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Derivatives Trading to Begin in Radar Logic's Residential Property Index(TM) (RPX(TM)) Market
| Source: Radar Logic
NEW YORK, NY--(Marketwire - September 12, 2007) - Radar Logic Incorporated (www.radarlogic.com)
announced that derivatives trading in the Residential Property Index (RPX)
market will begin September 17, 2007. Trading will be based on the RPX
Prices, single values representing price per square foot based on actual
transactions in residential real estate in 25 U.S. Metropolitan Statistical
Areas as well as a 25-city composite.
Dealers licensed to offer products in the RPX market include Morgan Stanley
& Co. Incorporated; Lehman Brothers Inc.; Merrill Lynch, Pierce, Fenner &
Smith Incorporated; Deutsche Bank Securities Inc.; Goldman Sachs & Co.; and
Bear Stearns & Co.
At nearly $23 trillion (Federal Reserve statistics as of March 31, 2007),
the value of U.S. housing is significantly larger than that of stocks and
rivals that of fixed income. Due to its illiquid nature, methods for
investing in real estate have been limited. Now, investors will be able to
take positions on the value of the residential property market, creating
liquid and efficient opportunities similar to those available for more
traditional commodities.
"Residential property derivatives should provide an essential and timely
investment and risk management tool for our institutional and individual
clients by offering them the opportunity to express a long or short view on
home price changes across the U.S.," said Tony Tufariello, Global Head of
the Securitized Products Group at Morgan Stanley.
Scott Soltas, Managing Director, Head of Merrill Lynch Mortgage Sales and
Trading, said, "Initially, we believe the RPX trading will be centered
around price return 'swaps' and simple forward contracts. These will be
quoted in terms of Home Price Appreciation (HPA) and will vary in length
from one to five years. The variety and flexibility provided by these
contracts will enable investors to quickly and easily express views on
specific property markets for their desired length of time."
According to Rich McKinney, Head of Residential MBS Trading at Lehman
Brothers, "Investors holding securities sensitive to mortgage credit and
prepayment performance as well as businesses with exposure to the housing
market cycles now have a powerful tool in managing their residential real
estate risk."
Michael Feder, CEO and President of Radar Logic Incorporated, said, "The
launch of the RPX market provides both investors and participants in the
real estate industry with sophisticated tools that have not been available
to them before. The granular applications of the RPX-based derivatives
should allow substantial utility for all interested participants. We are
excited by the reaction that professionals have had thus far."
In addition to generating daily RPX prices, Radar Logic has developed a
series of analytic tools designed to help professionals in both the real
estate and financial services industries utilize these derivatives. These
tools are available by subscription via the company's website,
www.radarlogic.com.
About Radar Logic Incorporated (www.radarlogic.com)
Radar Logic, the home of tradable real estate(SM), is a technology-driven
data and analytics business that produces a daily "spot" price for
residential real estate in U.S. metropolitan areas. To do this, actual
transaction data are captured from public sources and translated into the
Radar Logic Daily™ Prices. The Daily Prices, in turn, power the
Residential Property Index™ (RPX™) market, where derivatives and
other financial instruments are offered and traded. RPX allows real estate
and financial professionals to manage risk, invest in real estate without
owning physical assets, and obtain more accurate insight into the
residential property market.
For more information on Radar Logic and the RPX, including licensed
dealers, visit www.radarlogic.com.