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James Kennan, v.p. in currency option trading at BNP Paribas in New York, has left the firm. Kennan, who declined comment, is not yet thought to have joined a competitor.

BNP Paribas has hired Ebo Coleman, senior credit officer at Moody's Investors Service in London, as a structurer in its securitization group. At BNP, Coleman reports to Michael Donahue, head of securitization in London.

After months of wrangling the European Commission is expected to say derivatives can be used for limited borrowing and leverage in certain Europe-wide funds. This will be a boon for the derivatives industry, especially because it was feared that European regulators were attempting to tighten the rules. "This is what the industry was hoping for," said one equity derivatives structurer. Calls to the Commission were not returned by press time.

Derivatives houses have started buying protection on first-loss tranches of synthetic collateralized debt obligations they hold to offset risk they retained when issuing the senior tranches. Hedge funds have emerged as the main sellers of this protection. When first loss tranches of CDOs, which typically represent the riskiest 3% of a portfolio, were retained by dealers they were so out-of-the-money they did not have much mark-to-market volatility, noted Frank Iacono, senior v.p. in structured credit products at Lehman Brothers in New York. Record spread tightening in credit-default swaps over the past year, however, has moved the positions in the money and in turn made them vulnerable to spread volatility and changes in correlation, he said.

Michael Ice, former managing director and North American head of rates, sales structuring and marketing at UBS in Stamford, Conn., has landed at Dresdner Kleinwort Wasserstein as a managing director heading up the firm's financial institutions group.

One-month implied volatility on the euro/Hungarian forint leaped to 20% last Wednesday, from 8% the week before, while one-week volatility took an even wilder ride jumping to 25% from 7% in the same time frame. Government statements that the forint is not on target for integration with the euro started speculation that the central bank might allow the currency to devalue, noted one trader. Although the central bank has now denied this, the talk set the ball in motion and preceded a 3% interest rate hike that sent the currency into turmoil, he noted. Last Wednesday the euro traded at HUF274, compared with HUF263 the week before.

The International Swaps and Derivatives Association plans to publish dictionaries of standard terms used in over-the-counter derivatives in Korea, Taiwan and Thailand. "It will save them from having to reinvent the wheel each time they deal with a counterparty," said Angela Papesch, head of the Asia-Pacific office at ISDA in Singapore.

JPMorgan has hired Adrian Averre, derivatives trader in the options and structured products group at BNP Paribas in Tokyo, for a new role in Japan as head of interest rate options trading. "With more volatility in the interest rate and exotic markets, business is getting hotter," said Hideharu Taira, head of rates trading in Tokyo, explaining the firm's intention to increase its focus on the interest rate options market by appointing a head for the desk. "There's still room to increase," added Taira. Next year the firm will likely hire additional bond, swap and exotic traders. Averre could not be reached.

The International Swaps and Derivatives Association is putting together a coterie to open up the Middle Eastern derivatives markets. The group will include experts in Islamic law, market practitioners and lawyers specializing in ISDA documentation, according to Peter Werner, policy liason to the Central and Eastern European committee at ISDA in London. The committee will focus on Saudi Arabia, Qatar, Kuwait, Bahrain and the United Arab Emirates. The move represents a growing interest in the Middle East and Shariah compliant investment products.

Fran Reed, previously a structured credit salesman at Commerzbank Capital Markets, joined Lehman Brothers last week as agency product head. Reed, who prior to working in structured credit sales, spent 11 years on the agency side of the business including five years as head of the agency desk at Barclays Capital, said the aim of this new role is to connect the dots between Lehman's agency traders, salesmen, issuers and investors. "I'm going to work with the trading desk, talk to the issuer side and work with the sales force to distribute product," he explained.

Australia's Macquarie Bank is planning to sell a multi-billion dollar collateralized debt obligation to retail invetors in New Zealand. The CDO will be the bank's second, having launched the first such deal, dubbed Generator 1, earlier this year. Craig Swanger, head of the financial services group in Auckland, said he expects the deal to be launched in the first quarter, but is waiting for global credit spreads to widen.