Protego closes £8 million property derivatives deal

Barclays Capital and Protego have arranged a property index certificate sale worth £8 million, the first significant secondary market deal in the nascent property derivatives sector.

Protego, a UK property investment management company, and Barclays Capital placed £380 million in property investment certificates (PICs) with UK investors earlier this year. According to the company, when one of the investors wanted to cash in, Protego was able to identify five new investors to take on the PICs within three working days.

Charles Weeks, head of new business development at Protego, said that the resale was a good sign for the property derivatives market. "It illustrates the ease, speed and price transparency by which PIC trades can be executed in the secondary market," he said.

Since its inception, questions have surrounded the potential for liquidity in the property derivatives market. A Risk report in August this year found enthusiasm high but limited by fears of an illiquid market.

But some parties, including Weeks, believe subsector trades could be a possible solution, with one banker saying that more trades "would completely change the dynamics of the market".