MacroShares Housing Depositor plans to introduce two exchange-traded securities that will track the price movement of U.S. housing. The new securities will allow investors to participate in the price movements of the housing market, without taking physical ownership of real properties.
“Housing has been the catalyst for both the boom and bust of the U.S. Economy,” commented Sam Masucci, President and CEO of MacroMarkets. “Several marquee institutions have suffered tremendous losses in part, due to the lack of market-traded price discovery and effective home price hedging tools. MacroShares Major Metro Housing Up and Down are a market-based solution to this unprecedented financial crisis.”
For investors with a bullish bias on housing, the Major Metro Housing Up (UMM) is designed to increase in value when the value of homes inside the S&P/Case-Shiller index rise.For investors with a bearish tone, the Major Metro Housing Down (DMM) is designed to increase in value when home values in the S&P/Case-Shiller index fall.
The paired securities will have a ten-year term and will feature a 2x (200%) leverage factor. The initial offerings of UMM and DMM will occur simultaneously via an electronic auction managed by W.R. Hambrecht + Co. The auction is tentatively scheduled to open on November 3rd and close on November 17. The new securities, once issued for trading, will be listed on the NYSE/Arca.
Like all MacroShares, the Major Metro Housing trusts will be fully-collateralized by short-term United States Treasury Bills, overnight repurchase agreements secured by Treasury securities, and cash. In addition to addressing issuer and counterparty credit risk concerns that continue to mount in connection with certain other exchange-traded products, this collateral also generates quarterly distributions for MacroShares investors when interest income exceeds trust expenses.