The International Securities Exchange (ISE) and Weather Risk Solutions (WRS), the developer of Hurricane Risk Landfall Options (HuRLO), have entered into a strategic agreement. Following this, ISE will receive a minority interest in WRS in return for granting WRS the right to use ISE’s proprietary Longitude technology.
Reportedly, WRS’s trading platform and ISE’s Longitude technology use mutualized risk-sharing principles to aggregate liquidity and produce market-driven prices to enable commodity options trading in events and occurrences that do not have an underlying cash market. It has added that WRS’s HuRLOs are commodity options that enable individuals and businesses to hedge against financial risks resulting from hurricane landfalls in an open, dynamic and transparent financial market.
HuRLOs are available to eligible contract participants and are traded through WRS’s internet-based electronic trading platform and cleared by CME Clearing House, a subsidiary of Chicago Mercantile Exchange.
Kenneth Horowitz, founder of WRS, said: “We are very pleased that ISE has recognized the potential of our unique offering which provides a simple way for market participants to hedge against or speculate on the risk that a hurricane will first make landfall on a selected county or region on the US Atlantic and Gulf coasts.”
Thomas Ascher, chief strategy officer, ISE, said, “Through this agreement, we are well poised to benefit from future growth in this untapped segment of the commodity options market.”
