Deutsche Bank to trade event-linked futures on Chicago climate exchange
Insurance Futures Exchange Services, a member of the Climate Exchange group of companies, and Deutsche Bank are to trade in catastrophe event-linked futures (ELF) on the Chicago Climate Futures Exchange later this month,
Climate Exchange is a holding company whose subsidiaries are principally engaged in owning, operating and developing exchanges to facilitate trading in environmental financial instruments. Its chief executive is former Brit chief Neil Eckert.
ELF contracts are standardised exchange-traded futures derivatives contracts, also know as “contracts for difference”, providing a binary payment based on natural catastrophe events which result in industry-wide insured losses, similar to the Industry Loss Warranty (ILW) features found in some insurance agreements.
ELF contracts will offer investors the ability to trade natural catastrophe loss risk outside the framework of conventional insurance and reinsurance contracts, as well as provide hedging contracting capability for property/catastrophe insurance-linked exposure.
“Deutsche Bank has been a market leader in developing a liquid trading regime for exposures linked to property and casualty insurance though its over-the-counter Event Loss Swap contracts,” said Elad Shraga, Managing Director in Deutsche Bank’s Global Principal Finance group. “Deutsche Bank is excited to work with visionaries of the caliber of Richard Sandor and Climate Exchange, and continue the evolution of trading opportunities for this asset class.”
Richard Sandor, Chairman of Climate Exchange said: “We are delighted to announce the launch of IFEX and our joint venture with Deutsche Bank which will ensure the continuing convergence of insurance and capital markets.”
