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Keith Jacobson, managing director and former head of the recently disbanded strategic solutions group (SSG) at Merrill Lynch in New York, has left the firm. After SSG, a specialized group responsible for structuring and marketing derivatives-based transactions, was merged into Merrill's derivatives sales division last November, Jacobson's role was eliminated (DW, 11/10). Jacobson quit late last month after failing to find a suitable role within the firm, explained one Merrill insider.

Andrew Feldstein, managing director and co-head of North American structured products and derivatives marketing at JPMorgan in New York, has resigned. Michael Dorfsman, a JPMorgan spokesman in New York, confirmed the resignation, adding that Feldstein is exploring other options within JPMorgan or in partnership with the firm. Calls to Feldstein's office in New York were not returned.

Introduction Currency fund and currency overlay programs have become the flavor of the month for investors. These products both utilize bespoke and often confidential trading models to take advantage of the volatile currency markets. Funds use models to predict when spot, forward or sometimes option trades should be placed to generate return, while overlay programs use the same models to make hedging decisions. The fund products can, at their best, generate healthy annual returns (in some cases 7%-10% of the face value of the trades), while good overlay programs offer option-like protection and the possibility of 1%-3% return enhancement. These are the results from the best, of course. Choosing the right overlay provider or currency fund is a critically important decision.

Merrill Lynch is looking to structure principal protected notes on an index of Chinese equities that for the first time will be re-balanced via the constant proportion portfolio insurance method. Principal protected products offer clients a way to tap China's growing market with limited downside risk, explained John Robson, director of structured products in the global equity markets group in Hong Kong. "Many people are interested in China but are worried about the risks," he said.

"We want to alleviate common concerns from hedge fund investors: lack of transparency, lack of liquidity and hubris."--Nick Waltner, hedge fund manager at Kulshan Capital Management, on plans for his fund. For complete story, click here.

Nationwide Building Society has entered an interest rate swap to convert a recent GBP200 million (USD330.04 million) offering into a synthetic floating rate liability. Andy Hutchinson, assistant treasurer in Northampton, U.K., said the thrift decided to enter the transaction because its lending portfolio consists of mostly floating-rate debt. He explained that Nationwide does not always convert fixed-rate to floating-rate debt, but looks at its current debt portfolio to determine whether it needs to enter a new swap to hedge interest rate exposure. He declined to disclose Nationwide's target fixed-to-floating-rate ratio.

A Question of Greed?

Société Générale has hired Anneke Van Hoorn, trader on the European medium-term notes desk at JPMorgan in London, as a cash and credit derivatives marketer to German funds in London. Marcus Ribka, head of cash and structured credit sales to Europe (ex-France) in London, said Van Hoorn takes a new position. SocGen is expanding the group in anticipation of capturing business from funds as they divest equity positions and look to credit products for higher returns. Van Hoorn reports to Simon Lawless, head of the German fund sales group in London. Van Hoorn started at SocGen last Monday. Lawless referred calls to Ribka.

Southern Power Co., the wholesale power subsidiary of Atlanta-based energy giant Southern Co., plans to unwind approximately eight forward starting swaps with a total notional size of around USD500 million when it prices a bond issue of approximately USD600 million that is planned for June. Mike Harreld, senior v.p. and treasurer at Southern Company Services, the power firm's service arm, explained that the swaps were entered into in increments over the last 18 months, with Southern paying a fixed rate and receiving a LIBOR-based floating rate. Harreld declined to specify the rates.

Standard Chartered is making a push into selling derivatives products in Africa and has appointed Jean-Michel D'Oultrement, treasurer for U.K. and Europe in London, to be the head of markets for Africa based in London. D'Oultrement replaces Peter McLean, who has been appointed as chief executive of Standard Chartered Zambia, McLean said. D'Oultrement was traveling and could not be reached.

WestLB Securities Pacific, the Tokyo-based arm of Germany's Westdeutsche Landesbank, has beefed up its derivatives operation with several hires and transfers. "We have made a number of strategic hires in conjunction with refocusing our business on core credit and derivatives markets," said Terence Mark, deputy head of sales in Tokyo. He added, "These are growth businesses in Japan."

Asian equity derivatives market veteran Nick Waltner plans to start using over-the-counter derivatives when his fledgling hedge fund, Kulshan Capital Management, reaches USD50 million in assets under management. The Seattle-based fund, which has USD5 million under management, is building up a track record in the U.S. cash equity market and will look at overseas markets such as Asia in the coming months, he said. Waltner, who established the fund last year (DW, 3/18), was previously responsible for setting up an Asian equity derivatives business for Bank of America in Tokyo and before that ran the equity derivatives desk at Nikko Salomon Smith Barney.