CME plans derivatives that would guard home's value
The nation's largest futures exchange today announced that it plans to build a sophisticated derivates market to protect homeowners from a bursting housing bubble.
Chicago Mercantile Exchange has completed a Letter of Intent with MACRO Securities Research LLC to explore developing derivatives based on the Fiserv, CSW family of Housing Price Indexes. These derivatives would create a market that ultimately will provide homeowners with tools to help them protect the value of their largest asset.
MACRO Securities Research, or MSR for short, is a financial innovations firm dedicated to the creation of instruments designed to unlock liquidity in new asset classes
The CSW Home Price indexes track home price trends and are used by some of the country's largest lenders for loan originations as well as various types of mortgage analysis. MSR owns the exclusive rights to develop financial products based on the CSW Indexes.
As the largest domestic asset class, U.S. single-family homes represent a $22.3 trillion market, according to the U.S. Census Bureau and the Mortgage Bankers Association's Mortgage Finance Forecast. Given all of the participants in the U.S. housing sector, including insurance companies, pension funds, hedge funds, home buyers, mortgage banks and insurers as well as developers, construction suppliers and homeowners, this type of product could appeal to a large number of potential market users.