CBOE Futures Exchange (CFE) to launch futures on Radar Logic 28-Day Real Estate Index on February 2

CBOE Futures Exchange (CFE) to launch futures on Radar Logic 28-Day Real Estate Index on February 2

26/01/2012

CBOE Futures Exchange, LLC (CFE) announced today that on Thursday, February 2, it plans to launch futures trading on the Radar Logic 25-Metropolitan Statistical Area (MSA) RPX Composite Index (futures symbol: RPXCP). The index tracks U.S. residential housing values as a whole and is one of several Radar Logic 28-Day Real Estate indexes on which CFE may offer futures contracts.
 
CFE also announced that Barclays Capital will serve as the Designated Primary Market Maker (DPM) for Radar Logic 25-MSA RPX Composite Index futures.
 
"We are pleased to partner with Radar Logic to bring to market the industry's first real estate futures contract featuring comprehensive national residential real estate values and daily pricing," CFE Managing Director James F. Lubin said. "Now, with CFE futures on RPX indexes, the residential real estate community will have a powerful risk management tool combining these unique contract features with the benefits of an exchange-traded marketplace — improved price discovery, market transparency, execution certainty and centralized clearing."
 
"Residential real estate, which is among the largest asset classes in our economy, has long needed an efficient way to manage risk," said Michael Feder, President, Radar Logic. "RPX futures traded on CFE can provide residential mortgage lenders, developers, insurers and investors with opportunities to protect against or to capitalize on changing housing values in any market condition."
 
"Making markets in RPX futures fits naturally with Barclays Capital's position as a global leader in the trading of inflation and real assets," said Chris McReynolds, Head of U.S. Inflation Trading at Barclays Capital. "We believe these futures will be beneficial to investors seeking efficient access to the housing market and to those looking to manage their exposure."
 
Metropolitan statistical areas included in the 25-MSA Composite Index are Atlanta, Boston, Charlotte, Chicago, Cleveland, Columbus, Denver, Detroit, Jacksonville, Las Vegas, Los Angeles, Miami, Minneapolis, Milwaukee, New York, Philadelphia, Phoenix, Sacramento, San Diego, San Francisco, San Jose, Seattle, St. Louis, Tampa and Washington, D.C.
 
Historical data on the 25-MSA Composite Index spans from January 2000 to the present.
 
Radar Logic, with which CFE entered into a licensing agreement in 2011, is a real estate data and analytics company that calculates residential property indexes on the U.S. housing market as a whole, on four U.S. geographical regions and on 25 individual U.S. metropolitan areas.
 
Unlike other housing price indicators, Radar Logic's real estate index values are published daily (versus monthly or quarterly) and include all types of home-sale closings — single- and multiple-family homes, new-home sales, existing home sales, and homes that do not conform to federal loan limits.
 
Potential users and applications of the 25-MSA Composite Index futures could include:

  • Mortgage lenders: Seeking protection against diminishing loan-to-value ratios in existing and new lending portfolios.
  • Fixed-income investors: Seeking to replicate real estate returns by combined use of futures and credit instruments.
  • Developers: Seeking to hedge against either rising values of real estate they plan to own or declining real estate values for owned developments under construction.
  • Insurers: Seeking to provide a hedge to lenders against unwanted real estate exposure due to mortgage defaults and to property casualty insurers against replacement cost inflation.

For RPXCP product information, see www.cboe.com/RPX.