Swedish bank SEB has globalised its foreign exchange options business in anticipation of Sweden's entry into the eurozone, reports Risk 's sister publication FX Week .Jan Rune Skorpen joins the bank on July 1 to manage the new global desk, reporting to head of forex in Stockholm, Terje Anderson. Skorpen was previously at CSFB in Asia, where he worked in both the Tokyo and Singapore offices.
"We have an extensive options desk already," said Marcus Nysten, global head of forex at SEB in London. "We've been doing exotics for years, and are now really beefing up our competencies and focusing on the majors. We want to make sure we have the right competence when Sweden joins the euro."
Nysten said SEB's view that Sweden will become part of the eurozone now forms a part of all the bank's business planning. Sweden's referendum on euro entry is set for September 24, and Nysten said he anticipates the country will join the eurozone at the beginning of 2005.
Widening forex coverage in areas such as options is a crucial way for banks to ensure their forex desks survive the replacement of their local currency. "Once the Swedish krone no longer exists you might expect to see one Swedish or one Nordic bank - at most two - and everybody else essentially receding from the currency markets," said one analyst in London. Nysten added that the bank is also expanding its options capability, as growing sophistication among Swedish clients - as elsewhere - is boosting demand for different types of hedging strategies. "We follow client demand, and clients are getting more sophisticated. Vanilla cash products are not enough any more," said Nysten.
SEB has a total of six options dealers in Stockholm, including Christian Tornqvist, who remains in his role as chief dealer for options in Stockholm. The bank also has options traders in New York and Singapore and more hires may be made to the global team. "We will always hire good people when the right competencies come along," said Nysten.
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