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Merrill Lynch has hired Peter Buettner, director and co-head of the correlation group at Deutsche Bank in London, as a director in exotic credit derivatives trading. Buettner, who started last week, reports to Neil Walker, head of credit derivatives trading in London, according to Walker.

Morgan Stanley is reshuffling its investment-grade and emerging market credit derivatives trading teams to meet increasing volumes and better grasp a deteriorating credit environment. Robert Breden, who had run the synthetic emerging market book from London, is in the process of moving to Tokyo where he will be co-head of Japanese and Asian credit derivatives trading with Richard Thomas. Nick Riley, who had been head of credit derivatives trading for Europe, Middle East & Africa in London, said he starts this week in Breden's old role, but will be based in New York. Breden and Thomas were out of the office and unavailable for comment.

Merrill Lynch is reorganizing its London cash and derivatives credit trading teams along industry lines and expects to mimic the reorganization in New York and Asia in the coming months. Merrill is initiating the reorganization now to take advantage of potential pricing discrepancies between various cash and derivative credit instruments, according to Dale Lattanzio, managing director and head of European high-grade and credit derivatives trading in London. The move reflects greater liquidity in credit-default swaps, meaning that demand for default swaps is now moving in lock step with demand for cash bonds.

Salomon Smith Barney is adding an offshore equity derivatives trading desk for India to its Hong Kong office and Morgan Stanley is looking at setting up a similar operation. Salomon's desk will offer market-access products, which give offshore players participation in onshore products via over-the-counter transactions, targeting such instruments as forwards, equity options and swaps as well as proprietary and customer strategies for India, according to Justin Kennedy, managing director of Asia Pacific equity derivatives in Hong Kong.

National Australia Bank in London has hired Peter Rothwell, credit trader at Deutsche Bank Australia in Sydney, and has transferred Hulya Yilmaz, manager in securitization, from NAB's Sydney office.Yilmaz and Rothwell were unavailable for comment.

The cost of one-month U.S. dollar/euro options rose last week as the dollar sank to USD0.945 Wednesday, its lowest level against the common currency in 17 months. Implied volatility rose to 9.9% late Wednesday from 9.5% at the start of the week, according to options traders in New York. A weaker dollar tends to lead to higher volatility. They said continued declines in the U.S. equity markets are causing weakness in the dollar. "There's a lack of capital inflow as a result and given the fact that the dollar is a deficit currency, you need money coming in for the dollar's value to remain high," noted one trader. He and others reported strong buying interest in one- and three-month euro calls/dollar puts with strikes ranging from USD0.95 to parity. The euro's run pushed 25-delta risk reversals further in favor of euro calls at 0.9 vol, up from 0.8 vol at the beginning of the week.

Recent months have heralded change on many fronts for the derivatives industry in Germany. New legislation and supervisory regulations and directives together with recent judicial decisions and developments in the fields of tax and accounting spell a time of opportunity and new challenges for market participants.

"This is a pretty big restructuring."--Nick Riley, head of credit derivatives trading for Europe, Middle East and Africa at Morgan Stanley in London, talking about a reorganization of the firm's credit derivatives department. For complete story, click here.

WestLB is reorganizing the structure of its global asset securitization, principal finance and credit derivatives group, and John Paul Garber, managing director and head of the group, is leaving the firm. Garber has been with the firm for 11 years, four of which were spent in London and the remainder in New York, according to an individual familiar with the situation. Garber does not have concrete plans for what he will do next. Garber and John Godfrey, spokesman for WestLB, declined comment.

ABN AMRO's equity derivatives department has started pitching trades to corporates allowing them to synthetically unwind corporate cross-share holdings in Japan and plans to close its first trade in the coming weeks, according to Daisuke Kikuchi, head of corporate marketing in Tokyo. "This will allow clients to dispose of their holdings," he added. Kikuchi, who joined two months ago from Westdeutsche Landesbank, where he was head of marketing in Tokyo, said he is looking to finalize the transaction with a domestic corporate. The bank is structuring the product now because it has just received internal approval.

Asbury Automotive Group, the fifth-largest auto retailer in the U.S., has unwound three swaps with Goldman Sachs as part of its new interest-rate risk management program, said Jeffrey Hilsgen, treasurer at Asbury in Stamford, Conn. Eric Jordan, the company's banker at Goldman Sachs in New York, declined comment.

Bank of Montreal has hired Emma Vassallo and Lucile de Carbonnières, v.p. and director in credit product sales at TD Securities, as managing directors in the global financial product division. Rod Jones, executive managing director and head of international capital markets in London, said the hires are part of the firm's plans to grow its credit derivatives group. "Credit derivatives will become the biggest derivatives market in the next five to 10 years," said Jones, adding, "This is the basis of banking."