Sources in India have confirmed that exchanges and trading firms are still waiting on the Indian parliament to amend the Forward Contracts Regulation Act in order that new asset classes such as weather futures and index-linked weather contracts can be introduced to markets there. This is seen as essential for India to be seen as a world class financial centre.
Not only does India need the diversity in its financial markets but it also needs to the ability to trade weather contracts based on measurements at weather stations within the country. Weather insurance and micro-insurance have been widely accepted within India and the obvious next step is to enable companies there to access financial markets to hedge and trade their weather risks.
Our sources tell us that it will happen but Indian bureaucracy and red tape means these things take time. We’ll keep you up to date on events in India as the markets there progress and come to fruition.
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