Derivatives trading and payday loans

Derivatives trading in the RPX started on 17 September 2007 on an over-the-counter (OTC) basis with maturities expected to be from one to five years. Initially, licensed banks to offer products in the RPX market included Morgan Stanley, Lehman Brothers, Merrill Lynch, Deutsche Bank, Goldman Sachs and Bear Stearns. Trades are quoted in terms of price appreciation in percent for a given maturity date and executed as quarterly price return swaps exchanging a fixed payment against the quarterly index appreciation. For example, if one counterparty buys the index with a maturity of one year at 4 %, he or she pays 1% every quarter in exchange for the actual quarterly index returns.

The interdealer broker ICAP announced the creation of a joint venture with Radar Logic to develop the RPX market in August 2007. In September 2007, ICAP intermediated the first derivative transaction, a total return swap, based on the RPX. The counterparties were two of the licensed banks. Further, Radar Logic has plans to roll out similar indices that allow trading in commercial real estate.