Caifa believes the PDCA technology, which establishes auctions for buyers and sellers of contracts, will generate narrower spreads than are currently available in the over-the-counter market. This is aimed at encouraging more firms to become involved in trading weather risk.
Longitude claimed PDCA allows financial intermediaries to provide derivatives and risk management products without assuming the market risks customarily associated with the facilitation of risk transfer.
“Swiss Re is a major force in risk transfer and the weather markets, and it is an ideal partner for the development of these new products,” said Andrew Lawrence, chief executive of Longitude.
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