RTS prepares to trade weather derivatives
Analysts say weather futures should not be confused with insurance. Insurance cannot help if, for example, one is an ice cream manufacturer and summer ends early.The RTS expects the volume of trade in its weather contracts may reach $US1 BLN in several years.But some analysts doubt they will ever become popular.“In the future when we have fair pricing, fair tariffs, regulated by the market, these futures can be very useful. But for now, it's an instrument for speculation,” Max Shein, from the Broker Credit Service, said.The RTS is confident in its product – and says it's hoping for an eager band of market traders.“Speculative dealers are cannon fodder that is needed for a contract to shoot out, to get launched. Without speculators, the market is not liquid and the contract is lifeless. It will take some time before traders and Russian companies learn how to use weather futures,” Sergey Zamolotskih, Derivatives Division, RTS said.