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Stephane Petermann, head of the fx options desk at BNP Paribas in Singapore, will soon return to the firm's head office in Paris to take an equity derivatives position, according to Olivier Osty, head of equity options trading in Paris. Osty declined all further comment.

Enron is offering via its Internet trading platform a structured weather note that gives investors financial exposure to the weather in 19 U.S. cities. Mark Tawney, Enron's Houston-based head of weather derivatives who was in London last week, said the note mirrors the weather risk element of the Kelvin weather bond Koch Energy Trading issued in November 1999. Tawney believes that by guaranteeing to make a secondary market in the note, more pension funds, hedge funds and mutual funds will invest in weather derivatives. The note is most likely to be traded by bond holders, Axia (the product of a merger between Koch Energy Trading and Entergy Trading and Marketing) and speculative accounts. A weather derivatives official at Axia declined comment.

New Brunswick Investment Management Corp., with CAD6.2 billion ($4 billion) under management, is considering using equity derivatives to boost its foreign investments following the Canadian government's decision to raise the cap on foreign investments by 5% to 30%.

Credit protection tightened across the board last week after equity markets stabilized and new issuance dried up. Traders said hedge funds were sitting on credit default swaps expecting the spreads to widen as poor company results continued. But after the equity markets stopped falling investors sold the swaps. On average credit default swaps have tightened between four and five basis points over the last two weeks but autos and telecoms tightened approximately 20bps. The new issue pipeline has run dry over the last couple of weeks, according to Bradley Bugg, telecom credit analyst at Dresdner Kleinwort Wasserstein in London. He attributes this to companies coming to the market early to avoid paying premiums after investors were flooded with paper.

Fortis Bank is writing equity call options on a basket of value stocks as part of the structuring of a guaranteed fund it will launch at the end of May. Koen Zoutenbier, senior account manager on the derivatives and structured products desk in Amsterdam, said the options will be six-year average-rate calls on a basket containing ABN AMRO, Vandex, Wereldhave, Société Générale, Volkswagen, DaimlerChrysler, KLM Royal Dutch Airlines,AXA, Dutch State Mines and Respsol YPF. Investors get a cash payout equal to the average closing price of the basket on the last day of the final 13 months. Zoutenbier said the exotic option is cheaper than a plain vanilla call, adding that defensive investors favor this strategy because it spreads the risk. He estimates the notional size of the option position will be approximately EUR25 million (USD22.5 million). Zero-coupon bonds provide the guarantee.

New issues of Japanese barrier knock-in equity-linked products are down by at least 50% this month as a downward lurch in the Nikkei 225 in March left many retail investors deep underwater. One equity derivatives trader estimated JPY100 billion (USD800 million) of Nikkei-linked notes were knocked-in in March, when the market traded down to 11,200. The index closed at 13,973.03 Thursday

Asia Debt Management Ltd., a Hong Kong-based asset management firm that specializes in distressed debt, is looking to expand its use of structured notes. Robert Appleby, managing director, declined to give reasons for the move, citing the proprietary nature of the firm's investment strategy. Asia Debt Management manages USD100 million in distressed debt and also handles USD300 million in passively managed portfolios.

HSBC plans to enter the interbank credit derivatives market in Hong Kong in the next few months to meet growing customer demand, according to an official.

Ensuring liquidity should be the primary goal in negotiating an ISDA Master Agreement (the "Agreement") for smaller, non-rated customers, such as a hedge fund or a middle-market corporation. Often highly leveraged and with little room for error, these customers should focus their efforts when negotiating the Agreement with a dealer on limiting the dealer's opportunity to terminate the Agreement. Unfortunately, however, customers (typically through expensive outside counsel), often instead use up valuable negotiating capital on esoteric legal issues that may only remotely affect a customer's situation.

MBNA Corp. recently entered into a 10-year EUR750 million ($672 million, notional) currency swap with an undisclosed counterparty. Vernon C. Wright, executive v.p. and chief corporate finance officer, said the Wilmington, Del.-based credit card company entered the swap to convert U.S. dollar-denominated receivables into euros. It will pass on the euro swap payments to bond investors that purchased a euro-denominated asset-backed security issued by MBNA, he explained. Wright declined to detail the swap rates. He added that MBNA occasionally uses interest-rate swaps.