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Scan a 10-Q filing and the words "derivatives" and "losses" tend to jump off the page and resonate in investors' minds in a way that the term "unrealized loss" does not, as General Electric discovered recently. GE's stock fell some 10% over the last 10 days of May in a move that some institutional investors say is attributable to the corporate having to disclose the fair value of derivatives on its balance sheet, in accordance with the Financial Accounting Standards Board's accounting rule 133. For most corporates this is the first calendar year in which they must report derivatives positions under FAS 133.

Dresdner Kleinwort Wasserstein has hired Mark Mallia, principal-fixed income at Morgan Stanley, as managing director and head of credit trading, Japan and non-Japan Asia in Tokyo. Yukiko Omura, managing director, head of global markets, Japan at Dresdner in Tokyo, said the firm plans additional hires. Dresdner started building up its credit derivatives operation earlier this year (DW, 2/18). Mallia, who joins Dresdner today, could not be reached for comment.

Goldman Sachs in Tokyo has landed Jackson Chou, a credit derivatives trader who recently left Morgan Stanley in Tokyo (DW, 6/11). Chou started at Goldman last week, covering non-Japan Asian credit derivatives at Goldman. He reports to Can Uran, executive director, global credit derivatives. Uran was traveling last week and could not be reached for comment.

Banca d'Intermediazione Mobiliare is considering setting up a credit derivatives operation which likely will start trading in "the near future," according to Elizabeth Tot, head of relative value trading in Milan. The bank is looking at trading European investment grade credit default swaps on both a proprietary and customer basis, she said, declining to outline what factors will determine whether it goes ahead. She added that narrowing bid/offer spreads resulting from improved liquidity have prompted the bank to consider entering the burgeoning market. Tot declined further comment.

Manulife Indonesia and HSBC recently gave a presentation on the benefits of using interest-rate swaps to the Ministry of Finance. Chris Bendl, managing director, investment and pension services at Manulife in Jakarta, said the company has been looking to tap the swaps market for some time to hedge its investment portfolio (DW, 6/19/00). He described the presentation as well received. Officials at the MoF and HSBC in Jakarta and could not be reached for comment.

Icelandic power company Landsvirkjun is considering raising USD70 million via an emerging market currency-denominated medium-term note issue before year-end and likely would use currency derivatives to convert the proceeds into euros. Stefan Petursson, treasurer in Reykjavik, said the company is waiting for banks to come up with the right structure before it pulls the trigger. It would consider issuing in Hungarian forints, Czech korunas or Hong Kong dollars to achieve a better funding rate. "There is nothing that we would not look at," he added.

Japan's exporters last week took advantage of a recent uptick in the euro against the yen to purchase out-of-the-money euro puts, according to traders. The euro strengthened in the spot market to JPY104.8 on Friday from lows around JPY99.85 June 1, following Ireland's recent surprise rejection of the Nice Treaty on enlargement of the European Union, said Ron Leven, currency strategist at Lehman Brothers in Tokyo. The spot market reacted positively to the news, since the Irish 'no' vote will at least delay EU expansion. In addition, recently released weak GDP numbers in Japan dragged the yen lower, he continued.

Koninklijke KPN was punished in the credit default swap market last week after Standard & Poor's put the company's triple-B plus rating on credit watch. Five-year protection on the telecom company widened to 240 basis points/280bps on Wednesday from 160bps/200bps a week before. Traders said the market slowed after pricing on credit protection on the name went through 200bps.

Merrill Lynch has moved emerging market credit derivatives risk to a global, all-encompassing emerging markets book from the structured credit trading book. George Handjinicolau, global head of emerging markets in New York, said the reason behind the move is hard currency emerging market debt, credit derivatives referenced to emerging markets and local currency debt are all country-risk dependent, therefore it makes sense to put these together. "We are adapting our structure to the real world." Both proprietary trading and customer business will be included, as will plain-vanilla and exotic credit derivatives.

Morgan Stanley has hired Tadashi Kikugawa, a proprietary trader in the fixed-income department at Lehman Brothers in Tokyo, as executive director, interest-rate strategist for the fixed income division. Kikugawa said he will focus on interest-rate derivatives and Japanese government bond strategies, declining further comment. A Morgan spokeswoman said the position had been vacant for a year. "We felt it only made sense to fill the position if we could find the right person. And now we have!" she said via an e-mailed statement. Prior to Lehman Kikugawa also worked at Fuji Bank and Goldman Sachs. Kikugawa reports to Toshiya Mizuno, co-head of fixed income trading, who could not be reached.

The private banking units of several firms, includingMerrill Lynch, Deutsche Bank andHSBC , are hiring derivative and corporate finance professionals to staff new divisions targeting high-net-worth clients looking to monetize single stock holdings. The banks are looking to meet growing demand as restrictive stock packages become more common and because high-net-worth clients are unwilling to sell outright single stock holdings because of the stock market downturn.