That’s not a typo up there.
CME Group, the world’s leading and most diverse derivatives marketplace, and Nasdaq, a global technology company serving the capital markets and other industries, today announced plans for a new futures contract on the Nasdaq Veles California Water Index (NQH2O). CME Group will launch its new Nasdaq Veles California Water Index futures contract in late Q4, pending regulatory review.
Nasdaq Veles California Water Index futures will be an innovative, first-of-its-kind tool to provide agricultural, commercial, and municipal water users with greater transparency, price discovery, and risk transfer – all of which can help to more efficiently align supply and demand of this vital resource.
“With nearly two-thirds of the world’s population expected to face water shortages by 2025, water scarcity presents a growing risk for businesses and communities around the world, and particularly for the $1.1 billion California water market,” said Tim McCourt, CME Group Global Head of Equity Index and Alternative Investment Products. “Developing risk management tools that address growing environmental concerns is increasingly important to CME Group. This innovative, new water contract builds on our strong partnership with Nasdaq, as well as our proven 175-year track record of helping end users and other market participants manage risk in essential commodity markets including agriculture, energy, and metals.” [Traders Magazine]
An implicit acknowledgement that the price of water, reflective of both natural availability and possibly hostile control thereof, is becoming a highly important and pricey component of the functioning of many industries. Futures helps smooth out risk and price.
But it’s also a signpost of the increasing scarcity of one of the fundamental basics of life, on a per capita basis as calculated not only per a person’s personal needs, but on their needs for water as it percolates throughout the industries they utilize.
Here’s the announcement:
Introducing @Nasdaq Veles California Water Index futures, a first-of-its-kind tool to help market participants manage exposure to water supply and demand risk. Coming Q4 2020.
— CME Group (@CMEGroup) September 17, 2020
I wonder what impact this has on the cost of living. Probably quite small, which in some ways is unfortunate.
