CHICAGO and NEW YORK, Sept. 17,
2020 /PRNewswire/ -- CME Group, the world's leading and
most diverse derivatives marketplace, and Nasdaq, a
global technology company serving the capital markets and other
industries, today announced plans for a new futures contract
on the Nasdaq Veles California Water Index (NQH2O). CME Group will
launch its new Nasdaq Veles California Water Index futures contract
in late Q4, pending regulatory review.
Nasdaq Veles California Water Index futures will be an
innovative, first-of-its-kind tool to provide agricultural,
commercial, and municipal water users with greater transparency,
price discovery, and risk transfer – all of which can help to more
efficiently align supply and demand of this vital resource.
"With nearly two-thirds of the world's population expected to
face water shortages by 2025, water scarcity presents a growing
risk for businesses and communities around the world, and
particularly for the $1.1 billion
California water market," said
Tim McCourt, CME Group Global Head
of Equity Index and Alternative Investment Products. "Developing
risk management tools that address growing environmental concerns
is increasingly important to CME Group. This innovative, new water
contract builds on our strong partnership with Nasdaq, as well as
our proven 175-year track record of helping end users and other
market participants manage risk in essential commodity markets
including agriculture, energy, and metals."
"The Nasdaq Veles California Water Index helps drive better
outcomes for water market participants through verifiable price
discovery," said Lauren Dillard,
Executive Vice President and Head of Nasdaq Global Information
Services. "Our collaboration with CME Group has the power to
deliver greater transparency around the management of an important
natural resource."
A liquid, transparent futures market will help to create a
forward curve so water users can hedge future price risk. For
example, 40% of water currently consumed in California is used to irrigate its nine
million acres of crops. Nasdaq Veles California Water Index futures
would allow an agricultural producer to plan ahead for changing
costs of the water they need for large-scale irrigation. It would
also allow a commercial end user, like a manufacturer, to better
navigate business and financial risks when water prices
fluctuate.
The new California water
futures contract will be financially settled based on the Nasdaq
Veles California Water Index launched in 2018, with each contract
representing 10 acre-feet of water. The index sets a weekly
benchmark spot price of water rights in California, based on the volume-weighted
average of the transaction prices in California's five largest and most actively
traded water markets. Nasdaq developed the NQH2O Index in
partnership with Veles Water Limited, a firm specializing in the
development of financial products for water markets. The data
utilized in the calculation of the index is provided by WestWater
Research, an economic consulting firm focused on pricing,
valuation, and transaction advisory services for water rights and
water resource development.
Nasdaq Veles California Water Index futures will be listed by
and subject to the rules of CME. For more information and contract
specifications, please visit www.cmegroup.com/waterfutures. For
more information on the NQH20 Index, visit
www.Nasdaq.com/waterindexes.
About CME Group
As the world's leading and most
diverse derivatives marketplace, CME Group (www.cmegroup.com)
enables clients to trade futures, options, cash and OTC markets,
optimize portfolios, and analyze data – empowering market
participants worldwide to efficiently manage risk and capture
opportunities. CME Group exchanges offer the widest range of global
benchmark products across all major asset classes based
on interest rates, equity indexes, foreign
exchange, energy, agricultural
products and metals. The company offers futures and
options on futures trading through the CME Globex® platform,
fixed income trading via BrokerTec and foreign exchange trading on
the EBS platform. In addition, it operates one of the world's
leading central counterparty clearing providers, CME Clearing. With
a range of pre- and post-trade products and services underpinning
the entire lifecycle of a trade, CME Group also offers optimization
and reconciliation services through TriOptima, and trade processing
services through Traiana.
CME Group, the Globe logo, CME, Chicago Mercantile Exchange,
Globex, and, E-mini are trademarks of Chicago Mercantile Exchange
Inc. CBOT and Chicago Board of Trade are trademarks of
Board of Trade of the City of Chicago, Inc. NYMEX, New York Mercantile
Exchange and ClearPort are trademarks of New York Mercantile
Exchange, Inc. COMEX is a trademark of Commodity Exchange, Inc.
BrokerTec, EBS, TriOptima, and Traiana are trademarks of BrokerTec
Europe LTD, EBS Group LTD, TriOptima AB, and Traiana, Inc.,
respectively. Dow Jones, Dow Jones Industrial Average, S&P 500
and S&P are service and/or trademarks of Dow Jones Trademark
Holdings LLC, Standard & Poor's Financial Services LLC and
S&P/Dow Jones Indices LLC, as the case may be, and have been
licensed for use by Chicago Mercantile Exchange Inc. All other
trademarks are the property of their respective owners.
About Nasdaq
Nasdaq (Nasdaq: NDAQ) is a global
technology company serving the capital markets and other
industries. Our diverse offering of data, analytics, software
and services enables clients to optimize and execute their business
vision with confidence. To learn more about the company, technology
solutions and career opportunities, visit us on LinkedIn, on
Twitter @Nasdaq, or at www.nasdaq.com.
CME-G
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SOURCE CME Group and Nasdaq