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Corporates entered Thai baht/U.S. dollar strangles last week after implied volatility fell in recent weeks on the currency pairing. "Vols are softening on the front end," said Johnson Wong, senior currency options trader at HSBC in Hong Kong. He continued that with low volatility, corporates with baht exposure were looking to profit on the vols remaining low and gain on the day-to-day time decay via strangles. "This makes sense if the market stays within a tight range," noted Wong. In a typical position, Wong said two-month U.S. dollar calls/baht puts were sold at THB45.5 while two-month U.S. dollar puts/baht puts were sold at THB44.2.

Zenith Asset Management, a private investment fund in Singapore investing throughout the Asia-Pacific region, is considering trading over-the-counter equity options for the first time as a tool for hedging as well as investing. Harold Woo, director in Singapore, said the fund manager got up and running two months ago and it will first use index futures and single stock futures with over-the-counter options being added after six months.

Firms in Singapore are planning to boost the range of interest-rate derivatives products they offer to include constant-maturity swaps and swaptions. The expansion beyond plain vanilla swaps is part of the coming of age of the Sing mart and the development of a fixed-rate benchmark, according to traders. One trader estimated 10-15 exotic products will have been traded by year-end from almost zero today.

A forthcoming report from an international securities association will criticize at least one European Union member's use of interest-rate derivatives and market makers fear this could lead to increased regulation. The report is expected to claim Italy entered swaps to camouflage the true size of its debt and rig its entry into the European Union. The International Securities Market Association, an international securities trade association and the body behind the report, declined to name the country involved. But interest-rate derivatives market makers pointed the finger at Italy. The report is due to be published Tuesday.

Singapore-based Ferrell Asset Management is considering trading foreign exchange derivatives in the coming months, especially options, for its recently launched Ferrell Currency and Futures Fund. The fund focuses on Group of Seven and Asian currencies as well as global stock index futures. "We'll use options to become more leveraged and enhance returns," said Dennis Ng, investment director in Singapore. Ng continued that he will likely first employ options on U.S. dollar/yen and euro/U.S. dollar.

Hyung Jun Jin, head of trading and risk management at UBS Warburg in Seoul, has joined Hungkuk Life Insurance as an auditor. Munsouk Choi, director of the interest-rate and foreign exchange department at UBS in Seoul, said he has been handling Jin's responsibilities since Jin left the firm last month.

Tokyo-Mitsubishi International is planning on becoming a market maker in credit derivatives. The firm anticipates making its first single-name credit default swap trades in the next three or four weeks and expects to have the business up and running by the start of next year, according to Robert Hammond, managing director and head of fixed-income trading and sales in London. He said the firm will not take a market-share approach and will instead focus on areas where it believes it has an advantage, such as in Asia excluding-Japan or highly rated European banking credits.

The European swaptions market is experiencing a severe crunch in implied volatility, as the rising cost of options and expected continued demand from pension funds looking to hedge fixed guaranteed annuities has created a one-way market with market-makers looking only to buy volatility in anticipation of more demand. In the last two weeks spreads on bids and offers--if they could even be found at the same time--were anywhere from five to seven times wider than normal, according to one market official, who also noted notional deal sizes have dropped by more than 50%. "There's a real dislocation of the market right now, a scramble to pick up vol," noted one head of interest-rate swaps in London, adding, "the number of people trying to sell is very limited." Vol for a 10 year option to enter a 20 year swap rose 10.61% Wednesday from 7.31% at the beginning of October, according to UBS Warburg.

Westdeutsche Landesbank has hired Tim Nathan, a director in the structured bonds area at Barclays Capital in London, as an executive director in the asset securitization and principal finance group. He starts later this month and will report to Robin Saunders, the London-based head of securitization. Saunders did not return calls. A WestLB spokesman said the position is a new one and is necessary as the firm increases its securitization business, but was unable to provide more details.

Credit Suisse First Boston has stepped up to join Deutsche Bank to fully underwrite the $5.5 billion bridge loan to EchoStar Communications to finance the Hughes Electronics acquisition from General Motors for $24.6 billion in cash and stock, after market players were mystified last week as to why Echostar's advisor, UBS Warburg, was not on the roster. CSFB advised Hughes on the deal.

This chart, provided by Citibank/Salomon Smith Barney Inc., tracks bid-ask prices for par credit facilities that trade in the secondary market. It also tracks facility amounts, ratings, pricing and maturities.

Greg Hosbein, portfolio manager with Segall, Bryant & Hamill, says he is swapping 3% of the firm's portfolio, or $33 million, out of Treasuries into conventional Fannie Mae and Freddie Mac 30-year pass-throughs. He is making the move on the view that spreads on mortgage bonds are widening to attractive levels, and because he sees the Treasury rally potentially ending soon.