UPDATE 1-ISE to launch auctions on ReXX property indices

(Repeats to additional additional clients)

By Ros Krasny

BOCA RATON, March 12 (Reuters) - The International Securities Exchange said on Wednesday it plans to launch derivatives auctions based on the Rexx U.S. commercial property indices.

The auctions, when fully operational, will enable traders to take positions on the total return and changes in rent of commercial property for 15 individual U.S. cities and an all-market composition.

The Rexx indices represent nearly 2 billion square feet of real estate valued at some $2 trillion.

The first auctions are scheduled for the second quarter of 2008 based on property in New York midtown, Houston, Chicago, San Francisco and the all-market index, subject to regulatory clearance.

The auctions bring into the exchange space "things that were previously untradeable," said Mike Knesevitch, head of ISE's alternative markets group.

"This is the first time there will be an exchange-traded, liquid and transparent market in commercial property," Knesevitch said at the Futures Industry Association meeting in Boca Raton.

ISE said it has had interest from several hedge funds and large commercial property managers about the contracts.