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Credit derivatives dealers have started to trade five-year credit default swap contracts with fixed quarterly maturity dates. Dealers have traditionally suffered maturity mismatches in attempting to run a balanced book, which has left them open to carrying an unhedged position should a credit event occur between maturity dates, explained one credit derivatives professional. By fixing quarterly maturity dates this permanent worry is removed, he noted.

Citigroup Asset Management Australia, with more than AUD6.5 billion (USD3.64 billion) under management, is gearing up to trade credit derivatives for its AUD4 billion fixed-income portfolio. "It's something we're considering," said Anthony Kirkham, senior portfolio manager in Melbourne, noting the firm would look at buying as well as selling credit-default swaps.

"We don't want to be left behind."-- Anthony Kirkham, senior portfolio manager at Citigroup Asset Management Australia in Melbourne, explaining its reasons for gearing up to use credit derivatives. For complete story, click here.

Tokyo-based Daiwa Securities SMBC is looking to close its first synthetic collateralized debt obligation in Japan and set up a credit trading operation in the coming months. The securities house has looked at launching credit products before (DW, 6/23) but market officials said the firm now has the customers in place and is gearing up to complete its debut yen-denominated synthetic CDO on Japanese names. The deal will be roughly USD100 million.

The price of dollar/yen options fell last week as spot remained rangebound. The currency pair traded at JPY123.5 in the spot market last Wednesday, the middle of a several-week range. One-month implied volatility stood at 9.3% last Wednesday, down from 10.25% where it had climbed in the week. The previous week spot had been trading at JPY124 and one-month implied volatility was 9.8%.

Dresdner Kleinwort Wasserstein last week hired Yingxin Gong, a marketer on the China sales team at Deutsche Bank in Frankfurt, in a new role as a structured products marketer for its Singapore desk. She now reports to Mahmood Jumabhoy, head of sales and marketing for the capital markets division in Singapore.

There is always demand in the foreign exchange market to determine market positioning as a guide to the near term pressures on a currency. This is because if the short term speculative market is long in a particular currency, then there is an increased risk these positions will be reversed and there will be a sharp move lower. The data on international money markets (IMM) positioning will give some indication on the speculative stance of the market, but it only represents a small part of the marketplace. In addition, it only provides information on Friday for market positioning up to the previous Tuesday. By Monday morning, when the figures are widely known, the data are nearly a week out of date.

Monument Investment Management, a division of Monument Securities, which recently launched its first hedge fund, is planning to hire derivatives savvy professionals in the next few months and will also launch additional hedge funds. Grant Cullens, cio in London, said he will mainly be hiring fund managers, but will also look to add traders. Once it has more staff, the fund manager will go ahead with plans to launch additional hedge funds. Cullens would not elaborate on the planned number of hires.

Futures Plan, the first hedge fund to be launched by IFX Investment Management, will use over-the-counter foreign exchange options. Christopher Cruden, head of managed investment products in London, said the new global fund will have four fund managers, three of which will invest solely in foreign exchange products and one which will invest in fx and fixed income instruments. The fund will start trading in a few weeks and Cruden said it is targeted to raise approximately EUR50 million (USD50.49 million) by the end of next year.

ING Financial Markets is gearing up to move its Hong Kong-based Asian foreign exchange and fixed income trading operation to Singapore in the coming weeks. "This is a move to rationalize costs and handle trading through a single entity--based upon greater efficiency," said Tim Fallowfield, director of foreign exchange, money markets and derivatives trading in Hong Kong. Fallowfield will move with five traders to join the sales team, which has already relocated to Singapore in recent weeks. The Hong Kong dollar derivatives trader will remain in Hong Kong along with the China coverage sales team. Fallowfield said moving the operation to Singapore means ING will be able to reduce its back-office costs.

HSBC is expanding its structured credit product teams in both New York and London as it continues its campaign to become a major global credit derivatives house. Rick Ziwot, head of structured credit products in New York, said he plans to grow the department to 25 staff members from its current 14 by the end of the first quarter.