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RTS to Introduce Weather Futures Contracts
The spell of severe frost in Russia impacted even the stock market. The RTS exchange announced yesterday the drafting of weather futures contacts together with the Russian Meteorology Agency. Russian market watchers are quite skeptical of the popularity of the new futures, though.
The RTS announced the drafting of weather futures. The stock exchange is drawing up the contact’s data sheet together with the Meteorology Agency and the Federal Hydrometeorology and Environment Monitoring Service. Two types of contacts, on temperature and precipitation, are planned to be prepared for this fall when the trading of weather futures is to start.
Weather futures are not Russia’s invention. The Chicago Mercantile Exchange, the world’s largest one, is also trading this kind of futures. Out of 15 types of weather futures the one for winter temperatures is the most popular. An index which is calculated as the temperature deviation from the fixed base figure is actually the base asset in this case.
“Hedging by futures contacts is an efficient means for companies dependant on the weather to protect themselves from weather risks,” the RTS press release quoted Marina Petrova, the director general of the Meteorology Agency, as saying. Roman Goryunov, the vice-president of the RTS exchange, underlined that it is important to “draw the floor audience (utilities, governmental bodies, transportation firms, companies of energy, gas and oil industries) to the contracts.” Yet, marker players doubt that weather futures will be popular soon. “Our clients haven’t voiced the need in this kind of futures, and there are few specialists in this country who know how to work with them,” Andrey Belinsky, the chief executive of Olma, an investment fund, said.
Olga Buyanova
All the Article in Russian as of Jan. 20, 2006
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