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Commerzbank Securities is touting several foreign exchange option strategies to take advantage of its expectation that the strength in the U.S. dollar is a temporary blip, sparked by military successes in Afghanistan. Fundamental weakness in the U.S. economy will see a reversion to a lower greenback against the euro, the bank believes.

Enron Credit has virtually shut down in the wake of the agreement by Dynegy to acquire its parent Enron, according to an official at the firm in London. The team has all but stopped trading because counterparties are wary of taking on additional exposure to the company, particularly because of uncertainty about the future role of Enron Credit within the merged entity. Dynegy has stated it wants to concentrate on Enron's core businesses and market professionals said it is unlikely Enron Credit would meet that description. Alex Parsons, a spokesman at Enron in London, did not return calls by press time.

J. David Rogers, a former Goldman Sachs equity derivatives star, has started a hedge fund firm called JD Capital Management and is looking to hire a staff of about 22, most of whom will be traders and researchers. The Greenwich, Conn.-based firm plans to launch the multi-strategy hedge fund in February and hopes to raise USD350-400 million, Rogers said. He declined to detail the fund's current size of assets.

AXA Investment Managers' recently launched Asian absolute return fund plans to enter equity arbitrage opportunities, such as warrants trading at a discount to the underlying, as these offer free money, according to Andrew Alexander, managing director of alternative investment strategy for Asia Pacific in Hong Kong. In these trades the hedge fund can buy the American-style warrant and sell it instantly at a premium. Alexander declined to comment on a specific trade but said a recent example of this arbitrage opportunity is Want Want, the snack food manufacturer.

Dedicated electronic platform Volbroker plans to start brokering emerging market foreign exchange derivatives after the merger with TFS-ICAP. Mike Leibowitz, managing director at TFS-ICAP, said the firm's long-term plan is to put all its foreign exchange derivatives on Volbroker. However he continued that Asian, Eastern European and Latin American currencies would be a priority because of the large volumes ICAP brokers through the voice market. He declined to set a timeframe as the merger does not come into effect until Dec. 1.

There have been major changes to accounting standards in Japan which, by the time they have all been implemented will have brought Japanese accounting standards broadly into line with international norms. These changes are comprehensive and include the introduction of fair value--or mark-to-market--accounting. This last change, although seemingly innocuous will be particularly powerful in its impact.

Kokusai Asset Management, with JPY2.4 trillion (USD19.8 billion) under management, is considering launching a Japanese or global market neutral fund next year both of which would use derivatives, and would be its first foray into alternative investment management, according to an official in the planning department in Tokyo.

Shinko Securities is planning to sell credit-default swaps next year. "It's the biggest potential market," said Toshihiro Ikejima, trader in the fixed income securities department in Tokyo. The firm, which currently sells credit-linked notes, said its clients--mainly domestic corporates and banks--are starting to inquire about the product for hedging purposes. Ikejima continued that it is doubtful that it would look to become a market maker, likely preferring to focus on customer business. He declined to comment if the bank will hire additional marketers for the effort.

Moody's Investors Service is seeking to expand its structured finance teams in Europe with an emphasis on hiring for the London, Milan, Paris and Frankfurt offices, according to Andrew Farr, the agency's structured finance recruitment specialist in London. The credit derivatives, collateralized debt obligation and asset-backed securities teams will all increase their headcount. The additions are being made in response to the explosive growth in demand for structured deals, he added.

The Ontario Teachers' Pension Plan Board is looking to hire an equity derivatives trader early next year to replace a co-manager who left two months ago. The new trader will replace Puneet Kohli, who was a co-manager with Kevin Duggan, according to Duggan, portfolio manager for Canadian equity derivatives in North York, Ontario.

Hedge funds and proprietary trading desks were the most active in the foreign exchange market last week buying one-week euro calls/dollar puts at the start of the week thinking the dollar would weaken in the wake of the continuing U.S. war on terrorism. But after military success showed there was actually a risk of the dollar strengthening they quickly reversed their positions, flipping the risk reversal to favor euro puts/dollar calls by 0.1 vol from 0.2 vol in favor of euro calls, according to New York-based traders. However, one-month implied volatility remained stable last week, at about 10.5%.

Salomon Smith Barney Australia plans to start trading credit derivatives on Australian names in Sydney by the end of the month. The desk will make markets for clients as well as trade on a proprietary basis, according to Glenn Hodgeman, head of Australian dollar credit trading in Sydney. The firm previously offered these products from Hong Kong or London if clients requested pricing.