TRADING in United Kingdom commercial real estate derivatives plunged by 37 percent in the third quarter, as the financial crisis reduced demand for the instrument.

Derivatives with a face value of around 1.03 billion pounds (US$1.69 billion) were traded in the quarter to September 30, London-based Investment Property Databank Ltd said yesterday. That compared with 1.63 billion pounds of trades in the second quarter of this year, which was less than half of the previous quarter, Bloomberg News said.

"Given the financial crisis besetting investment banks at present, it is encouraging that the level of derivative activity, which depends on their participation, has held up as well as it has," said Ian Cullen, co-founding director of IPD.

IPD's indexes were also used as a peg for 126 million pounds of third-quarter derivatives trades for real estate markets outside the UK.