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Volumes in euro/Hungarian forint options rocketed by three to six times as investors jumped into convergence trades in the last two weeks. Traders said approximately EUR250 million (USD250 million) of these trades were executed every day in comparison to EUR50-100 million on average. The trades were sparked off when JPMorgan reportedly bought about USD500 million (notional) in 10-delta euro put/forint calls.

A lawsuit alleging breach of contract brought by a U.S. hedge fund against JPMorgan regarding a credit derivative contract on Argentine sovereign debt will be heard in the U.S. District Court for the southern district of New York after a judge threw out the bank's attempt to dismiss the case. In a memorandum and order District Judge Lawrence McKenna dismissed all Eternity Global Master Fund's other claims expect breach of contract. The notional size of the credit derivatives position and the damages Eternity is seeking could not be determined by press time. Officials at JPMorgan did not respond to messages and officials at Eternity in New York could not be reached for comment.

Domestic Korean securities houses, including Dongwon Securities, Good Morning Shinhan Securities, Hana Securities, Woori Securities Co., are readying to start offering over-the-counter equity derivatives in the Korean market. The move will likely bring increased business to international houses as the domestic firms will hedge their positions. "Lots of things are changing--this is a great time in the Korean market," said Hong Shik Kim, senior executive managing director and head of trading and derivatives at Good Morning Shinhan in Seoul, noting that deregulation is allowing local houses to set up an onshore equity derivatives market in Korea. "This market will get bigger and bigger," said J.K. Kim, head of derivatives at Hana Securities. Market officials expect the firms to receive their OTC equity derivatives brokering licenses, which will permit them to sell won-denominated OTC equity products, next month.

Ferox Capital Management has hired Anthony Medina, equity derivatives trader at Lehman Brothers, as a senior trader at the convertible bond arbitrage fund in London. Jeremy Herrmann, head of the fund in London, referred calls to Nick Curtis, a firm official, who confirmed the hire, but declined all further comment.

Singapore-based Maestro Capital Management is preparing to launch its first fund and will consider using over-the-counter equity options. "We'll use the futures market as our medium of trading but as we follow trends we could choose different mediums such as OTC options," explained Nick Delf, managing director in the Lion City. Maestro is looking to start its Global Maestro Fund in early January and will focus on program trading. "We're systematic trend followers," he explained.

Pacific Investment Management Co. is looking at developing more hybrid synthetic managed collateralized debt obligations, following the introduction of its first two such products last month. An official at the firm in Newport Beach, Calif., said the U.S. manager launched the first CDOs in order to exploit favorable opportunities in pricing and the money manager is now considering making further launches for the same reasons. Potential products will be evaluated in view of their arbitrage gains. The official said the details as to when the firm may launch new products or what type of CDOs it is eyeing have not yet been decided.

Moody's Investors Service is in talks with U.S.-based derivatives-savvy professionals, aiming to appoint the first person to its newly conceived derivatives team by year end. David Fanger, senior v.p. in New York, explained the hire is being made as part of a recent decision by the rating agency to create specialist accounting, derivatives and corporate governance teams. The specialist teams will serve as a resource for Moody's analysts, who are responsible for tracking a portfolio of firms. While Moody's analysts are already knowledgeable about derivatives, the fact they follow a group of companies full time gives them little time to focus on derivatives, thus the attention of the specialists will aid in making the information more robust, he added. The new hire will report to Christopher Mahoney, senior managing director.

Bank Nederlandse Gemeenten, the principal Dutch public sector finance agency, has entered a cross-currency interest rate swap on a recent GBP100 million (USD159 million) bond offering to convert it into a euro-denominated synthetic floating-rate liability. Bianca Ydema, senior manager in the capital markets group in Den Haag, said BNG issued the bond in sterling because of demand from a major U.K. investor, which she declined to name. It converted the offering into floating-rate euros to match its lending portfolio.

A salary survey conducted by Michael Page City predicts derivatives staffers' salaries and bonuses will be down by as much as 20% compared with last year. It also shows two-tiered remuneration, with structured derivatives pros receiving higher compensation than those working in plain vanilla groups, which is normal when client flows dry up in a bear market. Additionally, all equity derivatives professionals will fall within the lower tier.

"The court effectively stripped away extraneous claims and forced the parties to focus on the contract."--Patrick Clancy, derivatives counsel at Shearman & Sterling in London, commenting on a judge's decision to throw out most of Eternity Global Master Fund's claims against JPMorgan. For complete story, click here.

U.S. realtor the Federal Realty Investment Trust has suffered a USD1.5 million loss on an interest rate hedge the firm entered on the back of a planned note sale, which was then delayed because of a fire at one of its properties. Andrew Blocher, v.p. in investor relations and capital markets at the firm in Rockville, Md., said the loss is now being amortized into the expense of the delayed issue. The firm issued the bond this month having originally scheduled the issue for August.

Taiwan's Securities And Futures Commission is preparing to open an equity-linked note market next year in a step to further expand the onshore derivatives market. "This is a huge positive," said Justin Kennedy, managing director of Asia Pacific equity derivatives at Salomon Smith Barney in Hong Kong. Wang Hung Rui, an official at the SFC in Taipei, said the regulator will permit equity-linked notes as well as warrants on stocks listed on the GreTai Securities Market by April.