Are Pfandbrief issuers out of touch with modern rating methods?

It is not uncommon in any market for an underlying to gravitate towards certain option strikes as they near maturity. In foreign exchange, which is arguably the most sophisticated options market, it is increasingly the barrier component of exotic trades that acts as the magnet. The amount of leverage certain structures can provide results in huge buying and selling of the underlying as participants try to defend or knock out the barrier.

Satish Selvanathan has left Barclays Capital, where he worked for two years under the leadership of ABS veteran Rob Ford. However, Ford left Barcap just before June to become a partner at Synapse – a credit hedge fund.

According to a report by Aite Group, Spain’s fund of hedge funds market is taking off following legislation allowing retail investors to put money into the asset class. Spanish investors with more than €50,000 in disposable assets can invest in hedge funds, although it is expected that funds of hedge funds will be the preferred route. Hedge fund managers should be positioning themselves to capture the new influx of capital from the investor base.

Illiquid hedge funds should stop smoothing returns, report urges.

The newly enlarged CME Group, which now also comprises former rival Chicago Board of Trade, says that its second-quarter 2007 total revenues were up 17% to $329 million and net income up 15% to $126 million on the second quarter of 2006. Commenting on the figures, CME Group chief executive Craig Donohue referred to aspects of the exchange’s growth strategy, including FXMarketSpace. In a web broadcast Donohue admitted that volumes fell off in July but that customer "onboarding" had increased and that the joint venture with Reuters remained on track to break even at some point in 2008.

Hedge fund administrator GlobeOp and hedge fund Archeus have agreed to an amicable settlement of the claim filed by Archeus in July. Archeus shut down last year, blaming its closure on GlobeOp for its poor administration services. These, the fund said, had reduced investor confidence and led to redemptions. The filing highlighted the vulnerability of hedge fund counterparties as being held responsible for client losses, and so the settlement is largely welcomed by the hedge fund administration industry.

Bank of America has appointed Derek Dillon and Doug Baird as co-heads of global equity capital markets, replacing Ciaran O’Kelly, who was named co-head of global equities in June, a role he shares with Peter Forlenza. Dillon and Baird are both based in New York and report to Forlenza and O’Kelly as well as Bill White, the global head of capital markets.

Asset management research and advisory firm Carbon360 says assets under administration for hedge funds globally are $3.4 trillion. Single-manager assets under administration are $2.72 trillion, the firm claims. The figures were reported in Carbon360’s 2007 fund administration fact book, which analyses 74 hedge fund administrators.

London Stock Exchange takes on Euronext with launch of dedicated market.

Downgrading tranches and revising criteria will not convince the market that the rating agencies are on top of the sub-prime mortgage crisis.

The sub-prime contagion has now reached as far from the USA, geographically, as it possibly can: Australia. In July Basis Capital, arguably the best-known home-grown hedge fund manager in the southern hemisphere, ran into serious trouble after defaulting on margin calls to several of its creditors. At the time of writing its survival was in the balance.

Jim Siracusa is the new global head of DCM and securitization at Calyon. Siracusa previously worked at Dresdner Kleinwort, where he was co-head of client coverage, which included DCM origination and media, telecoms and technology coverage. In his new role he is responsible for securitization, debt principal finance and client solutions. He also covers traditional DCM, including emerging markets. He reports to Guy Laffineur, global head of fixed income.

Japan’s equity bounce-back has lost momentum. But there are good grounds for believing that a floor has been reached and that renewed buoyancy is around the corner.

When Stan O’Neal spoke at the Euromoney Forum in London in late June, concerns about the fallout from the sub-prime correction were at their height. In a wide-ranging interview with Euromoney’s editor, Clive Horwood, Merrill Lynch’s chairman and chief executive discussed the market’s reaction to sub-prime, and whether or not the contagion would spread.

Dealers are hoping a new-look contract will finally get the European leveraged loan credit default swap market off the ground.

If, as expected, US regulator the National Futures Association implements a proposal it has sent out to its 43 forex dealer members (FDMs), the result will be that many firms will have to attract fresh funding or close down.

China study dispels misconceptions about performance.

ABN Amro is embroiled in its own M&A battle but that has not stopped the bank’s investment banking arm closing some landmark deals for clients.

Financial sponsors turn attention to the region.

Dear Sir,

Investors will still want access to the best-run funds.

Commerzbank has hired Julien Mareschal as its new head of ABS trading and David Hoffman as a senior trader on the ABS team. Mareschal ran ABS trading at BNP Paribas, where he was responsible for ABS/MBS and cash CDO trading. Hoffman joins the team as senior trader with a special focus on developing Commerzbank’s ABS derivatives business.

Country is now a net creditor, paying off external debts and developing local markets.

Euromoney’s latest survey of the leading banks in structured credit shows a clear top tier of five investment banks. They say that providing fresh ideas to clients is what keeps them at the head of the pack.

Like most Philippine banks, Banco De Oro has enjoyed a re-rating as the fortunes of the local market have improved. With the shares now at a price to book ratio of about 2.8 and on a prospective P/E ratio of 18, even CEO Nestor Tan thinks the bank, like the stock market, is fully valued for now.

Historically, when the US sneezes, Latin America catches a cold, and Mexico comes down with hypothermia. So what on earth is going on in the market for mortgage-backed securities?

The number of wealthy individuals in Latin America is growing fast on the back of high commodity prices, buoyant equity markets and foreign interest in acquisitions and IPOs. Private banks are adapting quickly, developing new products to attract investors intent on diversifying from their traditional reliance on fixed income and offshore investment. Jason Mitchell reports.

Bond markets are still too sanguine about inflation prospects. But present global growth rates will inevitably drain liquidity from the financial system.

The recent contraction of liquidity has changed the landscape.