Market players keen to stimulate the budding U.K. property derivatives market last week staged a mock trading day to gauge potential liquidity and pricing of swaps between different property market sectors. More than 100 officials from derivative houses, property companies and financial institutions attended the half-day event. They worked in teams to simulate trades on sub sectors of the Investment Property Databank index under real market conditions. Called the Property Derivatives Trading Forum, it was held at the offices of Credit Suisse First Boston on Thursday.
The forum was the brainchild of Rupert Clarke, head of property at U.K. fund manager Hermes. Clarke said it aimed to educate newcomers to derivatives as well as consolidate attention on commercial property as an underlying. "A lot of people won't get involved until there is established liquidity, but that won't happen unless people get involved," he said. "This will hopefully unlock the catch-22 that exists."
Owners of a combined total of GBP200 billion (USD352 billion) of U.K. property attended the trading game which Ed Stacey, head of derivatives at Euro Hypo, said was an effective, if somewhat unconventional, method to reiterate the advantageous of synthetic property trading. Another three forums are scheduled for November, February and May.
