The 2011-12 winter forecast? More snow. Manage your risk now with CME Snowfall futures and options. |
For many parts of the U.S., last winter was one of the snowiest seasons on record - causing significant budget shortfalls, unexpectedly high removal expenses and heavier salt demands. Forecasts for the upcoming winter are calling for above-average snowfalls again, particularly in the Midwest regions of the country. How will your organization manage snowfall-related risk this year? Now is the time to prepare.
That's where CME Snowfall futures and options come in. These contracts were designed to help organizations manage risk of too much - or too little - snowfall and the related repercussions on budgets.
Six different futures and options products listed on six U.S. cities offer opportunities to:
- Hedge financial risks related to snowfall
- Stabilize cash flow and earnings
- Potentially profit from weather uncertainty/views on weather
Unlike other weather-risk instruments, CME Snowfall contracts are backed by the safety and security of CME Clearing, which significantly reduces counterparty risk potential.
 Learn more - and view a customer testimonial - on our CME Snowfall resources page
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New season heats up for temperature-based contracts |
October marks the start of another new season in weather risk-management - the Heating season, which typically runs through April for customers located in the U.S., Canada, Europe and Asia-Pacific region.
That's when businesses may have risk exposure related to colder-than-normal winters - and if forecasts hold true, that's exactly what many U.S.-based customers may be facing this winter.
To help businesses hedge these risks, CME offers a range of monthly and seasonal (and weekly for U.S.) Heating contracts, based on Heating Degree Day (HDD) Index measurements in cities throughout the regions. CME also offers cumulative average temperature (CAT) contracts for Europe.
Cooling Season Starts Down Under
October marks the start of Cooling season with the start of the summer season in Australia. CME offers monthly and seasonal contracts based on the Cooling Degree Day (CDD) Index measurements taken in three Australian cities, to help businesses hedge risks related to warmer than average summers.
Whether you're located in the U.S., Canada, Europe, Asia or Australia, now is the time to capitalize on the temperature-based contracts and take the uncertainty out of weather-related risks.
Learn more about hedging temperature-related risk
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Benefits of CME Hurricane Contracts Highlighted by Active Hurricane Season |
With the traditional hurricane season drawing to a close in November, now is a good time to review how CME Hurricane contracts performed during an active 2011 season.
One of the season's major events - Hurricane Irene, which made landfall twice in late August on the U.S. Eastern seaboard - helped highlight the potential benefits of our hurricane offerings. That includes contracts designed to provide more efficient measures of storm damages for use by insurance companies and their customers, as well as potentially quicker payouts.
The contracts are based on the CME Hurricane Index (CHI), a proprietary index calculated by EQECAT, the leading authority on extreme risk modeling. The index calculation, based on publically available data from the National Hurricane Center, take factors such as radius and wind speed to produce a numerical measure of a storm's damage potential.
For Hurricane Irene, the CHI produced preliminary settlement values within three days of landfall. Depending on hurricane contract used, payout from the contract could have taken place as early as five days after first landfall. That's compared to alternative risk management tools which may not pay out for months following an actual event, awaiting final damage tallies.
Because of their design, CME Hurricane contracts also reflected both landfalls of Hurricane Irene – the first in North Carolina and the second more than 12 hours later in New Jersey.
Alternative measures that use subjective data such as a scale rating can be less optimal as they may not be able to take into account important factors such as how wide a region was impacted by the storm.
Learn more about CME Hurricane offerings
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About CME Group
As the world's leading and most diverse derivatives marketplace, CME Group is where the world comes to manage risk. CME Group exchanges offer the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate. CME Group brings buyers and sellers together through the CME Globex electronic trading platform and trading facilities in New York and Chicago. CME Group also operates CME Clearing, one of the largest central counterparty clearing services in the world, which provides clearing and settlement services for exchange-traded contracts, as well as for over-the-counter derivatives transactions through CME ClearPort. |
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More information on CME Group Products: |
Agriculture | Interest Rates | Energy | Equities | Metals | FX | Weather | CME ClearPort | Credit |
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