Arbol executes unique parametric risk transfer in water risk management

Arbol, the global climate risk coverage platform, has executed an innovative parametric risk transfer on the NASDAQ Veles California Water Index NQH2O.

A first-of-its-kind trade, which has a call spread option that expires on June 20, 2024, represents a major step in managing climate-related financial risks, particularly within the water sector.

The NASDAQ Veles California Water Index, – also known as NQH2O – is an essential tool that helps track the changing water prices in California. The tool takes the volume weighted average price of actual water trades in California, which helps to give a clear picture of the actual cost of water.

The tool is a helpful resource for understanding water prices, and it is especially useful for creating financial options too.

From what we understand, Arbol executed the trade in strategic collaboration with Veles Water Limited, a financial products company that specializes in water pricing, designing bespoke financial products, and economic methodologies.

At the same time, Arbol has also structured this unique deal with John Dolan, a renowned Veles Water futures market maker on the CME.

This parametric risk transfer marks a significant step within…