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Cleaned Daily Data
The “real-time” data published by national
meteorological agencies regularly includes missing or erroneous values
due to instrument errors, communication system failures, or other
glitches in the process of measuring, transmitting, and recording
weather conditions. Such values are almost always identified and
corrected before publication of the final, official climate records for
each country anywhere from a week to several months later, however they
present a problem for weather trading activities that depend on accurate
and timely information. Incorrect data for recent periods can result in
incorrect valuations of current positions, leading to erroneous trading
decisions.
To provide the market with more reliable data, RMS
and EarthSat conduct overnight cleaning of prior-day data feeds from
individual meteorological agencies around the world. All data is run
through a series of algorithms to detect missing or erroneous values,
and experienced meteorologists estimate a replacement value when a
problematic observation is detected. Cleaned data is loaded into
Climetrix and delivered to clients at the start of the local trading
day.
Past experience shows that values estimated by RMS
and EarthSat to correct missing or erroneous observations are extremely
close to the final values published weeks or months later in the
official, quality-controlled climate records that are used for
settlement of all OTC contracts. To facilitate a short settlement
period, the London International Financial Futures and Options Exchange
(LIFFE) uses an RMS cleaned daily data feed as the official basis for
settlement of its listed U.S. weather derivatives contracts, and similar
data developed by EarthSat is used for settlement by the Chicago
Mercantile Exchange (CME) and the Intercontinental Exchange (ICE). |
