Search results for

JPMorgan is planning to launch a credit derivatives index for non-Japan Asia before the summer. The index will likely be made up of around 25 liquid credits from the region, according to Nick Barnes, v.p. of Asian credit markets in Hong Kong. "It's been a success in Europe and Japan," noted Barnes, explaning the motivation for launching the product.

Laurie Medvinsky, v.p. in credit sales, which includes credit derivatives, at Merrill Lynch in New York has joined Banc of America Securities in a similar position. Medvinsky could not be reached. Andrew Kresse, principal in structured credit products to whom Medvinsky will report, declined comment. Medvinsky worked with Kresse at Merrill Lynch, until Kresse left for BofA in 2000 (DW, 4/17/00).

Credit-default swap spreads on Safeway, a U.K. grocer, whip-sawed last week, widening and tightening by as much as 100 basis points at a time, as investors and dealers reacted to news reports about bids for the supermarket being referred to the Competition Commission. "People are pretty much trading on headlines," said one trader. On Wednesday after the Department of Trade and Industry referred Wm Morrison Supermarkets, Tesco, J. Sainsbury and Wal-Mart to the Competition Commission, five-year mid-market spreads widened to about 300 basis points from the low 200bps. On Thursday, investors sold protection after Wal-Mart stated it was still interested in pursuing its bid for Safeway. Spreads tightened to 200bps/220bps by early afternoon.

Ricardo Pascoe, global head of foreign exchange, fixed income and alternative investment strategies at Commerzbank Securities in London, has been named acting managing director and head of the London office following the departure of Martin Bell. Pascoe said he will keep his existing responsibilities. Bell could not be reached.

A Morley Fund Management derivatives specialist asked sales professionals to stop offering it tax efficient products without knowing its tax structure and to only knock on his door with products specifically designed for active fund management. Among the list of instruments on the 'do' list, were equity options, convertible bond arbitrage, hedge funds and funds of hedge funds, explained Tom Wills, derivatives specialist in London. The 'don't' list includes basket trades, capital protected products, listed notes and warrants and exotic options such as knock outs or cliquets. "Many of the trades we are shown are far more suited to a high-net-worth client," Wills said. In addition, he is frequently pitched products that Morley already offers, such as baskets of other institutions' funds, CDOs, investment trusts or fund of hedge funds.

Kommunalbanken, a Norwegian local government funding agency, has entered an interest rate swap on a recent NOK400 million (USD55.35 million) bond offering to convert it into a floating-rate liability. Thomas Moller, finance director in Oslo, said the agency converts all of its fixed-rate issuance into floating-rate and then enters additional swaps to convert it back into fixed if its liability portfolio contains fixed rate loans. Kommunalbanken plans to raise an additional USD2.5 billion in the bond market this year.

Many derivatives contracts, including the 1992 and 2002 International Swaps and Derivatives Association Master Agreement, do not include a severability clause, which addresses the enforceability of a contract, even though these clauses are usually in commercial contracts. The questions relating to severability are complex, and require careful analysis in the context of any particular derivatives transaction. This article looks at some of the situations, under both English and New York law, in which it may be advisable to consider including a severability clause. ISDA & The Single Agreement Concept

UBS Warburg is pushing money managers, particularly insurance companies and pension funds, to "think outside of the asset class" when looking at equity derivatives strategies. James Kelly, managing director in risk management products in London, said if one sector, for example equities, falls, this often leads to a move in funds to other areas, in this case bonds. This asset allocation tactic should be transferred to the derivatives arena, according to Kelly.

State Street, with USD763 billion in assets under management, is readying a global foreign exchange options trading operation that will reportedly see the firm taking risk for the first time. State Street has hired Hank Lynch, a senior foreign exchange trader at FleetBoston Financial in Boston, as the point man for the operation. Lynch could not be reached. Calls to Mark Snyder, global head of foreign exchange and money markets, to whom Lynch will report, were referred to Carolyn Cichon, spokeswoman in Boston, who did not return calls.

Taipei-based Bank SinoPac, with over TWD313 billion (USD9 billion) in assets, is gearing up to establish an interest-rate options book by the second quarter. "While interest rates are low, demand from corporates will come up any moment there is potential for upside risk," said Henry Chang, head of fixed income and derivatives. He explained that with a possible improvement in the U.S. economy next year, it now makes sense to ready the product in case of any rates rises. SinoPac will look to offer Taiwan-dollar denominated instruments, including caps and floors.

Revised European regulation for fund managers will give greater flexibility for structured product dealers to use derivatives and help to expand the structured products market in Europe, according to Piers Lowson, director at Barrie & Hibbert, a risk management consultant in Edinburgh. The regulation update, know as UCITS III--Undertaking for Collective Investment In Transferable Securities III--has been effective for around a year, but was only implemented in the U.K. in November and in Luxembourg in January. By February it will be implemented across the whole of the E.U.

Wachovia Securities has appointed Lawrence Gibbs, an equity derivatives trader at BNP Paribas, to its newly forged listed options/exchange traded fund business. Todd Steinberg, managing director and head of equity linked products in New York, said the hire completes the firm's equity trading hires in the short term. Wachovia has been building a listed options/ETF team in order to offer a broader range of services to institutional clients (DW, 2/23). Gibbs, who could not be reached, will report to Josh Penner, head of the listed options/ETF division.