Dear Subscriber,

Welcome to RiskNews Update - 11/1/2002

This week rating agency Standard & Poor's said innovatively structured collateralised debt obligations (CDOs) will spur the growth of structured finance products in 2002. The agency predicts a market worth more than $500 billion this year. S&P has reacted to the expected growth of such alternative investments by developing criteria for rating debt secured by the market value of hedge funds. And expects that rating these CDOs will encourage a wider investor base for the deals which, to date, have been dominated by niche investors.

Also this week, New York-based interdealer broker GFI launched what a market participant said was the first stage in its effort to create an online OTC electricity derivatives market in North America, via a soft launch in Alberta. Traders will be able to hedge electricity prices using electricity swaps and options, including base, peak and off-peak terms from day-ahead through the forward curve to calendar years via the new system. The broker has already combined voice and electronic brokerage trading in Europe - becoming the leading broker for German electricity. Should the Alberta project prove successful, it is likely that GFI will roll-out the hybrid model across North America, starting in the eastern seaboard area of the US.

In other energy news, Ohio-based utility American Electric Power (AEP) is set to enter the Nordic power market after its London-based European trading arm, AEP Energy Services, assumed operation of Enron's offices in Oslo and Stockholm. AEP gained an established team of 35 former employees of Enron Nordic Energy, which trades power and weather derivatives in Norway, Sweden, Finland, Denmark and Germany.

Meanwhile, the International Swaps and Derivatives Association (Isda) has hit back at calls for more derivatives regulation in the wake of Enron's demise. "Advocating regulation for regulation's sake is bad policy and could severely affect the US's role in global financial activity," said Robert Pickel, Isda chief executive, in a letter to the Wall Street Journal. "If OTC derivatives did not cause the bankruptcy and the bankruptcy does not pose a risk to the markets, the logical conclusion is that there is no argument for additional derivatives regulation. It is unclear... how additional regulation of Enron's derivatives trading operations would have prevented or mitigated Enron's financial difficulties," said Pickel in the letter.

Christopher Jeffery
Editor, RiskNews
http://www.risknews.net
mailto:cjeffery@riskwaters.com

PS: If you are interested in Weather Risk then you should be attending our Weather Risk 2002 conference at the end of this month. There is an exclusive discount for RiskNews readers - see the bottom of this email for full details.

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Headlines/Technology/People/Events

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Headlines - 11/1/2002
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11 January 2002 - Traders are having problems second-guessing the Japanese government's policy on the yen, after the currency's firming to ?132.38 against the dollar yesterday. This followed the yen hitting a three-year low of ?133.70 the day before.

10 January 2002 - The International Swaps and Derivatives Association (Isda) has hit back at calls for more derivatives regulation in the wake of Enron's demise. "Advocating regulation for regulation's sake is bad policy, and could severely affect the US role in global financial activity," said Robert Pickel, Isda chairman, in a letter to the Wall Street Journal.

9 January 2002 - US swap spreads narrowed during the year's first week of trading. But despite anticipation that the Fed will soon discontinue cutting interest rates, spreads will continue to be tight over the next few months, according to economic research from JP Morgan Chase.

8 January 2002 - Innovatively structured collateralised debt obligations (CDOs) will spur the growth of structured finance products in 2002, according to a report by rating agency Standard & Poor's (S&P).

 To read more now, click http://www.risknews.net

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Technology and Exchanges - 11/1/2002
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11 January 2002 - Deutsche B?rse is set to release a new 'behaviour-oriented' equity index based on the Neuer Market - made up of 325 mainly German technology and high-growth companies - as a market information tool for dealers.

10 January 2002 - Oko Bank, the central bank for Finland's co-operative banking community, will extend its use of London-based Misys International Banking Systems' Opics solution to cover regulated and over-the-counter (OTC) derivatives activities.

9 January 2002 - Swiss Re signed up with New York-based risk management software firm Longitude today, to help its development of new weather risk management products.

9 January 2002 - OneChicago, the joint venture of Chicago's three derivatives exchanges created to trade single-stock futures, has selected the Chicago Board Options Exchange's (CBOE) screen-based system, CBOEdirect, as its trading platform.

9 January 2002 - Nasdaq Liffe Markets (NQLX), in a preparatory move before the start of trading in single-stock futures (SSF) in the US, agreed to let the Delaware-based Board of Trade Clearing Corporation (BOTCC) process certain deals known as 'give-ups'.

