CDC Ixis’ new weather desk targets French clients

CDC Ixis Capital Markets has set up a Paris-based weather derivatives desk that will solely target French clients. The French bank will target the energy, construction, tourism and agriculture sectors.

But it refused to name clients it claimed had already traded over-the-counter weather contracts with the bank.

RiskNews’ sister publication Risk magazine reported that CDC Ixis planned to enter the embryonic weather risk market in August last year. At the time, Michel Queruel, CDC Ixis’ Paris-based head of alternative risk structuring, said weather trading would start in April this year – a target it met.

CDC Ixis joins Credit Lyonnais as the second French bank to establish a weather risk presence in the past few weeks. But, unlike its competitors, CDC Ixis employs a meteorologist in its four-person team. Tanguy Claquin, CDC’s meteorologist, told RiskNews the idea behind his position is to help educate potential clients about the benefits of hedging revenue-threatening weather.

Most weather risk dealers outsource their weather data requirements to third-party providers such as California-based Risk Management Solutions. Buying weather data direct from regional met offices then cleansing it using in-house data models under the guidance of a meteorologist is less common.

Although another French bank, BNP Paribas, pulled out of the weather risk market in January this year, citing a poor return on capital, Société Genéralé continues to offer weather risk products to its clients.