emmanuel Juillard, head of securitization and structured credit at AXA Investment Managers in Paris, explaining the asset management giant's strategy for buying asset-backed securities. For complete story, click here.

UBS Warburg has hired Sheree Ma, v.p. and credit derivatives marketer at JPMorgan in Hong Kong, for its structured products desk. Deborah Ho, regional head of distribution in Singapore, said, "She will be part of our structured products group," noting Ma will cover China, Hong Kong and Taiwan. In this new role, Ma will focus both on credit and interest rate products. "We're old [JP]Morgan colleagues," said Ho. Ma, who starts in the coming weeks, will report jointly to Ho and Lee Knight, managing director in the fixed income division in Tokyo. Ma could not be reached.

Caissa Capital Management will consider entering variance swaps in its soon-to-be-launched Volatility Opportunity Fund, which employs a volatility arbitrage strategy. Ron Henley, partner in New York, said variance swaps are attractive for vol arbitrage players because they give a pure play on volatility, which is a more direct form of execution than other techniques, such as buying delta. As a relatively young industry, however, the fund manager would need to feel comfortable that the variance swap market is sufficiently liquid before entering into any such products, he noted. A variance swap entails the exchange of a future realized variance of an asset against a fixed nominal variance.