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BNP Paribas has pulled out of the weather derivatives market. "The long-term profitability of this business is not at a level that our shareholders necessarily expect," said Jonathan Mullen, head of corporate communications at BNP Paribas in London. He was unable to give details of the French bank's profitability projections. The move will not result in any redundancies, he added.

GT Group Telecom, a local telephone exchange carrier, is considering unwinding some of its foreign exchange swaps as a way to raise capital, according to a company official in Toronto. The move is an opportunistic play to capitalize on the exchange rate moving in favor of the Canadian telco. "We've been looking at this for awhile now. We're still not certain which swaps will be unwound but there is a strong likelihood that something will be pulled off within the next three months," the official added. The company's swap portfolio is relatively small and it is only looking to unwind a portion to test the waters before possibly unwinding the entire portfolio, the official said. He declined to be more specific about the exact size and exactly how much it is looking to unwind.

Six of the largest credit derivatives houses were planning to meet--as DW went to press Thursday--to bash out a one-page confirmation document. Lawyers representing Credit Suisse First Boston, Deutsche Bank, J.P. Morgan, Goldman Sachs, Merrill Lynch and Morgan Stanley were scheduled to meet Friday and one official at Deutsche Bank predicted the document should be ready within weeks.

The European Investment Bank is plans to hire a derivatives-savvy capital markets officer to work in its funding group in Luxembourg. The recruit would be partly responsible for the development bank's funding in the debt markets, particularly in the U.S. dollar markets, as well as interest-rate and foreign exchange swaps on the back of those deals.

Venk Reddy, an equity derivatives trader at Bank of America Securities in New York, who left the firm last year to start an Internet business, has returned to head BofA's newly created equity financial products group, according to Van Nguyen, managing director and global head of equity derivatives trading. Reddy was an equity derivatives trader before leaving the firm to set up ZEO, a wireless travel guide Web site. He declined further comment about the Internet venture.

Standard Chartered and BNP Paribas have separately started recommending zero-cost dollar/yen digital strategies, in light of the expected repatriation of funds to Japan as the country's year-end approaches.

Danske Hedge is preparing to offer its first fund of hedge funds and will likely structured capital guaranteed notes on the fund using over-the-counter derivatives. Andreas Tholstrup, managing partner in Copenhagen, said it will offer the products to Scandinavian and Luxembourgian investors who require the guarantee for tax reasons.

The French treasury will likely execute a further EUR200 billion (USD178.3 billion notional) in interest-rate swaps over the next three to four years in order to reduce the average duration of its debt to four years.

Asia Financial Holdings, a Hong Kong-based financial company whose subsidiaries include Asia Commercial Bank and Asia Insurance, with over HKD20 billion (USD2.5 billion) in assets, is planning to use over-the-counter foreign exchange options for the first time. The firm will primarily trade options for speculative positions as a way of increasing its revenue streams, but it will also use them as a hedging tool on its USD400 million global bond portfolio. "This will be for hedging exposure as well as for speculation," said Vinson Lei, treasury manager.

Andrew Barnard, head of U.S. convertible arbitrage trading at Goldman Sachs in New York, has left his position to join hedge fund JD Capital Management, in Greenwich, Conn., according to the fund's founder David Rogers. Barnard, who worked under Rogers during part of his nine-year stint at Goldman, started at the hedge fund two weeks ago and will be working to develop its convertible arbitrage group. Barnard will have direct oversight of the group. Rogers, a former Goldman Sachs equity derivatives head, started putting together the hedge fund in June and has scheduled for a February launch. He is hoping to raise USD350-400 million for the multi-strategy fund, which will incorporate relative value and arbitrage strategies (DW, 11/19).

ICAP has hired James Emanuel, weather derivatives broker at GFI in London, in a similar position. He will work with Katleen De Cock, weather derivatives broker in London, and report to Paul Newman, managing director of commodities in London. De Cock said they will work as "partners in crime."

ING Barings plans to structure in the next six months what several rivals are calling the first synthetic collateralized debt obligation in Asia referenced to a portfolio of synthetic CDOs. "This sounds innovative," said a credit structurer at a rival firm in Singapore, adding that he had not seen this type of deal before. However, the structurer noted, "it might be difficult to sell this in Asia. There will be a lot of education involved." But a credit structurer at ING said there is now sufficient appetite for the product, because of falling yields in traditional fixed-income products and growing sophistication about CDOs among end-users.