British market index provider FTSE Group has launched real estate indexes in partnership with UK-based hedge fund company MSS Capital to tap the growing property derivatives market.
The venture puts MSS and FTSE Group in rivalry with Investment Property Databank (IPD), which currently dominates the market for providing property index data in Britain.
The FTSE UK Commercial Property Index Series comprises four separate indexes, constructed by using performance data from a Guernsey-listed fund which will be managed by MSS, the companies said in statements on Monday.
If the venture is successful, FTSE Group might look at property markets outside Britain, FTSE Group Chief Executive Mark Makepeace told Reuters.
The new indexes offer investors liquid access to property, with pricing information based on daily data, filling a gap in the present market, he said.
"We are seeing growing interest in property derivatives ... There needed to be something more liquid that could be used by the banks."
Four investment banks, including Eurohypo and Abbey Financial Markets, part of Spain's Santander, have agreed terms for a FTSE licence to use the index to create property derivatives including swaps and options.
The names of the other two banks have not yet been disclosed, a spokesman for MSS said. MSS's portfolio, which will form the basis of the indexes, will be known as the FTSEpx Fund.
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