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Dresdner Kleinwort Wasserstein has hired Ulrick Neuhauss, director in credit derivatives sales at Bankgesellchaft Berlin in London, as a director for its London-based structured credit sales group. He started Monday and reports to Raffaele Ricci, head of structured credit sales, Europe. Ricci said Neuhauss will fill a newly created role, noting the bank is adding to the team because it "sees a lot of potential in structured credits." Neuhauss' hire brings the structured credit sales team up to a dozen staffers, Ricci said.

Peter Kappel has resigned as managing director and head of securitization for Europe-excluding Germany at Dresdner Kleinwort Wasserstein in London. Kappel was responsible for cash and derivative securitizations. Officials familiar with the move said he will join Credit Lyonnais in London, where he will be charged with setting up a securitization group. He resigned last Monday.

Equity derivatives professionals at bulge bracket firms in the U.S., Europe and Asia are likely to see a 20-50% drop in their annual bonuses this year as investment banks look to cover loses incurred by a plummeting stock market, according to market officials. Most U.S banks began their annual review process for bonuses last week, according to headhunters.

Clarke Harris, chairman and ceo of the European arm of Entergy-Koch Trading, left the energy trading house last week.

Sal Oppenheim Jr. & Cie. has structured reverse convertible bonds based on shares in two German corporates that guarantee investors a 12.5% coupon by trading equity options with investors. The firm buys a put from investors to beef-up the coupon and sells a put to provide the guarantee.

Banca Popolare di Sondrio has sold U.S. dollar calls/Japanese yen puts to a customer following the firm's prediction that the yen will weaken against the dollar in the coming months as Japan's economy continues to weaken. Carlo del Grosso, head of trading in Lugano, Italy, said the firm sold two dollar calls in the trade, each with a notional size of USD15 million, which mature in December and June, respectively. Both options are struck at JPY120. Del Grosso declined to name the customer.

The International Swaps and Derivatives Association is creating a list of five reporting requirements for parties that receive swap payments and are subject to U.S. tax laws. ISDA's tax committee is expected to finalize the requirements within the next two weeks, according to Kimberly Summe, general counsel in New York.

One-month Japanese yen/U.S. dollar implied volatility fell to 10.6% Thursday down from 12.5% a week earlier as demand for yen puts/dollar calls increased on news that the Bank of Japan had intervened to boost its economy. Banks' proprietary desks and hedge funds were the most active, buying one-week yen puts/dollar calls as the one-month 25-delta risk reversal moved further in favor of dollar calls. The options typically had strikes around JPY125.25 when spot was trading around JPY119.

Martin Fraenkel, managing director and co-head of the global commodities group at J.P. Morgan in London, said he has resigned from the division and could be about to leave the firm. Fraenkel, a Chase Manhattan Bank veteran who has run J.P. Morgan's European commodities division since last year's merger, would not be drawn on why he made the decision or whether he will leave the firm.

J.P. Morgan has made two hires for its structured credit products team in Tokyo. Ken Koh, head of credit derivatives structuring at Bear Stearns, joined last week and reports to Mahesh Bulchandani, head of structured credit products in Tokyo. Koh was traveling and could not be reached for comment. Bulchandani, who himself joined from Merrill Lynch earlier this year (DW, 4/9), said J.P. Morgan two months ago added Chandrakant Mohandy, a collateralized debt obligation credit analyst at Fitch.

J.P. Morgan is pitching an interest-rate swap strategy designed to win if the Federal Reserve cuts rates more than the Bank of England over the next month. Marius Langeland, interest-rate strategist in London, said the firm is predicting the Old Lady of Threadneedle Street will cut rates to 4.25% before November whereas it predicts the Fed will cut rates to 2% or lower. Langeland said it is predicting larger cuts in the U.S. because it thinks there will be a prolonged downturn with recovery coming after the second quarter.

The market abuse regime in the U.K. is Part VIII of the Financial Services and Markets Act 2000, due to come into force on Dec. 1 and is a new concept for English financial regulatory law. The fundamental concept of the regime is that users of a U.K. regulated market have a positive duty to ensure that they do not, by their acts, statements, conduct or omissions, impede the efficient operation of that market. This duty extends to persons who, although they do not use the market themselves, benefit from it--thus derivatives traders should not act in such a way as to damage the markets in the underlying securities by reference to which they price their derivatives. This duty is loosely equivalent to a duty of care and a breach of the duty is punishable by a fine. Section 118 of the act sets out that behavior is to be treated as market abuse if it is behavior which is "likely to be regarded by a regular user of that market who is aware of the behavior as a failure on the part of the person or persons concerned to observe the standard of behavior reasonably expected of a person in his or their position in relation to the market". This is an "objective intent" test--that is, the question of culpability is determined not by reference to what the person doing the act intended, but by reference to what an experienced external observer would have concluded that that person's intentions were. This has the interesting side effect that market abuse can be perpetrated entirely inadvertently--even where a person can prove that they had no intention of abusing a market, if the FSA can show that a reasonable market user would have objected to the conduct, then the conduct is prima facie market abuse. Note also that where a transaction between two parties to an over-the-counter derivative has the effect of abusing a market in a reference obligation, the question of what the counterparts to the derivative should have known and thought and what they must have intended will be assessed by reference to a regular user of the underlying market, despite the fact that neither of the parties to the OTC derivative may be users of that market at all. The point here is that if you do things which may have the effect of abusing markets, the FSA takes the view that it is up to you to educate yourself as to the customs and practices of those markets.