CME launches snow derivatives

The futures will be offered on monthly snowfall at Boston's Logan Airport and New York's Central Park, and will trade from October to April. The CME snowfall index is based on the total daily snowfall, as measured by the EasthSat weather satellite. A strike price of zero equals no snowfall.

The CME already offers 29 weather derivatives based on temperatures in cities around the world, and a frost index contract for Amsterdam. Overall, 889,000 weather contracts traded on the CME in 2005.

Boston and New York were picked because they have over a century of reliable weather records, and are both large cities that face economic damage from heavy snow, the exchange said.

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