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Bank One is rebuilding its foreign exchange options business and has hired Justin Foley, global head of foreign exchange options at Bank of America in Chicago, in a similar role to expand the team in Chicago and London. Foley said the bank is planning to hire two or three options traders in London, including someone to head the desk, and three or four traders in Chicago. The firm plans to have half of the hires done by the end of the first quarter and most in place by the end of the second quarter.

Suncorp-Metway, Australia's sixth-largest bank with over AUD27.3 billion (USD15.9 billion) in assets, is looking to make its credit derivatives debut in the next 6-12 months. "At the moment we'd use these from the point of view of balance sheet management," said Mark Gardener, senior manager of the interest rate management group in Brisbane. He continued, "There's newer people in the balance sheet area that are more prepared to look at credit derivatives," noting that they are more open to using newer products. The bank will look to purchase credit protection on domestic names to hedge its loan portfolio, which stood at AUD22.9 billion in June.

Bear Stearns recently structured a JPY100 billion (USD839.3 million) synthetic collateralized debt obligation--the firm's largest CDO in Japan. The static portfolio is referenced to 100 Japanese credits, according to participants familiar with the transaction. Officials at Bear Stearns declined comment.

Endeavour Capital Management, a USD600 million global fixed-income relative value hedge fund, has hired George Polychronopoulos, senior managing director and head of interest rate trading at Bear Stearns in London, as a director and trader for the fund in London. The fund uses interest rate swaps, and volatility derivatives, according to Polychronopoulos, who left Bear Stearns in September (DW 9/30).

Credit Suisse First Boston has nabbed Jerry Wood, managing director in fixed income and 20-plus year veteran of Morgan Stanley in New York, to work in a senior position in the firm's fixed income division. Officials familiar with the situation noted that Wood, whose remit includes interest rate derivatives, is close to CSFB's CEO, John Mack, having worked with him at Morgan Stanley. The appointment reflects Mack's on going effort to fill senior positions with loyal lieutenants. Wood didn't return calls. Mack's secretary referred calls to Cristina von Bargen, spokeswoman, who declined comment.

A recent survey of the weather risk management industry has indicated a global increase of 43% in the number of weather-based financial transactions and 72% in the notional value for such contracts, in comparison with the previous year.* In order to maintain this rapid expansion market participants have sensed the need to enhance the legal environment in which such trades are executed and, in particular, to create a standardized documentation structure for weather transactions. Such a structure would expedite trades and enable companies to dedicate resources to weather risk management in order to improve market liquidity. Nevertheless, the nature of the underlying presents a series of obstacles, which renders the standardization process a challenging task and requires industry participants to openly discuss ideas and experiences in order to reach documentary uniformity.

Credit Agricole Indosuez is launching the first credit-default swap index in Asia in the coming weeks and plans to market such structures as baskets linked to the product. "As we've been seeing more and more interest for credit derivatives in Asia, clients have wanted to benchmark the performance of their baskets or credit-linked notes," said Medes Ma, Asia credit trading manager in Hong Kong. Dubbed the CAI Asian Credit Index, it comprises 29 names from seven countries in non-Japan Asia and tracks their performance from Jan. 2. Five-year levels will be listed on credits from China, Hong Kong, Korea, Malaysia, Singapore, the Philippines and Thailand. The index, which will be listed on Indosuez's Bloomberg page, will be launched in the next few weeks, said Ma. He continued that sub-indices will be created in the near future, broken down by country.

UBS Warburg, Schroder Salomon Smith Barney and Deutsche Bank are recommending butterfly trades on the back of recent trades totalling around EUR1 billion (USD1.057) executed in the interest rate swaps market. The firms are pitching trades where investors receive fixed and pay floating in the 10-year portion of the curve and pay fixed and receive floating in the two- or five-year portion of the curve as well as the 30-year portion.

The imminent expiry of massive foreign exchange barrier option positions could cause the dollar to weaken against the euro to levels over USD1.07. The State Administration of Foreign Exchange (SAFE), which oversees foreign exchange reserves for the People's Bank Of China, was rumored to be long at least USD5 billion in range trades that it was hedging as they neared expiry, which was keeping the euro below USD1.06, said traders and salesmen. One trader, however, speculated that trades were more likely to be euro calls with reverse knock outs because about a month ago when the trades would have been put on, a barrier trade would have cost more than a call with a reverse knock out. SAFE is a major player in the fx options market and uses the products to hedge its cash reserves, traders explained. One trader said, because SAFE has entered barrier trades in the past, it is often the subject of rumors about such trades. Officials at SAFE declined comment.

CADES, a French public agency, plans to use interest rate and foreign exchange swaps on a portion of its EUR3 billion (USD3.1267 billion) funding requirement for this year. CADES Chairman Patrice Ract Madoux in Paris said it is too early to tell how much of the issuance the agency would convert, but said CADES uses interest rate swaps to convert fixed-rate offerings into floating rate liabilities and fx swaps to convert any non-euro EMTNs into its home currency.

A group of banks led by Morgan Stanley is pushing for the European credit-default swap market to follow the lead of the U.S. and adopt a standardized quarterly termination date for all CDS deals. But so far their arguments have failed to convince a trio of industry heavyweights--JPMorgan, Deutsche Bank and Goldman Sachs. These three believe CDS players in Europe should have the flexibility to trade swaps with a monthly termination date, even though their New York offices have already signed up to the quarterly standard.

Dresdner Kleinwort Wasserstein has hired Loren Remetta, associate, credit derivatives trading for its New York desk, from WestLB. Paul Lewitt, head of credit derivatives trading in London, to whom Remetta reports, said Remetta was hired into the newly created position in response to the growth in Dresdner's business and the importance of New York within the business. Remetta will work alongside Pawel Mosakowski, v.p. credit derivatives trading, to execute proprietary strategies and provide greater North American pricing expertise to the firm, he added. Remetta declined comment. Mosakowski did not return calls.