GFEX to develop temperature index futures and options

The Guangdong-Hong Kong-Macao Greater Bay Area and Yangtze River Delta Temperature Indices were officially released in Guangzhou on Wednesday, marking an important step for integrating meteorological data elements into financial markets and empowering green and low carbon development.

For the Guangzhou Futures Exchange (GFEX), it also lays a solid foundation for future research and development of weather derivatives.

Jointly compiled and released by the National Meteorological Information Center, Fudan University, GFEX, Guangdong Meteorological Bureau and Shanghai Meteorological Bureau, the indices are based on the temperature risk management needs of two key economic regions, providing standardised tools for stable operation of weather-sensitive enterprises in energy, electricity, agriculture, tourism, and other sectors.

The temperature index for the Guangdong-Hong Kong-Macao Greater Bay Area includes the daily average mild cooling index while the Yangtze River Delta temperature index includes daily average temperature, cooling and heating indices.

GFEX said that the release of the indices is an important achievement of the coordinated efforts of meteorology, universities and financial institutions.

"Addressing climate change and managing weather risks are key directions for the Guangzhou Futures Exchange to serve green development," it said. "Weather factors such as temperature directly affect fluctuations in new energy power generation, energy supply and demand, and energy consumption intensity."

It noted that weather futures based on temperature and other factors can help enterprises mitigate operational risks caused by weather fluctuations, forming a collaborative transformation pattern of "mitigation + climate adaptation" with existing green commodity futures products, jointly improving China's green futures product system and providing strong support for the stable operation of the real economy.

The latest figures from the China Futures Association showed that Shanghai Futures Exchange's trading turnover won majority of market share while Zhengzhou Commodity Exchange dominated the charts for volume.

Phillip Nova in April announced that it has been granted approval by GFEX to act as an overseas intermediary.