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Northern Trust Provides Daily Valuation of Property Derivatives

^{Published on 2010-07-14 01:40:42 - Market Wire}
 

LONDON--([ BUSINESS WIRE ])--Northern Trust (Nasdaq: NTRS) announced today that it can offer clients daily independent valuations for complex OTC property derivatives. The product which has been developed in response to an increasing trend for property funds to use OTC derivative instruments, is the latest in a series of enhancements to the suite of services Northern Trust offers real estate fund managers.

"Property derivatives are notoriously difficult to value and as a result are written based on a real estate property index, such as the IPD index"

The product enables a transparent, daily independent valuation for complex IPD (Investment Property Databank) swaps. IPD is one of the most common benchmarks used for writing property derivative contracts in the UK and covers approximately 10 986 directly held UK property investments valued at around GB117 billion.

aProperty derivatives are notoriously difficult to value and as a result are written based on a real estate property index, such as the IPD index,a said Sascha Calisan, real estate fund administration product manager at Northern Trust.

aOur ability to now deliver independent valuations for IPD swaps on a daily basis is great news for the real estate industry, as typically the market data for daily valuations is sourced on a daily basis a" a challenging task in what is still an illiquid market with few brokers a" and is only publicly published once a month.a

Northern Trust provides administration services to over 250 real estate and infrastructure funds and related entities and can offer clients the following outsourced OTC activities:

• Daily independent valuations for OTC derivative instruments including; IPD swaps, interest rate swaps, and interest rate caps and floors
• Active Collateral management
• Trade Capture
• Trade confirmation
• Reconciliation
• Trade event confirmation
• Risk analysis

In addition, Northern Trust also offers a transparency report which highlights the market data attributes as well as the mathematical model and techniques that were used to calculate the price.

aWe are seeing activity in the market from two opposite ends of the investment industry. Investment managers holding commercial property portfolios are looking to hedge the financing of these portfolios through real estate derivatives, and are now being joined by an increasing number of hedge funds.a said Peter Cherecwich, global chief operating officer for Northern Trusta™s asset servicing business. aThis latest product development enables us to cut through the complex data associated with administrating property OTC derivatives and deliver the information fund managers require on a daily basis, helping them make timely investment decisions.a

Northern Trust provides derivatives processing solutions for over 450 clients worldwide.

About Northern Trust

Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of investment management, asset and fund administration, banking solutions and fiduciary services for corporations, institutions and affluent individuals worldwide. Northern Trust, a financial holding company based in Chicago, has offices in 18 U.S. states and 16 international locations in North America, Europe, the Middle East and the Asia-Pacific region. As of March 31, 2010, Northern Trust had assets under custody of US$3.7 trillion, and assets under investment management of US$647.3 billion. For 120 years, Northern Trust has earned distinction as an industry leader in combining exceptional service and expertise with innovative products and technology. For more information, visit [ www.northerntrust.com ].

Northern Trust Corporation, Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A, incorporated with limited liability in the U.S.

The Northern Trust Company, London Branch (reg. no. BR001960), Northern Trust Global Investments Limited (reg. no. 03929218) and Northern Trust Global Services Limited (reg. no. 04795756) are authorised and regulated by the Financial Services Authority.

The material within and any linked material accessed via this communication is directed to eligible counterparties and professional clients only and should not be distributed to or relied upon by retail investors. For Asia Pacific markets, it is directed to institutional investors, expert investors and professional investors only and should not be relied upon by retail investors.

• Northern Trust International Fund Administrators (Jersey) Limited and Northern Trust Fiduciary Services (Jersey) Limited are regulated by the Jersey Financial Services Commission.
• Northern Trust International Fund Administration Services (Ireland) Limited and Northern Trust Fiduciary Services (Ireland) Limited are regulated by the Financial Regulator.
• Northern Trust Global Services Limited has a Netherlands Branch which is authorised and regulated in the Netherlands by De Nederlandsche Bank.
• Northern Trust Global Services Limited has a Luxembourg Branch which is authorised and regulated by the Commission de Surveillance du Secteur Financier (CSSF).
• Northern Trust Luxembourg Management Company S.A. is regulated by the Commission de Surveillance du Secteur Financier (CSSF).
• Northern Trust Global Services Limited operates in Abu Dhabi as a Representative Office, Licence number 13/238/2008 which is authorised and regulated by the Central Bank of the United Arab Emirates.
• The Northern Trust Company operates in Canada as The Northern Trust Company, Canada Branch which is an authorized foreign bank branch under the Bank Act (Canada). Trustee related services in Canada are provided by the wholly owned subsidiary The Northern Trust Company, Canada, an authorized trust company under the Trust & Loans Companies Act (Canada). Deposits with The Northern Trust Company and its affiliates and subsidiaries are not insured by the Canada Deposit Insurance Corporation.
• The Northern Trust Company operates in Australia as a foreign authorised deposit-taking institution (foreign ADI)and is regulated by the Australian Prudential Regulation Authority.
• The Northern Trust Company of Hong Kong Limited is a securities company regulated by the Securities and Futures Commission.
• The Northern Trust Company has a Singapore Branch which is a foreign wholesale bank regulated by the Monetary Authority of Singapore.
• The Northern Trust Company operates in China as a Representative Office and is regulated by the China Banking Regulatory Commission.
• Northern Trust Global Investments Japan, K.K. is regulated by the Japan Financial Services Agency.
• Northern Trust Global Services Ltd (UK) Sweden Filial is Authorised by the Financial Services Authority and subject to regulation by the Finansinspektionen.

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