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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.

Credit protection on Sonera, Finland's largest telecom operator, tightened by roughly 20 basis points last week after news that the government has approved the telecom company's EUR1 billion (USD881 million) rights issue. The issue will improve the company's fiscal position. Five-year protection on Sonera tightened to roughly 250bps Wednesday as part of a trend that has seen its credit-default levels come in from over 1000bps in September. "They've continued to make good asset sales, they've managed to refinance and now they are doing a rights issue," said one trader in London, adding the bullish feeling has spread to other European telecom names with British Telecommunications and France Telecom also tightening by a similar amount. "Sonera has really driven sentiment on the telecom side," a trader added.

Swiss Re is preparing a USD150-400 million catastrophe bond deal that it will issue early next year, according to officials familiar with the deal. The proceeds would be used to provide coverage against an earthquake in California. Calls to Swiss Re were not returned.

UBS Warburg is looking at structuring a capital guaranteed product comprising of credit derivatives to sell to retail investors in the U.K. Although the plan is in its infancy and details are scarce, officials at the firm said it hopes to use single-name default swaps to leverage a fixed-income portfolio and generate higher returns than are currently possible in the equity or bond markets. Warburg officials said such a product has not been sold before to U.K. retail investors, who are historically more conservative then their counterparts on the continent. Pros at rival firms were not aware of any similar products.