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State Street global Advisors, which manages roughly USD35.5 billion in fixed-income assets, is considering entering the collateralized debt obligation market. "We're certainly looking at [CDOs], because of the fee potential," said Joe Marvin, head of U.S. bonds in Boston. Any deal is on ice for the time being, he added, because SSgA is waiting for the Financial Accounting Standards Board's clarification of consolidation criteria. By consolidation, he is referring to FASB's proposal to raise the minimum equity level held by third-party investors in CDOs to 10% from 3% (BW, 3/4).

ABN AMRO is predicting the Korean equity derivatives market is going to take off and plans to hire additional marketers to cope with the demand. "We're looking to increase our resources," said Frank McKirgan, head of Asian equity derivatives in Hong Kong.

Asset management (or managed) synthetic CDOs effectively securitize investment-grade corporate credit risk. A managed synthetic CDO combines the structure of a traditional asset management cash flow CDO with the cost-effective risk transfer of a static synthetic CDO. The result is a portfolio credit product that provides investors with an efficient investment strategy in an actively managed, diversified pool of investment-grade corporate credit. The advantage of managed synthetic CDOs for investors is the same as it is for other actively managed CDO products: a tailored exposure to an expert manager's performance in the selected asset class. Although the market has not yet converged on a standard managed synthetic CDO structure, the broad characteristics have been established.

Advance Auto Parts, an auto parts dealer in Roanoke, Va., is considering using interest-rate swaps to even the ratio of fixed-to-floating rate debt on its balance sheet, according to Sheila Stuewe, director of investor relations "Looking at possible swaps has become part of our constant review of our financing. We haven't decided on a schedule, but it is something we are looking at closely," Stuewe said.

Barclays Capital plans to expand its German corporate risk advisory business as more accounting rules drive cfos to consider the impact of hedging on the company's balance sheet. Martin Gueldenberg, director and German head of corporate risk advisory in Frankfurt, said the firm plans to hire one or two marketers with cross asset class experience. Most of the department's business revolves around interest-rate and foreign exchange risk, but equity and credit risk are also increasingly important.

Barclays Capital has hired Boris Loshak, v.p. in the mortgage strategy group at Goldman Sachs, as an agencies strategist in New York, according to Brad Stone, head of U.S. fixed income marketing and derivatives strategy. Loshak, who joined the firm about two weeks ago, is filling a new position created to meet the burgeoning U.S. agencies market, which Stone noted is becoming a large part of the U.S. high-grade market (DW, 9/9). He said the agencies business has nearly doubled over the last four years.

Bear Stearns is considering structuring its first synthetic collateralized fund obligation referenced to a basket of hedge funds, according to an official familiar with its plans. The deal is expected to hit the market in the second half of the year, probably in the fourth quarter. Officials at Bear Stearns in London declined all comment.

Credit-default swap volumes tripled last week on electronics giant Fujitsu on the back of an upcoming convertible bond issuance. "Fujitsu's the highlight this week," said Ralph Orciuoli, head of credit trading at Bear Stearns in Tokyo. Traders noted that the spread on the five-year yen-denominated default swap blew out to 135-140bps last Tuesday from 85-95 basis points two weeks ago. The credit then settled around 99-103bps Thursday.

Raymond James & Associates, a St. Petersburg, Fla.-based brokerage house with USD1.7 trillion in revenues, is planning its first foray into equity derivatives. The firm has hired David Dami, head of the private client group in the equity derivatives marketing division at Commerzbank Securities in New York, as a managing partner to lead the effort. Dami said he plans to hire several professionals to form a high-net-worth and corporate marketing team over the next few months. He added that there are also plans to begin structuring equity derivatives products after the marketing team is established. Dami declined to detail the type of products the firm would be offering.

Deutsche Bank has hired Shingo Tadakoro, head of equity derivatives trading at Daiwa Securities SMBC in Tokyo, as a senior equity derivatives trader, according to Tadaaki Tano, general manager of the planning division in the products section at Daiwa. "At Daiwa he was one of the biggest players in the OTC index products market," said a rival at Nomura Securities.

Implied volatility on one-week euro/U.S. dollar options popped to around 9.25% Wednesday from 8.5% after Morgan Stanley and Goldman Sachs were seen piling into the euro/dollar options market. Dealers in New York said both firms were active buying a combined total of around USD1 billion of euro puts/dollar calls struck at USD0.90 in an extraordinary three-hour feeding frenzy. Spot was at USD0.91 when the trades were executed. Traders at Morgan Stanley and Goldman referred calls to their respective press offices. Melissa Stonberg, a spokeswoman at Morgan Stanley, and Bruce Corwin, a spokesman at Goldman, declined to comment.

One-month euro/yen implied volatility rose last week to 8.50% on Wednesday from 7.6% Monday as the yen rose to JPY127 against the dollar and investors feared Japanese intervention. The dollar weakened against most currency pairs, but investors were most concerned about the yen, as the Japanese authorities have set a target ceiling of JPY130. Rob Hayward, a foreign exchange strategist at ABN AMRO in London, predicted the Bank of Japan would not intervene unless the yen strengthens to JPY120.