First snowfall trade cleared on CME

Choice Environmental, a portfolio company of OTC Global Holdings (OTCGH), has brokered the first CME-cleared snowfall hedging risk instrument – a snowfall binary option contract for Detroit.

Photo: Psy guy/Wikimedia

The contract was a seasonal maximum binary option for January to March of 2010 and was executed on the exchange on December 22. It was brokered by Choice Environmental on behalf of a reinsurance company and a Midwest supplier whose business is tied to snowfall levels.

“The snowfall binary option contract is an innovative hedging tool that brings new end-user participants to the market and has the potential to add significant liquidity to weather-related derivatives contracts,” said Clinton

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