Prebon re-enters credit derivatives market

A number of hires have been made for the desk, including three from rival broker GFI: Tad Lundborg, John Penfold and Chris Soprano. Prebon said there would be more recruits in the coming months.

“Members of this team are the market leaders in credit derivatives broking, which is why we have chosen them to build up Prebon’s presence in this area,” said deputy chief executive of Prebon, Tony Verrier.

Prebon originally sold its credit derivatives business in return for an equity stake in CreditTrade. At that time the two companies also signed a non-compete agreement. “When the non-compete expired last year, and because we expect strong growth in the credit derivatives market, we resolved to re-establish our presence in the market by creating our own credit derivatives brokerage operation,” said Ed Novak, head of credit derivatives for Prebon in Europe and North America.

There will be credit derivatives desks in two other offices – New Jersey will serve the US and Sydney will cover Asia.

Credit derivatives are the fastest growing class of over-the-counter derivatives, according to the International Swaps and Derivatives Association. It estimates that the volume of such contracts traded increased fourfold, to nearly $2.7 trillion, between June 2001 and June 2003.