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Storebrand Alternative Investments, the alternative asset management arm of Norwegian insurer Storebrand, is considering making its first use of derivatives to offer a capital guarantee on a planned fund of hedge funds launch. Ove Christian Norheim, managing director in Oslo, said the asset manager will select a derivatives house, through its sister company Storebrand Investments, to manage the guarantee if it goes ahead with the plan. Hans Aanis, cio at Storebrand Investments in Oslo, said it would select derivatives counterparties according to credit rating and price. The decision to offer the product will hinge on customer demand.

BNP Paribas is swapping two of its equity derivatives traders between New York and Hong Kong. Olaf Kasten, senior equity derivatives trader in Hong Kong, has moved to New York to replace Oren Amsellem, senior equity derivatives trader in New York, who will soon head to Asia. "It's a swap," said Laurent De Meyere, managing director and Asian head of equity derivatives in Hong Kong, declining further comment. Amsellem is transferring to Hong Kong for personal reasons, he said. Kasten declined comment.

Traders in Hong Kong said Deutsche Bank has been building up a massive over-the-counter equity option position in HSBC over the past few weeks, which has been the buzz of the market. Equity officials said the German bank has been buying around USD40 million (notional) of calls per day for the past several weeks and as a result short-term implied volatility on HSBC options has jumped 10 basis points to 35bps. "They've been quite aggressive," said one equity derivatives head in Hong Kong, noting that Deutsche Bank has been purchasing a variety of call options in various maturities roughly daily. He added, "I'm quite puzzled by it." Nick Fennell, head of equity derivatives in Hong Kong, declined comment.

Deutsche Bahn Finance, the finance-arm of the German rail network, has entered a cross-currency interest rate swap to convert a CHF75 million (USD55.6 million) fixed rate bond into a euro-denominated synthetic floater. Hartwig Schneidereit, head of capital markets and risk management in Berlin, said the rail firm pays a six-month Euribor-based rate and receives the 3.06% coupon on the bond. The swap mirrors the 10-year maturity of the bond.

The European members of the International Swaps and Derivatives Association's weather derivatives working group have met ahead of this week's global meeting. The European group is recommending that ISDA publish a standard long-form confirmation for swaps and caps, the two basic types of weather derivatives, before developing a product-specific definitional booklet. In addition, its members think there is no need to refer to the 1993 ISDA commodity derivatives definitions and that transactions should be described as "weather index derivatives transactions," with the index described within the confirmation.

Dresdner Kleinwort Wasserstein has hired Yannick Naud, head of convertible asset swaps trading at Crédit Agricole Indosuez in London, to kick start its convertible asset swap trading desk. Dresdner has been active in this area for around two years, however, until now it executed trades on an ad hoc basis by the convertible bond team, according to a firm spokeswoman. In current market conditions, where spreads on convertibles are widening, convertible asset swaps present more interesting opportunities for clients, according to the spokeswoman.

Pension Fennia, a Finnish insurer which guarantees defined-benefit schemes, has received approval to use credit derivatives for hedging purposes within the corporate bond portion of its investment portfolio and also has the go-ahead to use interest rate swaps to take on additional risk. The company has not yet executed either of these types of trades, said Veronica Törnwall, senior portfolio manager, fixed income in Helsinki. The company, which does not have a credit rating, has EUR3.7 billion (USD3.6 billion) in assets, of which EUR2.2 billion is in fixed income.

Deutsche Bank and JPMorgan are making a push to sell credit-linked notes to European corporates and Merrill Lynch is preparing its first deals. JPMorgan executed its first deal four months ago and has seen corporate demand for these notes rise to 10% of its total CLN operation, said Carlos Fernandez-Aller, v.p. and head of corporate credit derivatives for southern Europe and emerging markets in London. Tony Main, v.p. in the global credit derivatives group at Merrill in London, said the firm has a handful of deals in the pipeline. Deutsche Bank has already executed several CLNs for corporates since it started offering the products three months ago and has further deals in the pipeline, according to Mark Stainton, director and head of exotic credit trading at Deutsche Bank in London.

HSBC Asset Management has entered equity call options to structure a capital guaranteed fund referenced to the FTSE 100. Bryan Greener, head of product development-global products, said the fund, dubbed the Safe Haven Growth Fund, gives 100% capital protection as well as guaranteeing 100% participation in gains in the index. HSBC anticipates taking out similar options in order to roll out more products in the coming months.

Exotic foreign exchange structures on Asian currencies are growing in interest and volumes could double next year. "We're seeing a lot of cutting edge stuff," said Louis Cucciniello, v.p. of global fx options at JPMorgan in Singapore, adding, "A lot of products found in the G-7 currencies are now being offered in the regional [markets]." He continued that such instruments, as currency hybrid products, which contain exposure to interest rate, foreign exchange and commodities risk, typically structured in note form with embedded options, are becoming fashionable on regional currencies.

HVB Group, the investment banking arm of HypoVereinsbank, plans to hire two more staffers for its convertible sales and trading desk, which includes a convertible bond arbitrage operation. Inderjit Bedi, head of convertible distribution in London, said he is looking for a hedge fund salesman--who will sell credit derivatives--and a convertible bond and arbitrage trader with a hedge-fund client focus. After the last two hires are in place, the group will begin trading securities. In total the group will have five in sales, six in trading and two in research. The sales team targets hedge funds as well as fund managers, pension funds and insurance companies.