CME, a subsidiary of Chicago Mercantile Exchange Holdings Inc., announced today that it will expand its weather futures and options product suite to include weather contracts on six Canadian cities.
Beginning November 6, weather futures and options on futures will be available for Calgary, Edmonton, Montreal, Toronto, Vancouver and Winnipeg. The new Canadian listings will include Heating Degree Days and Cooling Degree Days on both monthly and seasonal index futures and options. Product specifications are identical to the existing U.S. and European cities with Canadian cities priced in Canadian dollars.
The futures contracts will trade only on the CME Globex electronic trading platform. Options on all CME weather futures will be traded on CME’s trading floor.
“Weather is one of the largest variables impacting economic activity and business performance,” said Felix Carabello, director CME Alternative Investment Products. “CME weather futures contracts provide the marketplace with important hedging tools that allow businesses worldwide, such as construction, energy, retail and transportation companies, to manage their exposure to the elements.”
Also beginning November 6, the CME is adding futures and options on futures of seasonal strip snowfall indexes for Boston and New York City. The strips allow investors to trade up to six months (but no less than two) of snowfall contracts in one trade. Snowfall futures and options began trading in March.
CME currently lists weather contracts based on aggregate temperatures for 28 cities, including 18 throughout the U.S., eight in Europe and two in Japan. CME introduced weather derivatives in 1999. In 2005, 860,000 weather contracts worth a notional value of $36 billion traded at CME.
CME to offer weather futures and options on 6 Canadian cities
Exchange adds seasonal strip snowfall indexes for Boston and New York
- By: James Langton
- October 16, 2006 October 16, 2006
- 10:10