The European members of the International Swaps and Derivatives Association's weather derivatives working group have met ahead of this week's global meeting. The European group is recommending that ISDA publish a standard long-form confirmation for swaps and caps, the two basic types of weather derivatives, before developing a product-specific definitional booklet. In addition, its members think there is no need to refer to the 1993 ISDA commodity derivatives definitions and that transactions should be described as "weather index derivatives transactions," with the index described within the confirmation.
To see the marked-up draft of the weather confirmation, as well as a questionnaire and grid describing fallback methodologies when data is unavailable, go to DW's Web site, (www.derivativesweek.com).
Stacey Carey, policy director at ISDA in New York, said the fallback methodology will be a major focus of this week's meeting. She added that the aim is to have the standard confirm finished by year end.
