Deutsche Bank and Credit Suisse First Boston separately are looking to enter the weather derivatives market for the first time. The move is significant, according to weather traders in the U.S. and Europe, because both likely would be able to bring corporates into the market via their lending and investment banking relationships, and both are large, well capitalized firms.
David Pearse, a commodity trading working on the weather effort at Deutsche Bank in London, could not be reached. Mohan Rajagopal, a quantitative analyst recently hired from Axia Energy to work on weather at Deutsche Bank in New York, referred calls to Pearse.
CSFB sees its role as offering weather-linked products to its customer base rather than taking proprietary positions in weather, according to Janelle Matharoo, managing director and head of European energy trading in London. The firm will offer weather products to complement its investment banking, emerging markets and lending businesses, he added, declining further comment.
While smaller financial institutions have entered the weather market, participants welcomed the arrival of a pair of bulge bracket players. "The more the merrier," commented one. "This market could really use some bigger players," he added.
