MSNBC- More than $250m of derivatives contracts based on Radar Logic’s residential property index (RPX) had traded since its launch in September, the research group said.<\/p>\n
Property derivatives allow investors to take a view on the health and direction of the US housing sector without having to buy property directly or invest in housing-related stockssuch as homebuilders or mortgage lenders.<\/p>\n
As the shake-out in the US housing sector continues, hedge funds, investment banks and property groups have looked to the RPX to hedge their exposure to specific geographic areas.<\/p>\n
“A lot of people who used the ABX market to take a view on the housing market are now also looking at RPX as a way of taking a macro view on housing that is independent of the credit risk of the mortgage market,” said Andrew Samawi, head of residential property derivatives at Icap.<\/p>\n
The RPX is based on prices per square foot of residential real estate in 25 US metropolitan areas, along with a composite national index, and contracts of up to five-year maturities are common.<\/p>\n
Six active dealers, including Morgan Stanley, Deutsche Bank and Merrill Lynch, provide liquidity to the over-the-counter market.<\/p>\n