However, this doesn’t appear to have been the CME’s original intention. In August, the CME had signed a non-binding letter of intent related to European weather futures. It had agreed to make an initial equity investment in, and license agreement with, weatherXchange - a UK Meteorological Office joint venture company. But the parties involved were “unable to reach a definitive agreement within the requisite time for launching the European products", the CME said. Meanwhile, the Met Office’s chief executive Peter Erwins said it was “disappointing” that a deal could not be struck. “We remain determined to establish a European market in weather derivatives,” he added.
The sites referenced in the new European contracts are: Amsterdam-Schiphol, Berlin-Tempelhof, London-Heathrow, Paris-Orly and Stockholm. Options on all 20 futures will also be offered.
Separately, the CME is expanding its US weather offering with the inclusion of five new cities: Boston, Houston, Kansas City, Missouri, Minneapolis and Sacramento, California. Heating and cooling degree day futures and options will be offered. New seasonal heating and cooling degree day futures and options on seven other US cities will also be offered from this Friday.