8 January 2002 - Smartstream Technologies, the London-based provider of reconciliation and trade confirmation management solutions, plans to let fund managers create electronic notification of trade execution through its latest electronic trade confirmation (ETC) module, Smartstream ETC.

8 January 2002 - Germany's European Energy Exchange (EEX) plans to become the first power exchange in continental Europe to offer central counterparty clearing services for over-the-counter (OTC) electricity forward transactions.

7 January 2002 - New York-based interdealer broker GFI today launched what a market participant said was the first stage in its effort to create an online OTC electricity derivatives market in North America, via a soft launch in Alberta.

7 January 2002 - Npower Northern Limited, a subsidiary of energy supplier Innogy, has chosen to use London-based KWI's kW3000 trading and risk management product.

To read more now, click http://www.risknews.net

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Don't miss the January issue of Credit magazine - click http://www.creditmag.com/freeissue to request your free sample copy of the only magazine dedicated to the international credit markets.

Our first issue of 2002 includes an analysis of how the ABS market has benefited from the flight to quality by investors, and goes behind the scenes of corporate restructuring. We also examine the market forces driving the growth of European CDOs and subordinated bank debt. This month's industry focus is the utilities sector - covering mergers and acquisitions, restructurings and asset disposals and case studies examining whether the current appetite for utilities paper is justified. Plus our regular monthly coverage including indexes, credit of the month, market data, people news, moves and profiles and all the information you need about new products, trends and issues in the global credit markets.

Don't miss this essential issue! Click here for your free sample copy http://www.creditmag.com/freeissue

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People - 11/1/2002
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11 January 2002 - Ed Noonan will relinquish his role as president and chief executive of American Re, one of the largest reinsurers in the United States, at the end of March.

11 January 2002 - SG, the investment banking arm of French bank Soci?t? G?n?rale, has hired Richard Hopkin as deputy head of its European securitisation team.

10 January 2002 - Robert Walsh, vice-president of trade processing at the Chicago Board Options Exchange (CBOE), will become managing director of operations for OneChicago, the joint venture created to trade single-stock futures by Chicago's three derivatives exchanges: the CBOE, the Chicago Mercantile Exchange and the Chicago Board of Trade.

9 January 2002 - Roselly Ramseyer-Torres, who has been steadily building up Dresdner Kleinwort Wasserstein's (DrKW) equity derivatives capability, has climbed another rung in the German investment bank's corporate ladder by being named deputy head of global equities.

9 January 2002 - Oliver, Wyman & Company, the New York-based consultancy, plans to boost its risk management practice by hiring Tom Wilson, former Swiss Re New Markets chief financial officer and chief risk officer.

8 January 2002 - Ohio-based utility American Electric Power (AEP) is set to enter the Nordic power market after its London-based European trading arm, AEP Energy Services, assumed operation of Enron's offices in Oslo and Stockholm.


To read more now, click http://www.risknews.net

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Events - 11/1/2002
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Take a look at the Risk Waters Group 2002 event calendar - it's now available online! Register for advanced 'Remind Me' alerts to be notified of specific event details, discount packages and other information at http://www.risk-conferences.com/events - If any of your colleagues or business associates would be interested in any of these events, please forward them this message.

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The third consultative document for the Basle II Capital Accord, due to be published this year, will provide a crucial opportunity for financial institutions to understand the growing convergence between quantitative and qualitative approaches to measuring and managing operational risk. OpRisk 2002 is the leading industry forum for operational and operations risk, with the world's foremost experts including regulators, practitioners and academics detailing the approaches that can be utilised for efficient economic and regulatory capital allocation.
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Risk 2002 USA - Boston, 11 & 12 June 2002
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Other useful links:
~ About Risk & EPRM Conferences: http://www.risk-conferences.com/about.htm
~ Event Calendar: http://www.risk-conferences.com/events.htm
~ Event Marketing Information: http://www.risk-conferences.com/marketing.htm
~ Past Event Documentation: http://www.risk-conferences.com/order.htm
~ Risk Special Reports: http://www.risk.net/supplements/supplements.html
~ EPRM Special Reports: http://www.eprm.com/

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This Appeal has been set up for the immediate families of, and any persons financially dependent on, those attending the Risk Waters financial technology conference on the 106th floor of the north tower of the World Trade Center on September 11, 2001, who lost their lives in the terrorist attack. Those attending the conference included many delegates, speakers, sponsors and exhibitors, as well as 16 people working for Risk Waters (UK, EU and US individuals).
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