Bank of Tokyo-Mitsubishi is gearing up to restart its weather derivatives business in Japan. Earlier this year the bank decided to shift its derivatives-related businesses to Mitsubishi Securities to integrate cash and derivatives products (DW, 4/4). Hiroshi Yoshimine, global head and general manager of the derivatives and structured products division, said that as part of the move, the firm is in the process of obtaining a weather derivatives license for the securities house and should receive the green light from the regulators in the next few months.
"It will be easier to operate in a securities environment," said Yoshimine, noting that he will have access to a wider client base as well as greater flexibility to combine derivative risks. "We plan to offer weather hybrids." For example, it will look at mixing weather and interest rate risk.
Yoshimine believes the market is still important, despite the withdrawal of many power companies in the U.S. and Europe. He attributes the growth in Japan to an increase in small and medium-sized corporates hedging weather risk. "The next step will be to get more investors involved with the products," he added.
