IAP.L Regulatory News (IAP)

14 Aug 2007 17:13

ICAP (LSE: IAP.L), the world's premier interdealer broker, andRadar Logic Incorporated, the analytic and data company that powersthe Residential Property Index(TM) market (RPX(TM)), announced todaythat they have reached an agreement to form a joint venture related tothe RPX market. In addition, ICAP has signed a license to act as thefirst authorized interdealer broker for derivative transactions basedon the RPX. These derivatives will allow users to hedge risk onresidential property prices in 25 major cities across the UnitedStates. A number of Wall Street dealer firms have already signedlicensing agreements with Radar Logic. £ As part of the joint venture, ICAP has been appointed theauthorized broker to conduct the market fixing of residential propertyderivatives prices. The ICAP Radar Logic fixing will be established ona daily basis. This will use a similar polling methodology as ICAPemploys in other fixing and market benchmarks, such as the ISDA swapfixes. £ The ICAP-Radar Logic joint venture company will develop new linesof market pricing mechanisms, analytics and commentary based on theU.S. residential property market. The information offering willinclude forward curve analysis related to property derivatives, aproperty derivative calculator, and derivative market reports andcommentary. £ Doug Rhoten, Chief Executive Officer, ICAP North America, said"U.S. residential property is an exciting asset class that offerssignificant potential for ICAP. Derivatives based on the RPX offerinstitutional customers a means to hedge their U.S. residentialproperty risk in the highly efficient and liquid over-the-countermarkets, and we expect these products to have a unique acceptanceamong dealers and market participants. The need for these products ishighlighted by the recent dislocation and volatility in the U.S.residential property market and the absence of an effective riskmitigation tool. We expect a wide array of transactions to be based onthe RPX index." £ Andrew Aymen Samawi, Head of Residential Property Derivatives,ICAP North America said, "We expect RPX derivatives to be an effectiverisk mitigation tool for participants in both the mortgage markets andthe collateralized debt obligations market (CDO) markets that haveembedded mortgage products for yield enhancement. As concerns affectother parts of debt and real estate markets, the timely introductionof this robust index can address the need and urgency for real estatehedging in volatile markets, as well as provide a transparent andreliable basis for investors to participate in U.S. residential realestate." £ "We are pleased to be establishing this important relationshipwith ICAP," said Michael Feder, President and CEO of Radar LogicIncorporated. "Combined with the very strong dealer group we areassembling, this venture will accelerate the utility of the RPX marketfor all participants in the capital markets." £ About ICAP £ ICAP is the world's premier voice and electronic interdealerbroker, delivering specialist intermediary broking services to tradingprofessionals in the wholesale financial markets. The group covers avery broad range of OTC (over-the-counter) financial products andservices in Energy, Foreign Exchange, Interest Rates, Credit, Equitymarkets; as well as data, commentary and indices. £ ICAP is active in both established and emerging markets. ICAP'sreach and organization are global, while providing a local response tocustomer needs. The company's electronic networks deliver globalconnectivity to customers seeking unparalleled liquidity and flow inan orderly marketplace. For more information, visit www.icap.com £ About Radar Logic Incorporated £ Radar Logic, the home of tradable real estate(SM), is atechnology-driven analytic and data business providing a broad rangeof daily indexes and analytic tools to serve as the basis for truederivatives markets in non-commodity assets. Data are captured frompublic sources and translated into the Radar Logic Daily(TM) Pricesfor Metropolitan Statistical Areas (MSAs) in the United States.Financial instruments based on those prices are offered and traded inthe Residential Property Index(TM) (RPX(TM)) market. Radar Logicpublishes RPX prices daily, including 1-, 7- and 28-day measures ofactual prices paid for U.S. residential real estate. RPX Daily Prices,along with more information about the company, can be found atwww.radarlogic.com. Copyright Business Wire 2007