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New York-based Miller Tabak & Co. plans to beef up its derivatives sales staff to U.S. agencies over the next 12 months. The expansion is prompted by more demand from agencies, such as Fannie Mae, which has been flooding the market with note offerings over the last eight months. The firm has expanded its premises in New York and Kurt Soderberg, head of over-the-counter derivatives trading, said, "We have more space so we need more agencies salespeople." He declined comment on how may hires the firm would look to make, but said it likes sales specialists who can come in with their own list of clients. "We do mostly commission business so if someone can come with their own list its an added bonus."

BNP Paribas priced two synthetic collateralized debt obligations totaling EUR2.625 billion (USD2.4 billion) last week. Antoine Chausson, head of structuring credit derivatives in London, said it structured the transactions in the same week because they were not competing with each other for investors, even though both CDOs have five-year maturities and are referenced to investment grade Group of Seven corporates. Chausson said the difference is in the tranches of the two deals. CDO Master Investments is a EUR1.625 billion CDO made up of 68 credit default swaps and split into three tranches of credit-linked notes: a EUR49 million triple-A tranche; a EUR44 million double-A tranche; and, a EUR26 million A-minus tranche. The Rivera Finance 2 is a EUR1 billion CDO and is also split into three tranches but it has a EUR16 million triple-B plus tranche instead of the A-minus tranche. Chausson said investors in Northern Europe are likely to snap up the lower risk CDO Master Investments deal while Southern European investors will go for the higher coupon paid in the Rivera Finance 2 transaction.

Bank of America has hired Meri Miller, director in the global hedge funds group at UBS Warburg in New York, as a senior marketer in its global leverage group, a subsection of its global derivatives products group. At UBS, Miller reported to Gary Kaufman, head of the rates and foreign exchange group in New York. Kaufman said UBS would look to replace Miller, declining further comment.

Credit Suisse First Boston has moved two credit derivatives traders to Hong Kong to boost its North Asian presence. Adam Sticpewich, managing director and global co-head of emerging markets credit derivatives moved from London to Hong Kong two weeks ago and the firm relocated Anthony Mason, credit derivatives trader in Singapore, to Hong Kong last Monday, according to a spokeswoman. The desk, which already had one trader, focuses on Hong Kong, Korea, Taiwan, and Japan. Mason referred calls to the spokeswoman and Sticpewich did not return calls.

BNP Paribas is recommending clients buy euro puts/yen calls to participate in a possible yen rally caused by the repatriation of funds by Japanese financial institutions. Karim Wilkins, foreign exchange options strategist in London, said the strategy is plain vanilla because implied volatility is low at the moment. "Super-partial-rinky-dinky-treble-knock-out options are not always the best way forward," he quipped.

Deutsche Bank is launching a New York desk that will trade packages of risks made up of swaps, mortgages, agencies and government bonds. Jon Kinol, managing director of North American over-the-counter derivatives in New York, said creating the cross-rates desk is a response to burgeoning customer demand over the last six months to trade across these asset classes. "As flow fixed income products continue to converge, this desk will give us the ability to trade and risk manage the aggregate risk in one book, which will help liquidity and minimize trading costs to our clients," he said.

Spreads on Deutsche Telekom credit default swaps widened 10-15 basis points on the back of its poor stock performance last week. A New York-based trader reported that credit default swap spreads on Deutsche Telekom widened to about 95bps last Thursday from about 80bps the previous week, as investors looked to buy protection. Other telecoms also widened in Deutsche Telekom's wake. For example, Nortel Networks widened from 390bps to 510bps. In comparison with traditional August flow, traders said this week was relatively busy as a result of the market being volatile and spreads widening. The major players were hedge funds and top-tier investment banks, such as Morgan Stanley.

Société Générale plans to structure a privately-placed EUR500 million (USD459 million) synthetic collateralized debt obligation next month referenced to a static pool of approximately 70 credit default swaps. Wissem Bourbia, head of the European CDO group in Paris, said it is structuring the CDO because it has received requests from investors wanting to buy into the equity tranche. He added once the equity is in place it can structure the remainder of the deal around it even though it only makes up 3% of the structure. In return for investors signaling their interest early in the deal they can handpick the credits they want exposure to, which is the normal way of structuring privately-placed CDOs, according to Bourbia.

The aim of this Learning Curve is to explain the behaviour of a particularly interesting kind of barrier option, the Parisian, and to focus on its use in structuring exotic equity derivatives products.

Dealers in Singapore have started to quote 15-year Singapore dollar interest-rate and foreign exchange swaps for the first time ahead of this week's inaugural 15-year bond issue, a SGD2.2 billion (USD1.25 billion) deal by the Lion City. Swaps have traditionally gone out only as far as 12 years.