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Lehman Brothers is parachuting in Benoit Savoret, head of equities for Asia-Pacific in Tokyo, in a newly created role as head of European equity trading for both cash and derivatives to beef up its London-based operation. Lehman is reportedly revamping its equity derivatives business after plummeting global stock markets have resulted in a dismal year for equity desks, according to rivals. Francois Pham-Quang, head of European equity derivatives sales, who officially resigned last Friday but signaled his intention to leave last month, said the firm has decided to bring in Savoret to devote a senior manager to the group, in which he was the only managing director.

Korea's Samsung Securities recently hired Alex Choi, executive director in fixed income sales at Goldman Sachs in Hong Kong, in a new role as its head of the capital markets division in Seoul, to kick-start its derivatives business. "It's a very compelling opportunity," said Choi, explaining his reasons for moving. He will look to build up Samsung's newly-created division: "We're putting together proprietary trading, capital markets and derivatives under one division." Choi noted that for this initiative, he will establish a fixed-income and equity derivatives operation when Samsung receives a license in the next few weeks, hiring both traders and salesmen. "If any domestic firm has a chance to really succeed in the derivatives market, it's this one," he added.

"Hong Kong used to be a great hub but as turnover is down so much it really doesn't make sense when you're making more money outside of Hong Kong."--Dustin Kuo, head of index arbitrage trading at Barclays Capital Asia in Hong Kong, on why Barclays plans to close its Hong Kong equity derivatives trading desk and centralize all Asian trading in Tokyo. For complete story, click here.

TD Securities has hired Tom Mykityshyn, a veteran mortgage-backed securities salesman from Deutsche Bank Securities, to head up a new structured product sales effort for its New York office, according Harold Holappa, TD Securities' global head of structured products. Mykityshyn did not return phone calls seeking comment. Holappa said Mykityshyn will head a team of three and will be actively seeking additional hires for the group. He said the group will try and expand the bank's distribution of Canadian asset-backed securities to U.S. institutional investors, as well as selling collateralized debt obligations and credit-, equity- and interest-rate derivatives.

The cost of U.S. dollar/Japanese yen options increased last week as investors continued to show concern over the Bank of Japan's intended reform of the country's banking sector. "The Japanese government is likely to create an inflationary environment to try to force the yen higher, however with the Nikkei hitting a 16 year low last Tuesday, bottoming at 8,500, the banking sector also looks weak and professional money is betting on a weaker yen," noted one trader in New York. One-month implied volatility rose to 10.5% Wednesday, up from 10% the week before. One-year volatility increased to 9.75%, from around 9.5% in the same period. The pair traded at JPY124.24 Wednesday, up from JPY123 Monday.

This article discusses the construction of notes derived from iBoxx indices, the basis between cash and credit-default swaps and what types of clients these instruments are aimed at. The first notes were introduced this summer by ABN AMRO and Deutsche Bank.

ABN AMRO is planning to launch a euro-denominated iBoxx 40 credit-linked note within the next few months and is looking at issuing additional iBoxx 50 CLNs in currencies other than the euro in January. The euro-denominated iBoxx 40 is planned on the back of the introduction last week of its first iBoxx 40 note, which was denominated in Swiss francs, said Andrew Feachem, credit derivatives marketer in London. The iBoxx is a European fixed-income index jointly compiled by seven market makers to provide transparent pricing of investment-grade corporate bonds.

Auto manufacturers worldwide got hit by consumer credit concerns on manufacturers led by Ford Motor Credit last week, with DaimlerChrysler also suffering a 50 basis point spread blow out. Five-year protection for Ford blew out to around 700bps, up from 475bps the previous week and Daimler's spreads increased to 230-240bps last Thursday from around 180bps the week before. "A lot of the widening has been stateside, being led from the cash investors. Dealer desks are scrambling to hedge their positions on automakers like Ford and are moving to get euro protection," he noted.

Barclays Capital Asia plans to close its Hong Kong equity derivatives trading desk and centralize all Asian trading in Tokyo, according to Dustin Kuo, head of index arbitrage trading in Hong Kong. "Hong Kong used to be a great hub but as turnover is down so much it really doesn't make sense when you're making more money outside of Hong Kong," he said. The operation will be moved to Tokyo to reduce costs, Kuo said, adding he will relocate to Japan next month.

Domestic banks in Japan are looking at structuring synthetic collateralized debt obligations to free up capital with a greater sense of urgency as their loan books worsen in tandem with the country's stock market, according to market officials. The success of Mizuho Bank's securitization earlier this year is also causing other banks to look at the structures, according to one credit structurer (DW, 3/31). In addition, Mizuho itself is planning to securitize more of its loan book to free up capital, according to an official at the firm.

Buried in a 120 page document is the latest sign that the Basel Committee on Banking Supervision is still insisting on including restructuring as a credit event for regulatory capital relief. In a document published this month, named Quantitative Impact Study 3, Technical Guidance, it states that, "restructuring of the underlying obligation involving forgiveness or postponement of principal, interest or fees that results in a credit loss event (i.e. charge-off, specific provision or other similar debit to the profit and loss account)," must be included.

Pythar Capital began fundraising in Europe last week for its telecom, media and technology long/short equity hedge fund and is also in the process of fundraising in the U.S. The fund will initially look to raise USD25-40 million (DW, 7/8) and expects to start trading on Nov. 1 or Dec. 1, said Doug Ashton, one of the joint managers of Pythar.