ISDA PRESS REPORT FOR NOVEMBER 10, 2000

* Sri Lanka Plans To Deregulate Broking Industry
* Battle For The Benchmark Is On
* Swiss bank offers 'Gore' and 'Bush' derivatives

Reuters - November 9, 2000
Sri Lanka Plans To Deregulate Broking Industry

Sri Lanka plans to deregulate its broking industry and to allow for
specialised brokers who will promote new risk instruments, the director
general of the Colombo Stock Exchange (CSE) said.

"We are looking at the deregulation of the stock broking industry to allow
free entry and exit," Hiran Mendis told a forum of business leaders late on
Thursday.

In the current system, the CSE board advertises slots for broking licences
and approves eligible applications.

"We will allow brokers to do more investment banking, margin lending and
dealing on their own account, and are also considering brokers doing their
own underwriting," Mendis said.

"Brokers' fees are too high due to the lack of diversification in
activities," Mendis said. The CSE has been badly hit by an exodus of
foreign equity capital this year due to an escalation in Sri Lanka's ethnic
war.

Average daily trading volumes were down to about 25 million rupees last
month, half the volume from earlier this year.

The key Colombo all share index opened around 493 on Friday, up from the low
of the year of 427.62 in May but down from the year's high of 574.26.

The CSE also plans to introduce derivatives , short-selling and securities
lending from around September 2001.

At present, Sri Lanka's 15 broking firms act only as agency brokers while
having some leeway to extend margin lending facilities and to trade on their
own account.

Mendis said brokers would also be allowed to segment their activities, with
some offering trading facilities and others, clearing and settlement
services.

"We also hope to introduce Internet trading in the next three-four months,"
Mendis added.
($1 = 80 rupees).

Financial Times - November 10, 2000
Battle For The Benchmark Is On:

The French government bond market has benefited from the launch of the euro,
but possibly not as much as it might have liked to, according to market
strategists. When the introduction of the European single currency did away
with currency risk among the participating countries, France set out to
topple Germany from its position as the benchmark provider for the European
government bond market.

Germany has maintained that position mainly as a result of the strength of
its currency, the D-Mark, as well as the reputation of its central bank, the
Bundesbank.

But, with the first no longer an independent entity and the second stripped
of its monetary policy remit, the battle for providing the new euro-zone
benchmark has been thrown open.

So far, the outcome is inconclusive. Market participants praise the French
government debt agency France Tresor for its transparent information policy
and efficient debt management at a time when falling budget deficits and
windfall earnings from the sale of mobile phone licenses are reducing
European
governments' need to borrow.

"It is certainly the case that the information policy of France Tresor is
better than that of the various bodies in Germany," says Daniel Pfandler,
bond strategist at Dresdner Kleinwort Benson. "But Germany remains the
benchmark in 10- and 30-year issues, whereas in the two-and five-year
maturities one could argue that France is ahead."

France's deficit is expected to fall to 1 per cent of gross domestic product
next year, excluding the projected receipts from UMTS mobile licences.
Including those receipts, France expects a small surplus.

However, there should be little impact on bond issuance as UMTS receipts -
expected to amount to some Euros 20bn - are spread over several years.
France has also embarked on an active debt management programme in order to
boost liquidity even as financing requirements fall.

That includes the activities of agencies such as the Caisse d'Amortissement
de la Dette Sociale which re-finances the debt of France's social security
system and will continue to be active in the market.

But although France has emerged as the leading European issuer in some
maturities and some types of bonds, many investors especially outside the
eurozone, continue to regard Germany as the point of reference for
euro-denominated government bonds.

Germany's competitive advantage in the 10-year maturities is underpinned by
the liquidity in the Bund futures market on Eurex, the Swiss-German
derivatives exchange, which is perceived as the European market leader.

But the French policy of releasing issuance schedules up to a year in
advance with bond auctions held regularly every month is seen as superior to
Germany's quarterly schedules. France has also traditionally provided a more
regular supply of liquid issues over the whole range of maturities from 2-to
30- year
bonds.

"France has always had liquid issuance's spread much more evenly across the
whole of the yield curve," says Nathalie Fillet, bond strategist at BNP
Paribas.

The five-year BTAN is now widely regarded as the benchmark trading at the
same or a slightly lower yield than its German counterpart, the Bobl.

France has also led the way in launching the first euro-denominated index
linked bond, known as "OATi" and runs the most developed market for
"strippable" government bonds - which can be split into their component
parts of coupons and principal. Even so, French bonds in parts of the yield
curve still trade at a
spread over the German government's Bunds, meaning that France is borrowing
at a more expensive interest rate than Germany.

"The French curve offers more steady large issuances, it is very transparent
and from the French Tresor's point of view, that should certainly be
producing narrower spreads," says Padhraic Garvey, senior bond strategist at
ABN Amro in Amsterdam. "But the French curve is regarded as a spread
product, because the German market is seen as the anchor to the system for
historic reasons."

Mr Garvey said that this year, spreads between German bunds and other
European government bonds have widened as a result of increasing worries in
the market over the quality of European monetary union.

Those fears were exacerbated by the relentless slide of the euro on the
foreign exchange markets.
Greece's decision to join the euro next year, while Denmark has decided to
stay out, has further shaken investor confidence. The launch of euro notes
and coins in 2002 is likely to help allay fears that monetary union could
break up, and that is likely to produce tighter spreads between European
government bonds.

The Hindustan Times - November 10, 2000
Swiss bank offers 'Gore' and 'Bush' derivatives

A SWISS bank is offering financial derivative called 'George Bush'and 'Al
Gore' options made up of baskets of US company shares which could profit if
their namesake wins the presidential elections.
Vontobel, Switzerland's fifth-biggest bank, advertised the offers in Swiss
newspapers today as the world awaited the outcome of the cliffhanger US
vote.

"On wednesday morning we decided to launch the George Bush product on the
announcement of the first results of the elections, then during the day with
the uncertainty over the winner we prepared the Al Gore product," a banking
source said.

The Democrat' product is made up of shares in pharmaceuticals company Merck
and Co, mortgage loan specialists Fannie Mae and Freddie Mac, Devry Inc,
Ballard and United Technology.

End of ISDA Press Report for Monday, November 6, 2000.

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