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Commonwealth Investment Management, a division of Australia's Commonwealth Bank Group with AUD34 billion (USD17 billion) in assets under management, expects to make its first use of credit-linked notes and credit default swaps on Aussie names. Francois Kong, head of fixed interest in Sydney, said the firm is studying using such instruments particularly for its AUD1 billion high-yield fund, to hedge credit risk, as well as to gain synthetic exposure to certain credits. The investment manager plans to throw the internally seeded fund open to external investors and anticipates using credit derivatives as the fund grows.

Credit Lyonnais recently hired Sonia Lee, a credit derivatives trader at the Industrial Bank of Japan in Hong Kong, in the new position of v.p.-Asian credit trader. Lee said when IBJ's credit desk moved back to London she wanted to stay in Hong Kong. The move is understood to be part of a push into credit derivatives initiated with the recent appointment of Omar Abukhadra as global head of credit derivatives in London (DW, 7/9).

Credit Suisse Group has agreed not to hire any Morgan Stanley employees until mid-September, a move widely seen as a condition of the severance package under which John Mack, president and coo, left Morgan before joining Credit Suisse First Boston as chief executive. Human resources managers at CSFB sent a copy of the agreement, which covers employees at every level at Morgan, to recruiters last Monday. Mack did not return calls. Press officers at CSFB and at Morgan Stanley declined comment.

Deutsche Bank has recently received approval from the central bank, Bank Negara, to set up an equity derivatives operation in Malaysia. A Deutsche Bank spokesman in Singapore said the firm has received a license allowing it to enter equity swaps, equity forwards and to sell equity-linked notes in Malaysia. The German bank is restricted to on-shore transactions. An official at Bank Negara in Kuala Lumpur said it does not comment on the activity of individual banks.

A recent flurry of attention on the impact of new accounting regulations, Financial Accounting Standards 133 and International Accounting Standards 39, has highlighted two key questions. First, why should any accounting regulation affect derivatives trading? And second, has there been a significant change in trading?

U.K. fund manager Friends Ivory & Sime, with GBP37 billion (USD52.8 billion) under management, plans to ramp up its use of equity derivatives to enter or unwind positions and is looking to recruit a derivatives manager to handle the additional business. Ian MacFarlane, head of strategy in London, said the manager wants to use derivatives to temporarily change its level of participation in indices. If it decides to extend the maturity of a position it will gradually replace the derivative position with cash, allowing for better execution.

Scottish Widows Investment Partnerships is structuring a fund in which investors short a basket of 30 five-year knock-in puts linked to shares of major U.K. listed companies, such as Vodafone, Imperial Chemical Industries and Marconi. Tony Whalley, investment director in Edinburgh, said its parent company--Lloyds TSB--will purchase the over-the-counter puts. The fund, which closed last week, is aimed at retail investors.

Volumes in the basis-swap spread market doubled last week as traders entered swaps in response to the Italian treasury's announcement that it "does not rule out buybacks." Traders said the increase in volume was exceptional given that so many investors are on holiday at this time of year.

Malcolm Perry, head of credit trading at J.P. Morgan in Japan, is moving to London in the next couple of weeks to become European and Asian head as well as global co-head of the derivatives counterparty exposure management (DCEM) group.

The Singapore branch of Jordan's Arab Bank is considering making its first use of credit derivatives to manage credit risk in its loan portfolio, according to a bank official. Christopher Cheung, head of the corporate institutions group in Singapore, which handles lending operations, declined to put a timeframe on the move or detail the size of the loan portfolio. Arab Bank had USD8 billion in loans and advances as of Dec. 31 last year, according to the firm's Web site.

Lehman Brothers is believed to be looking to hire a European head of its collateralized debt obligation business. The new recruit is expected to sit in between the European structured credit trading department, headed by Mark Ames, and the European structured finance department, headed by Amany Attia. Ames would not comment on the hire, but said there is a joint venture between the two departments for securitized products. He added that Lehman does not have a European head of CDOs at present. Attia was traveling and could not be reached.