Arbol Executes First Of Its Kind Financial Trade in Water Risk Management

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Jan 25, 2024
By Arbol

Arbol, a global climate risk coverage platform, today announced an innovative financial trade on the NASDAQ Veles California Water Index NQH2O. This first-of-its-kind trade, a call spread option expiring on June 20, 2024, represents a groundbreaking step in managing climate-related financial risks, particularly in the water sector.

Arbol executed the trade in strategic collaboration with Veles Water Limited, a financial products company specializing in water pricing, designing bespoke financial products, and economic methodologies. Arbol has structured this unique deal with John Dolan, a renowned Veles Water futures market maker on the CME. This trade marks a significant advancement in environmental financial products, offering a new way to manage the risks associated with water scarcity and pricing.

The call spread on the NASDAQ Veles California Water Index NQH2O is a testament to Arbol's innovative approach to climate risk management. It provides a clear, fixed risk/reward profile, allowing participants to effectively manage their financial exposure to water price volatility. This option is a strategic tool for those seeking to balance risk with potential rewards transparently and predictably.

"This trade on the NASDAQ Veles California Water Index is a clear example of how Arbol utilizes geophysical and climate datasets to provide risk management tools to market participants,” said Scott Klemm, Chief Revenue Officer of Arbol. “Our goal is to empower businesses and individuals to make informed decisions in a world where water is a crucial asset that needs careful management.”

“We enjoyed interacting with Arbol in getting to a structure that works and is trade able, plus easy to understand. Notably it limits the risk the buyer takes to just the premium paid and allows easy access to the water price,” said Lance Coogan CEO of Veles Water Limited.

The NASDAQ Veles California Water Index, also known as NQH2O, is an essential tool that helps track the changing water prices in California. It takes the volume weighted average price of actual water trades in California. This index gives a clear picture of the actual cost of water. It's a key resource for understanding water prices, especially useful for creating financial options like the one Arbol has just launched. This helps people and businesses protect themselves against the volatility of water prices.

As water becomes an increasingly valuable and unpredictable resource, this trade offers a unique tool for financial risk management. It underscores Arbol's commitment to providing innovative solutions in the face of climate change and resource scarcity. Arbol invites brokers and market participants to explore this new financial instrument, which opens up new possibilities for managing environmental risks.

  

About Arbol

Arbol is a global climate risk coverage platform, specializing in parametric financial solutions for businesses looking to mitigate climate-related risks. Through cutting-edge technologies like AI underwriting, extensive data analysis, and blockchain-driven operational efficiencies, Arbol brings scale and transparency to climate risk management.With a comprehensive product portfolio and a worldwide presence, Arbol is committed to fostering innovation and cooperation, facilitating climate-responsible investments, and enabling organizations to proactively build operational resilience against climate risks.

 

About Veles

Veles is a financial products design company specializing in water pricing, bespoke financial products, and economic methodologies, plus offering Nature Based Solutions in the Carbon and Biodiversity markets.