On shaky foundations
Two US exchanges are launching property derivatives contracts in an attempt to access the vast US real-estate market. But critics say structural weaknesses in the sector will hamper growth. By Jayne Jung
A peculiarity of the US real estate sector is that this huge asset class has always lacked a derivatives market. Now, however, both the Chicago Mercantile Exchange (CME) and the Chicago Board Options Exchange (CBOE) are developing derivatives contracts focusing on the residential segment of the overall $21.6 trillion property market.
These efforts, combined with the execution of what is thought to be the first over-the-counter trade in December 2005, suggest the US property derivatives market may
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