Investment banks are adding desks from Hong Kong to Tokyo for equity derivatives specialists as they trade more for their own accounts and the securities become more popular with clients.

A pick-up in derivatives trading has helped the trend, driven in party by the increasing importance and size of hedge funds in Asia. Firms such as Barclays Capital, ING and Merrill Lynch have been among the most active hirers.

"Last year, the first six months were pretty slow across the board, but ever since then equity derivatives have been extremely active and a lot of banks are looking to upgrade teams and expand teams," said Ameet Budhrani, a senior associate in the financial markets group of recruitment firm Alexander Mann Group.

Banks are selling more equity derivative products to hedge funds — a rapidly growing sector with some US$40 billion in assets in Asia -- and intermediaries such as private banks, he said.

Equity derivatives include complex securities such as those which profit from changes in the price swings of a stock index.

"It's an area that, within our derivatives mandate, has probably been the most active," Budhrani said.

One indication of the importance of the business is that when ING agreed to sell its Asian equities unit to Australia's Macquarie Bank in March, it held on to equity derivatives and just announced two Hong Kong staff additions.

Barclays Capital, a unit of Barclays Bank, on Tuesday announced the addition of 15 people to its worldwide equity derivatives team.