02/23/11 - The Wall Street Journal - By Katy Burne

Jefferies Taps Deutsche Bank Exec For Credit Derivatives Push

NEW YORK (Dow Jones)--Jefferies & Company, Inc. has hired Sean George, a managing director in corporate bond and credit derivatives trading from Deutsche Bank in New York, according to people familiar with the pending move.

His hire underscores how smaller derivatives dealers and clearing brokers have been looking to break the stranglehold that larger Wall Street dealers have on the nearly $600 trillion swaps market, aided by a global regulatory overhaul.

A Deutsche Bank AG (DB) spokeswoman declined to comment on his departure, and a Jefferies Group Inc. (JEF) spokesman could not immediately confirm or deny the hire. George could not be reached; nor could it be determined when he starts his new role.

Jefferies has been on a hiring spree since the financial crisis helped level the playing field between big dealers and smaller boutiques. In derivatives, the firm has recently focused on equity hires, most recently tapping Zubin Ramdarshan in European volatility trading from Macquarie Bank.

George would be the firm's first addition in credit derivatives trading, according to one of the people who knew about his hire. Another said his background in corporate bonds would facilitate a gradual transition into credit default swaps--derivatives that function like insurance on bonds.
"It's an interesting move because Jefferies must have thrown the kitchen sink at him to get him to come over," that person said.

Smaller dealers like Jefferies have been lobbying for a wider role in the swaps market, enamored by the $30 billion to $40 billion in global revenues the incumbent dealers make each year, according to recent estimates from consultancy Oliver Wyman.

Two key tenets underpin the new regulations being drafted for the OTC market: A desire for swaps to be centrally cleared, or guaranteed, to prevent a repeat of the fallout from Lehman Brothers' failure; and a desire to see more price transparency by forcing swaps to be traded on exchanges and alternative execution platforms.

Jefferies and other members of the Swaps and Derivatives Market Association, a trade group formed last year to lobby for derivatives reform, argue that in order to work properly, central clearing should involve fair and open access for all market makers and clearing brokers.

"Without open access to clearing we won't have universal clearing adoption...and reduce systemic risk," said James Cawley, CEO of Javelin Capital Markets and a co-founder of the SDMA, at a recent Congressional hearing on swaps.