Property derivatives market set to launch: paper

LONDON (Reuters) - The first U.S. commercial property derivatives market is set to launch as early as this week, as four of the world's biggest banks team up to create a trading platform, the Financial Times reported on Monday.

Credit Suisse (CSGN.VX) is one of the four lenders, it said. Goldman Sachs (GS.N), Merrill Lynch MER.N and Bank of America (BAC.N) were believed to be the other three, the FT reported.

They have signed up to work with the National Council of Real Estate Investment Fiduciaries (NCREIF), which will provide the data from its U.S. property indexes to create the market, according to the newspaper.

"The banks are very excited about this as this is a market with tremendous potential," NCREIF Chief Executive Blake Eagle was quoted as saying. "And it won't just be the big banks that trade this. Hedge funds and insurance companies are showing real interest in developing this market."

The four banks will be given their licenses to use the NCREIF data, with Eagle saying another three lenders were also close to signing up for licences.

The FT said Lehman Brothers LEH.N and Morgan Stanley (MS.N) were thought to be among this group.

Last month, Phil Barker of CBRE Melody/GFI in New York said the U.S. commercial property derivatives market was set for take-off again with the "imminent" purchase of key trading licenses by "at least four new banks."

Commercial property index contracts have been traded in Britain for more than two years, but have yet to take hold in the United States.

Credit Suisse was granted an exclusive NCREIF license two years ago to trade derivatives based on NCREIF's property indexes, but waived those rights in October to build up market liquidity after executing only a handful of trades.