OTC weather trades fall; exchange trades rise

The weather derivatives market is shifting from an over-the-counter (OTC) market to an exchange traded one, according to the 2004 Weather Risk Management Association (WRMA) survey.

The international trade body for the weather risk industry will today announce at its annual meeting in New York that the notional value of weather risk management contracts transacted from April 2003 through March 2004 increased by nearly $400 million compared to the previous 12 months. With a total notional value of $4.6 billion, this marks an increase of 10% over the previous year.

But the size of the global OTC market has, in fact, contracted. Last year the OTC market was worth around $3

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