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HSBC plans to begin issuing warrants in Hong Kong for the first time, as the warrant market re-launches on the Stock Exchange of Hong Kong this week. "This is a reasonably profitable area of business," said Franklin Heng, head of Asian derivatives in Hong Kong. Heng, who will spearhead the effort, noted that the bank will look to become a big player as it looks to leverage its strong local banking presence, for example it can market the products to its private banking clients. "We'll focus our existing capability for this," added Heng, noting that the bank's current equity derivatives operation is sufficient for handling the product.

J.P. Morgan is structuring a five-year, USD7.3 billion index-linked credit protection product thought to be the first of its kind. The product, which provides second loss protection against default by corporates and sovereigns, will be used by a fund manager as a proxy for credit protection on its fixed income portfolio, according to Oldrich Masek, managing director and European head of structured credit in London. The fund manager chose index-linked credit protection because it is cheaper and more flexible than buying individual protection on each name in its extensive portfolio. He declined to name the fund.

ICAP started crossing sterling forward-rate agreements Monday and plans to expand the service to euros today and dollar and yen in February. GBP6.8 billion (USD9.7 billion) went through the Web-based system, dubbed fra-CROSS, on its first day, according to Charles Sabel, marketing manager in the electronic broking division in London.

Crédit Agricole Indosuez is looking to hire a credit analyst to evaluate the firm's counterparty risk in cash and derivatives transactions with other financial institutions. The role, a new one, has been created as the bank decentralizes its counterparty credit analysis from Paris into satellite offices, said Nils Johnson, manager of the financial institutions department in London.

Lehman Brothers has transferred Satu Parikh, interest-rate options trader in New York, to Tokyo as its Asian head of interest-rate derivatives, in a position that was set up to allow the firm to expand its derivatives desk. Parikh reports to Koji Tsubouchi, managing director of fixed-income in Tokyo. Tsubouchi said Parikh joined three weeks ago. Parikh declined comment.

Credit Lyonnais has hired Tony Au, head of capital markets at Fortis Bank Hong Kong, as a regional fixed-income structurer in Hong Kong to kick start its credit structured products business. Up until now the firm only had credit-default swap traders, according to Frédéric Lainé, Asian head of fixed-income and derivatives in Hong Kong. Au declined comment.

This Learning Curve will focus on the empirical application of option replication rather than the theoretical foundation. We restrict ourselves to the foreign exchange markets where transaction costs are low and liquidity high. These two factors are indeed the necessary conditions for the use, if at all, of dynamic strategies.

U.K. mobile operator mm02 has entered a cross-currency interest-rate swap to convert a fixed-rate euro-denominated liability into a floating-rate sterling denominated one. Anthony Lawrinson, group treasurer in London, said the company converted half of a EUR1 billion (USD884 million) bond it sold earlier this month into a floating sterling liability. It also entered a plain-vanilla interest-rate swap to convert the remaining EUR500 million into floating euros. At the same time, the company also issued a fixed 10-year GBP375 million (USD536 million) bond, for which it will not enter a swap.

BNP Paribas plans to hire up to 20 foreign exchange marketers with knowledge of over-the-counter derivatives as part of the firm's effort to offer more structured fx products to generate higher margins in a commoditized plain-vanilla market. Ligia Torres, head of fx sales in Paris, said, "we are concerned that fx is becoming a commodity and we are trying to find a solution," adding, "we are trying to recruit people with a strong background in derivatives."

Nikko Salomon Smith Barney is planning to double its credit derivatives desk in Tokyo within the next six months amid growing client interest, in part driven by the weakening credit environment. The firm plans to hire two or three traders and the same number of structurers, according to an official in Tokyo. "It's in the game plan," he quipped.

U.K. sandwich chain Pret A Manger may increase its use of foreign exchange swaps to hedge currency exposure as the company opens more stores around the globe and more of its revenues are non-sterling. John Clarck, finance director in London, said the company has opened a handful of take-out stores in New York and Hong Kong recently and "we probably will use a bit more [fx swaps] in the future because we are developing overseas."

UBS Warburg plans to set up a cross-rates business in Stamford, Conn. and London as part of a move to increase its distribution of interest-rate derivatives. Rafael Geys, managing director and global head of fixed income derivatives marketing and structuring in London, said the cross-rates business would offer a package of risks made up of swaps, agencies and government bonds that can be traded and sold from a single desk. Currently UBS clients have to call separate desks to trade each asset class, but the new desk will give them one point of call and allow them to reallocate their positions more quickly, Geys said.