At just £606 mln (EUR769 mln), the total volume of IPD Index Property Derivatives traded over the first quarter of 2009 was the lowest first-quarter figure for three years, according to data released on Friday by IPD. Since the rapid growth of derivatives trading from 2007, first-quarter volumes have proved the year's most active period. In Q1 2008, for example, trading volumes were £3.7 bn, while over the same period a year earlier £3.3 bn worth of property derivatives were executed. This annual spike in first quarter activity is due in part to the preference of full calendar year pricing among traders.
At just £606 mln (EUR769 mln), the total volume of IPD Index Property Derivatives traded over the first quarter of 2009 was the lowest first-quarter figure for three years, according to data released on Friday by IPD. Since the rapid growth of derivatives trading from 2007, first-quarter volumes have proved the year's most active period. In Q1 2008, for example, trading volumes were £3.7 bn, while over the same period a year earlier £3.3 bn worth of property derivatives were executed. This annual spike in first quarter activity is due in part to the preference of full calendar year pricing among traders.
This year, a total of 156 trades were executed over Q1, while the average outstanding deal size fell to £8 mln, from £9 mln in the fourth quarter of 2008. In the UK, significantly still the most mature property derivatives market, the total notional value of deals completed stood at £554 mln, compared to £979 mln last quarter and £3.4 bn over the same period last year.
The French and German derivatives markets both saw significant falls in trading volumes compared to both the previous quarter and Q1 last year. There were just seven French trades worth £51 mln and one German trade. Annual trading volume for France came to £319 mln in 56 trades, while Germany recorded £143 mln in 34 trades.
The aggregate total value of trades executed on the IPD suite of indices since recording began in Q4 2004 now stands at £22 bn, accounting for over 2,105 trades. The outstanding notional amount is now £9.4 bn.
Ian Cullen, co-founding Director of IPD and Head of Systems and Information Standards said: 'In a time of unprecedented property market turmoil, there were some small but interesting signs of the use of new approaches to the toolkit of risk management - the first 40 trades of Eurex property futures and some cautious property fund re-entry to the market using structured products.'
