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John Costas' New Horizons

John Costas made a number of impressive career moves during his 15 years at Credit Suisse First Boston. After starting as a lowly MBA graduate trainee, he soon found himself managing the bank's U.S. interest rate sales and trading groups, and eventually rose to lead the bank's fixed-income efforts globally. In all that time, however, he never left CSFB's 6th-floor trading room.

Then one day last year, he took a three-block walk from CSFP's headquarters on 52nd Street to a new job at the Union Bank of Switzerland. "It was a bit like the Twilight Zone," he confesses. "My entire career took place in a 40-square foot space. To leave that and then move across the street was more traumatic than I suspected."

Costas was recently promoted from heading North American fixed income at UBS to managing the day-to-day operations of its global fixed-income and foreign exchange businesses as well as fixed-income derivatives in the United States. He now serves as one of the three lieutenants who report to Hans Peter Bauer, who heads the bank's global fixed-income and equity derivatives business from London.

Thus far, he says, 1997 is looking like a good year. "The activity level dried up dramatically in 1994 and 1995, but there's been a good steady return to the markets by investors," he says. "Late last year and early this year, when credit spreads compressed to historically high levels, we saw a willingness to create incremental yield through securities that had imbedded derivatives."

Costas says UBS isn't trying to replicate the vast product list of a bulge-bracket, but rather is focusing on a few products that give investors lower-cost alternatives to conventional financing. It's also working on building up its cash trading and origination ability in Eastern Europe, Latin America and Asia as well as in designing new structures that help investors optimize their exposures in those markets.

Merc Economics 101

By Robert Hunter

How many economists does it take to run business development at a derivatives exchange? One, according to the Chicago Mercantile Exchange, which recently appointed Fred Arditti, an economist and university professor, to the post of executive vice president of business development, effective July 1.

"Economists are needed because the products have become quite technical," explains Arditti. "It's still economics-that is, the allocation of scarce resources. But we focus on quite specialized problems, such as bringing liquidity to noncompetitive markets and producing this liquidity at low costs."

Arditti should know-he's learned from the best. In the course of his triple-crown run through MIT (BS in electrical engineering, MS in industrial management, Ph.D. in economics), he worked with a veritable who's who of economics superstars. His master's thesis adviser was Paul Samuelson, and his dissertation directors were Robert Solow and Franco Modigliani.

Working with three Nobel Prize winners was good training for his first job at the Merc, where he served as vice president of research and chief economist from 1980­82. His crowning achievement there was overseeing the development of the S&P 500 and Eurodollar contracts. (The Merc's three-month Eurodollar contract is now the most heavily traded futures contract in the world.) Arditti then moved on to various consulting and teaching positions, ending up at DePaul University in Chicago.

Arditti expects his economics experience to serve him well in his new role at the Merc. "Economics took me into this part of the business," he says. "My training allowed me to deal with problems involving risk transference, and I have spent many years on both sides of the market, developing contracts on the one hand and using futures and options to run businesses on the other." In his new role, Arditti will be responsible for research, marketing, business strategies and, to a lesser extent, new technological development.

  • Jeffrey S. Falk and Matthew Cooney joined the regional sales department at Tech Hackers Inc. Falk had previously served in a number of technical liaison positions for such firms as Shearson Lehman Bros. and Citicorp. Cooney previously served as a licensed sales agent for Baltimore Life Insurance Co
  • Donald Horowitz has become senior vice president and general counsel for Sakura Dellsher Inc. He previously served as managing director of the Woodward Group, and has more than 20 years experience in futures and derivatives markets, including stints as general counsel of Merrill Lynch Futures and the Options Clearing Corp.
  • Bank of America, in an effort to build a commodities derivatives team, recently added David Moody, David Chang and Ron Neal to its financial engineering and risk management unit. All three previously worked for Citibank. Mooney will head the team, which will be based in New York
  • Guillermo Matta has been named director of marketing for FIMAT USA Inc. He will also continue to serve as senior vice president, a position he has held since 1995
  • Chris Phillips has been named director of risk products and services of Intuitive Products International Corp. Phillips has previously worked for Bankers Trust, BOT-Mitsubishi and Price Waterhouse, and he cofounded the Risk Information Service Center in Chicago, an organization providing independent valuation and risk services
  • Bankers Trust added David Shimko to its risk management advisory group. He previously served as head of risk management research at JP Morgan
  • Diane Conley has been named director of equity derivatives sales for global derivatives and global asset management at BankBoston. Conley had spent four years at Lehman Bros., serving as vice president of equity derivatives sales.