Eurex to launch UK property derivatives exchange from Feb '09

LONDON, Dec 17 (Reuters) - Deutsche Boerse's (DB1Gn.DE) derivatives exchange Eurex said on Wednesday that it is planning to launch Europe's first property futures market in early 2009, based on Britain's largest UK commercial properties index.

The property derivatives, which will start trading from February 9 next year, are annual contracts based on the total returns of Investment Property Databank (IPD)'s UK Annual All Property Index, the exchange said in a statement.

"In the current market conditions, exchange-listed, centrally cleared real estate futures...are an excellent risk management tool enabling hedging and bringing additional liquidity," said Peter Reitz, a Eurex executive board member.

"They will allow open-ended property fund managers greater flexibility with cash flow management and redemptions," he said.

The new futures will have a notional contract size of 50,000 pounds ($77,860) each and be valued daily, Eurex said.

Eurex signed a licence agreement with UK-based IPD in October to launch futures and options based on IPD's European property indexes. IPD compiles most of the indexes used in property derivatives trading.

Property derivatives, currently traded over the counter, have yet to capture significant interest outside Britain, with France, Germany, the United States, Spain and Japan seeing just a small number of trades, industry executives have said.

Eurex said it also plans to launch later in 2009 new futures based on IPD's property indexes for UK office, retail and industrial properties, as well as futures derived from indexes of French and German real estate. (Reporting by Daryl Loo; Editing by David Cowell) (See www.reutersrealestate.com for the global service for real estate professionals from Reuters)