Isda said the 'long-form confirmation', which constitutes a new part of the Isda Master Agreement, is intended to address heating degree day transactions and supplements. Isda added that the confirmation addresses disruption events that can occur in the collection of meteorological data. The trade body said it commissioned separate studies on methods for estimating the missing data.
“In light of increased usage of weather derivatives globally, Isda members from Asia, Australia, Europe, Japan and North America participated in preparing the new long-form confirmation,” said Isda.
Isda said it anticipates addressing documentation for additional types of weather derivatives transactions later this year.