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The European Investment Bank has entered an interest rate swap to convert a recent USD3 billion fixed-rate bond offering into a synthetic floating-rate liability. Carlos Guille, head of funding for American, Asia and Pacific capital markets in Luxembourg, said the agency typically converts fixed-rate debt to floating, but keeps some fixed-rate liabilities, depending on lending requirements.

One month euro/U.S. dollar implied volatility jumped more than 1% last week, reaching a high of 10.6% early in the week before settling at 10.3% last Thursday, said a New York-based trader. Euro/dollar vol had traded as low as 9.7% the previous Thursday before grinding higher on the back of the euro eking out and then giving back a USD0.02 gain in the spot market, to reach USD1.07 last Thursday.

A quartet of equity derivatives staff have left Morgan Stanley in New York over the last few weeks: a move that some in the market have attributed to disappointment with bonuses. "Morale in [Morgan Stanley's] equity derivatives [group] is very low," said one headhunter. A Morgan Stanley insider countered that bonus payouts at the firm were in line with other houses on Wall Street and that the number of departures are insignificant. Melissa Stonberg, spokeswoman at Morgan Stanley in New York, declined comment.

ING Financial Markets has transferred its Asia-Pacific credit derivatives trading operation from Tokyo to Hong Kong as part of a regional reorganization. "We're putting all of our capital markets-related trading under one roof," said Sheel Kohli, spokesman in Hong Kong. About six staff including Trevor Vail, credit derivatives trader, made the move to put the derivative traders alongside the regional bond traders. "Sales, marketing, and distribution in Japan remains unaffected," Kohli explained. Vail declined all comment. Kohli continued that ING is now concentrating regional trading out of its two main Asian hubs: Hong Kong and Singapore. He noted that interest rate and fx trading for Japan has always been handled from its hubs offshore.

Tudor Investment, the U.S. hedge fund run by iconic Wall Street trader John Paul Jones, has hired Todd Edgar, an executive director at Morgan Stanley, to bolster its commodity trading effort. Edgar was in between posts last week and could not be reached for comment.

Goldman Sachs has split its structured credit marketing group in order to beef up the structuring capability of two of its marketing groups. Christopher Barter and Calum Osborne, who were co-heads of structured credit marketing, have moved into leadership roles in separate marketing groups and the firm has also revamped its marketing efforts to pension funds and insurance companies, according to Barter. The structured credit marketing group previously sold structured credit products to banks, insurance companies and pension funds.

JPMorgan has received a license to deal renminbi--making it one of only a handful of bulge bracket players to do so. Aaron Poon, Hong Kong head of rates trading, said the firm can now offer traditional banking activities onshore. It will likely take a year or so before there is a functioning derivative market, he said, adding that regulatory guidelines are expected to be introduced in the coming months. Once permitted, JPMorgan will look to offer renminbi derivatives, he added. Market players believe that the upcoming regulations will present a clearer picture of uses and procedures for derivatives, which will aid in the development of the market (DW, 9/1).

JPMorgan has integrated credit and rates trading in Tokyo and transferred the previous head of rates trading for Japan to take an undisclosed position in London. Reasons for the moves were not immediately apparent but appear to be part of a trend across Asia for banks to consolidate their operations (DW, 1/6). In the reorganization, Ashley Bacon, head of rates in Tokyo, will take a newly created senior role in the rates group in London. Two JPMorgan insiders expressed surprise that the firm has not yet announced Bacon's new role. Bacon declined comment.

Bank of America has hired Eric Ohayon, head of fx structuring at Lehman Brothers in London, to build up its fx structuring business in Europe. Ohayon said he reports to Alan Collins, head of the fx business in London. Ohayon replaces Greg Kaldor, managing director in foreign exchange sales in London, who moved over from a structuring to sales role last year, Kaldor said. Collins referred calls to Rhiannedd Jones, spokeswoman in London, who confirmed that BofA is beefing up its fx structuring presence, but declined further comment.

Economists and analysts looking for succor from tumbling equity markets and the specter of war with Iraq should beware the false optimism suggested by tightening credit default swap (CDS) spreads, warn derivatives market officials. While CDS spreads are an important indicator of the overall robustness of the economy, the CDS market may not always accurately reflect credit conditions more generally, explained Alex Reyfman, v.p. in credit derivatives strategies at Goldman Sachs in New York. The CDS spread is the annualized basis point premium demanded by the market in exchange for providing default protection.

Lehman Brothers has reportedly promoted John Wickham, co-head of global equity derivatives in New York, as sole head of the division. Wickham's former co-head, Mark Sanborn, will now head up global program trading, said officials familiar with the reorganization. Wickham and Sanborn did not return calls. Meanwhile Dave Gittings, co-head of U.S. equity derivatives sales, has left the firm. Bill Levy, who joined Lehman last year to co-head the group with Gittings, has assumed sole responsibility for the role. Gittings declined comment and Levy did not return calls.