RMS adds Japan and Germany to weather system

RMS believes Germany and Japan are two of the most important potential markets for weather derivatives, and traders and end-users in those countries need access to data and risk management services.

RMS and Maryland-based partner, Earth Satellite Corporation (EarthSat), have compiled and cleaned 40 years of historical daily measurements produced by 47 of the Japan Meteorological Agency's primary weather stations. RMS selected the stations with input from active Japanese weather traders to provide the geographic diversity for traders wanting to structure transactions for corporate end-users.

A recent weather market survey compiled by international consultants PricewaterhouseCoopers and industry body, the Weather Risk Management Association, shows that Japan is a burgeoning market for weather derivatives trading. Contract values in Asia grew to $46.1 million in 2000 from $4.4 million in 1999.

In Germany, RMS and EarthSat have assembled 40 years of historical data from 14 weather stations located in or near major metropolitan areas. The data was sourced directly from the Deutscher Wetterdienst, the German meteorological office.

“It is widely recognised that the challenges in acquiring reliable, quality-controlled data have been one of the most significant constraints on global expansion of the weather market. By making available high quality data for key countries around the world, we hope to facilitate continuing rapid growth of weather trading activity,” said RMS managing director of weather risk products Paul VanderMarck at RMS.

RMS added UK weather data to its Climetrix weather derivatives trading system in June.

RMS director of business development, Steve Jewson, told RiskNews that his firm provides two-thirds of the US weather derivatives market with its data, including Houston-based energy firm Enron, Bermuda-based weather risk company Element Re, as well as French bank Société Générale.

Separately, UK-based electricity supplier Innogy has launched a weather derivatives trading division. Innogy will initially concentrate on temperature products, but says it will extend coverage to rain, snow and wind deals at a later date.