Cushman & Wakefield and inter-dealer broker BGC are entering the nascent property derivatives sector, providing strategic solutions to firms in the sector.
Cushman & Wakefield Finance Ltd, the finance arm of global real estate services firm Cushman & Wakefield, and BGC International, a leading inter-dealer brokerage firm, have signed of a joint venture agreement. The two firms will co-operate to provide strategic solutions and execution services in the rapidly growing property derivatives market across Europe.
This co-operation, marketed as 'Cushman & Wakefield BGC', has timed its entry into the nascent property derivatives sector at the point at which the market has gained sufficient momentum and is poised for exponential growth.
According to the Investment Property Databank (IPD), volumes of property derivatives trades totaled GBP 850 million last year, and to date in 2006 are approximately GBP 1 billion, much of which is accounted for by potential users only now beginning to gain approval to participate in the market.
With such huge potential reflected in currently small, but growing, volumes, Cushman & Wakefield BGC aims to ensure that the firms become leading players in the fast evolving property derivatives market, and that they can provide strategic solutions to clients through a combination of market insight, pricing information, structuring of products and trade execution services.
Cushman & Wakefield BGC states it 'expects to significantly increase liquidity in the market by offering vanilla derivatives priced against indices such as the IPD. In addition to growing liquidity and trading volumes, Cushman & Wakefield BGC is committed to developing innovative, structured products that are tailored to end user's specific requirements thereby helping the market reach its full potential'.
Together, the firms will target new clients and the existing extensive client contacts of both firms comprising banks, hedge funds and traditional property market participants (investors and occupiers) who wish to maximise returns and manage risk, through the innovative use of property derivatives alongside more familiar derivative products.
Combining Cushman & Wakefield's in depth property and finance expertise with BGC's derivatives trading platform, broking and execution services worldwide, the two companies will draw on the extensive global resources of both firms and will be managed by a joint steering committee, comprising David Erwin and Luca Giangolini of Cushman & Wakefield, and Jon Masters and Nick Ruddell of BGC. Alex Dewey, a derivatives expert at Cushman & Wakefield, and Mark Harris of BGC will be responsible for the day-to-day provision of services.