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WASHINGTON, May 27 -- The Weather
Risk Management Association (WRMA) hailed the Chicago Mercantile
Exchange, Inc. (CME) for adding six new weather risk management
instruments to its suite of futures and options products on May 26.
WRMA believes this move will attract a more diversified list of
participants in the weather risk management trading markets.
These products provide new techniques to hedge the trillions of
dollars exposed to the whims of Mother Nature.
These seasonal degree day index futures and options will offer
coverage in the November-March heating season and the May-September
cooling season. Initially, CME will list for trading futures based
on the degree day indexes for Chicago, Cincinnati and New York.
These differ from the products already offered by the exchange
because they cover an entire heating or cooling season, not just
individual months.
"This is another sign of the burgeoning interest in weather risk
management instruments. These products are new tools to assist any
business in reaching the important goal of protecting revenue
streams and keeping costs down," said WRMA Executive Director
Valerie Cooper.
CME currently offers monthly heating degree day and cooling degree
day futures and options on 10 U.S. cities: Atlanta, Chicago,
Cincinnati, New York, Dallas, Philadelphia, Portland, Tucson, Des
Moines and Las Vegas. The CME averages 1047 weather-related
contracts traded per month in 2003, compared with 72 per month for
the same period in 2002.
"In 1999, CME was the first exchange in the world to offer
exchange-traded weather derivatives, complete with the benefits of
our price transparency and Clearing House guarantee," CME Chairman
Terry Duffy said. "Participants in the weather derivatives markets
have told us that adding seasonal futures contracts to our existing
monthly heating degree day and cooling degree day contracts could
provide a valuable tool for an additional tier of customers to meet
their need for weather risk management."
WRMA anticipates that the new weather risk management instruments
will appeal to a broader spectrum of market participants and attract
reinsurance companies, hedge funds and commodity trading advisors.
About the Weather Risk Management Association
Founded in 1999 by some of the leading companies in the industry,
the Weather Risk Management Association (WRMA) is an international
trade organization dedicated to promoting the industry both to those
within it and to end-users. As a part of its mission, WRMA initiates
surveys of the industry, advocates the standardization of contracts
and other documentation used for transactions and sponsors forums
and conferences around the world for members to meet and discuss a
range of topics such as international markets, data collection
issues and tax and legal matters.
SOURCE Weather Risk Management Association
CONTACT: Bob Conrad, +1-202-466-7391, ext. 1123, bconrad@pcgpr.com,
or
Nicholas Mahrt, +1-202-466-7391 ext. 1103, nmahrt@pcgpr.com, both of
Potomac
Communications Group, for the Weather Risk Management Association/
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