Confusion over membership at WBOT continues

Dan Parker, chief executive of Atlanta-based Weather Board of Trade (WBOT), today told RiskNews that two institutions he originally named as charter members of the weather derivatives exchange never had such an agreement with the company.

Royal Bank of Canada, Bank One and broker GFI have all said they are not WBOT members. But, according to Parker, this is true for only two of the three institutions, although all three have displayed "high levels of verbal interest" in the exchange. Parker declined to say which two companies were not members and refused to explain why he had named them as members in the first place.

WBOT was initially set for launch in October 2002 but Parker delayed launch until February this year following problems regarding funding, the availability of meteorological data sets and its ability to secure charter member commitments. Parker refused to comment today on the state of WBOT funding and would not commit to another official launch date. He added, however, that the delays had, in part, been caused by charter member "infrastructure problems".

Parker said it can take a long time to implement the necessary internal processes at large institutions to make a successful launch possible. He added that WBOT would prefer to go live with a number of participants backing the exchange, rather than to launch the contracts prematurely.

Parker would not confirm which institutions were charter members of the exchange. "I don’t want to make comments that are politically incorrect - for my own protection and the protection of everyone involved," Parker said.

US brokers FC Stone, Castlebridge Partners and TFS told RiskNews that they have charter member status. UK broker Man Financial has yet to confirm its status.

Charter membership of the exchange is free, Parker said, although future membership will cost $50,000 and is limited to 200 seats.

Parker also declined to answer questions regarding WBOT’s clearing arrangements. Parker had originally told RiskNews that Chicago-based Board of Trade Clearing Corporation (BOTCC) had agreed to act as the clearing organisation for WBOT. But a BOTCC spokesman said last week that no such agreement was in place, although he believed the two parties were still in discussions.