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Traders at bulge bracket derivatives houses, such as Citibank, Deutsche Bank and Société Générale, in Korea expect volumes of interest-rate options, including caps, floors, and swaptions, to rocket this year on the back of the Korea Futures Exchange launching options on Korean treasury bond futures in May. "Price-makers for caps and floors will be able to use the options to [hedge] volatility," said K.H. Kim, v.p. of derivatives products at SG in Seoul. He continued that by year-end, trading in interest-rate options could reach daily volumes of KRW10-20 billion (USD7.6-15 million). Current volumes are KRW100 billion a year, said an official at Citibank in Seoul.

Last week's disclosure that HSBC will not pay bonuses to its equity cash and derivatives professionals had rivals and headhunters abuzz with speculation this sounds the death knell of the firm's investment banking pretensions. Although bonuses are down around 30-50% across the board in equities, market professionals said HSBC's apparent decision to do away with them altogether is unprecedented.

The International Swaps and Derivatives Association is looking to hire an assistant director for its London office to deal with risk management and accounting issues on a global basis, according to Emmanuelle Sebton, head of risk management in London. The hire will report to her and fills a vacancy left by a departing official whom Sebton declined to name.

The International Swaps and Derivatives Association has sent out a second draft of its proposed master agreement. Kimberly Summe, general counsel at ISDA in New York, said it received approximately 40 comment letters from banks, law firms and end users in response to its first draft and has incorporated these into a new version. The second draft will be discussed at a meeting in London and New York on March 12 or 14, with comments due in about a week later.

AMP Henderson Global Investors (NZ), an asset manager with over NZD11 billion (USD4.5 billion) under management, is planning to purchase and sell credit-default swaps in the coming months to diversify its NZD4 billion fixed-income portfolio. "We have the ability to do this, we're just waiting for the right opportunity," said Chris Wozniak, cio in Wellington. "This will become another part of our toolbox," he added.

Merrill Lynch is considering launching an onshore interest-rate derivatives desk in Korea this year as the regulatory environment will open up for securities houses in the coming months, according to officials at the firm. "We are juggling with the risk/reward, cost versus profit equation," said an official at Merrill in Hong Kong. He continued that the firm will make the decision in the next couple of months but noted if it goes ahead it could be up and running by year-end. Currently interest-rate derivatives marketing for Korea is handled out of Hong Kong while Tokyo is the regional hub for trading.

SBC Communications, a telecoms giant in San Antonio, is considering entering an interest-rate swap to convert the fixed-interest rate on a USD1 billion global note offering it brought to market in late January, according to a company official. "We feel now is the time to look seriously at doing this. There is that threat that interest rates will rise, but we know with our credit rating we fair well in the floating rate market," the official added. The offering was rated Aa3 by Moody's Investors Service and AA minus by Standard & Poor's.

Société Générale and ABN AMRO are separately considering synthetic and hybrid collateralized loan obligations referenced to project finance loans. The SG deal is likely to be referenced to USD500 million of loans on its own balance sheet, whereas ABN is planning balance sheet deals of between EUR200-700 million (USD173-609 million) and customer deals of up to EUR500 million.

MBf Unit Trust Management, one of Malaysia's largest asset managers with USD300 million in assets under management, is looking to enter the over-the-counter equity options market in 12 to 15 months for the first time since 1998 to hedge its USD300 million equity portfolio. "If possible we'll have our portfolio hedged 100%," said Philip Tan, senior fund manager in Kuala Lumpur, adding that the fund is looking to buy over-the-counter puts and calls as well as listed futures and options to hedge the portfolio, of which 90% is invested in domestic equities. "We don't want to subject investors to high volatility," said Tan.

Société Générale is looking to execute what is believed to be the first weather derivative in Thailand in the coming weeks. In the precipitation option the Thai agricultural conglomerate is hedged against rainfall below a certain level in May and June, according to an official at SG, who declined to give the exact details of the trade. The option provides USD1-2 million of protection for a premium of approximately 10%.

The firm also plans to hire a senior structurer for its New York-based synthetic collateralized debt obligation group, according to David Allan, managing director and head of securitization in Toronto. Allan said he plans to fill the position by next month.

The Deal Roll-off Chart, provided by Capital DATA Loanware, lists the 50 largest leveraged credit facilities in the U.S. market that are due to mature in the coming month. It is designed to provide a look at potentially available money in the market as credits are renewed or retired.