Search results for

Deutsche Bank is gearing up for a push into marketing equity structured products to U.S. investors, in advance of a change in legislation that is expected to open up the market. Johan Groothaert, head of equity structured products in London, said the firm is awaiting legislation to take effect that would allow it to sell products, such as reverse convertibles and equity-linked notes, to retail investors in the U.S. Currently securitized products structured with over-the-counter options are prohibited for sale to retail investors because they are considered options, but starting in January they will be deemed contracts, said Groothaert. Another official at the bank adds this is part of a broader package of Securities and Exchange Commission rule changes.

Deutsche Bank has hired Eric Soderlund, an equity derivatives salesman at UBS Warburg in New York, to fill a similar role, according to market officials. Headhunters said Soderlund's hire is one of several the firm's equity derivatives group is planning to make over the next several months to build its sales team. He reports to Rick Goldsmith, head of equity derivatives sales.

CIBC World Markets has hired Tom Wadsworth, an equity derivatives trader at J.P. Morgan in New York, in a similar position. Wadsworth fills a position left vacant by the departure of Richard Suth, who left the firm in July after five years, said Paul Beck, head of equity derivatives trading. Beck added that hiring Wadsworth is part of an overall expansion of the equity derivatives group in both New York and Toronto. CIBC is looking to hire two more equity derivatives marketers in New York and has recently hired two marketers for its Toronto division.

BNP Paribas has hired Alan Dunne, a foreign exchange technical strategist at Bank of America in Singapore, as a London-based strategist for the major developing currency markets in the European time zones. Dunne said he will cover currency and local debt market strategy, including foreign exchange derivatives strategy and interest-rate swaps, for Poland, Hungary, South Africa, Turkey and the Czech Republic.

Deutsche Bank has structured an offshore note linked to the Dow Jones EURO STOXX 50 Index that seeks to generate income and growth for U.K. retail investors. It is structured by selling investors two put options on the index, according to Benedict Peeters, a director in the structured products group in London. The firm is structuring it now because clients have been asking for products which protect them from an initial fall in equity prices in light of global equity market weakness.

One month U.S. dollar/Japanese yen implied volatility dropped almost 2% last week to 9.1%, near a two-year low, as traders scooped up dollars on the view that strikes on Afghanistan have gone smoothly so far. Implied vol had hovered between 10.5-10.8% earlier in the week. Traders said the drop in vol was partly caused by a quiet spot market. "All the vol looks pretty cheap right now, especially considering the political turmoil we're in," said one trader. Spot was trading at JPY120.14 Thursday.

Enron is working on a swap product that will allow U.K. corporates to hedge exposure to rising gas prices. In a typical transaction, a corporate will pay an up front premium and enters a gas swap with Enron. If gas prices reach a predetermined strike price the corporate receives an offsetting payment from Enron, according to Catherine Woolgar, a trader in the weather risk management group in London.

CreditTrade has put on hold its ambition to move credit derivatives customers away from voice brokered trades to transacting on its electronic platform. Increasing volatility, caused by last month's terrorist attacks in the U.S., means investors want to conduct transactions with a person because voice-brokers can give the story behind the credit, according to Paul Mullin, global head of sales in London. But Mullin added that its long-term plans still revolve around its electronic platform.

Credit default swap spreads on Enron tightened 40 basis points in the wake of the company's agreement to sell a U.S. utility for nearly USD2 billion. A trader in New York reported that credit default swap spreads on Enron tightened to 275bps last Thursday from 315bps the previous week as investors began gaining confidence in the power company's ability to finance itself. The major players were investment and commercial banks. Enron agreed to sell its Portland General Electric utility to Northwest Natural Gas Co. for approximately USD1.9 billion in cash and stock. The transaction was heralded as a move that will unite the largest gas and electric utilities in Oregon. As part of the deal Northwest Natural agreed to assume USD1.1 billion in debt. Enron will receive USD1.55 billion in cash, USD200 million in Northwest Natural preferred stock and USD50 million in Northwest's common stock.

Lutheran Brotherhood, a Minneapolis-based member-owned fraternal benefit society that provides investment services to its 1.2 million members, is planning to use single-name credit-default swaps for the first time next year for both hedging and investment. Steven Lee, portfolio manager, said it is too early to determine if Lutheran would look to buy or sell credit-default swaps. "We could potentially do either," he added. Several undisclosed investment banks are currently providing research on credit derivatives for Lutheran, but it has yet to decide on possible counterparties, Lee said. He added that Lutheran has used bond options in the past, but on a limited basis. "We decided to take a look at credit derivatives now basically because they're very available. A few years ago you couldn't get into it," he added. Lutheran sees credit derivatives as a way to tailor its risk and manage its credit.

Tokyo-based Daiwa Securities, Japan's second largest domestic securities house, is considering setting up a credit derivatives operation within the next year and will look to become a player in the interbank market. An official at Daiwa added that the firm is in the initial research and development stage for the operation and that no timetable has been established. Daiwa will wait for market conditions to improve and may wait for a rating upgrade that would allow it to be more competitive with international banks. The official expects its rating to be upgraded within 12 months. Daiwa is rated Baa1 by Moody's Investors Service.