Weather Derivatives Desk
Amid the increasing volatility of global climate, TP ICAP's Global Weather Derivatives Desk stands at the forefront of financial innovation, transforming how an ever-greater range of businesses manage their exposure to the risks posed by volatile weather patterns.
Finding liquidity, managing risk
Specialising in offering tailored financial products to hedge against weather-related risks, the desk leverages TP ICAP's robust market infrastructure and expertise to provide clients with innovative solutions to manage the financial impact of weather variability. These products include futures, options, and swaps linked to weather indices, enabling businesses from a growing number of sectors like agriculture, energy, and insurance to mitigate losses from adverse weather conditions.
By facilitating liquidity and transparency in the weather derivatives market, TP ICAP plays a crucial role in helping clients protect revenues and optimise risk management strategies. As the world’s leading Energy broker, we have significant insight into the challenges our clients face and an ability to connect them into the world’s largest liquidity pool.
Weather derivatives explained
Weather derivatives are financial instruments that businesses use to hedge against the financial impact of weather variability. These derivatives are linked to weather indices, such as temperature, precipitation, or wind speed, rather than traditional market prices like commodities or stocks. The basic principle involves creating a contract based on specific weather conditions occurring over a defined period.
For example, an energy company might purchase a weather derivative to protect against the financial losses associated with an unusually warm winter, which would reduce the demand for heating. If the actual weather conditions match those specified in the contract, the buyer receives a payout that offsets the financial impact of the adverse weather.
Weather derivatives can take the form of futures, options, or swaps. In a swap, two parties might agree to exchange cash flows based on actual versus expected weather outcomes. These instruments are crucial for sectors like agriculture, energy, and insurance, providing a vital tool for managing weather-related financial risks.
Products range from the entirely bespoke to a simple vanilla swap, all index linked and financially settled using robust third party data. Most products are primarily bilaterally traded but there are also 18 clearable CME temperature contracts.
Products
CME cleared weather derivatives
Clearable HDD, CDD, CAT contracts based in 18 major cities (13 in the US, 4 in Europe and one in Asia) trading seasonally and monthly.OTC Weather Structures
Customisable structures with specialised terms based on a measurable weather variable - Temperature Rainfall, Wind, Solar Radiation.OTC Quanto Weather Contingent Structures
Customisable structures based on a weather variable crossing a specified strike value triggering a clearable commodity.
Meet the Team
Kellee Campbell
Since the mid-1990s, Kellee has been actively trading in energy markets, participating in the newly deregulated electricity markets of New Zealand, Australia, and the UK. Her 12-year tenure as an electricity broker laid the groundwork for her to secure a position at ICAP in 2017, where she now leads the Australian and NZ Energy desks—including sectors like electricity, gas, and renewables/carbon. Kellee has distinguished herself as an influential leader and mentor, spearheading growth and achieving significant market share and successes in her areas of responsibility.
In 2023, Kellee accepted the role of global head of weather derivatives, having developed the Australian markets since 2019. She is passionate about the role weather products play in the Energy & Commodities markets and is dedicated to boosting their visibility and use in risk management.
Her dedication also extends to her personal ambition of encouraging more women to pursue careers as brokers within the financial markets.
Tim Boyce
With nearly 25 years of dedicated service at TP ICAP, Tim has established a remarkable career in the financial industry. Starting on the USD interest rate swaps desk, he quickly demonstrated his expertise and leadership abilities. This led to a decade-long tenure in Singapore, where he successfully ran the thermal coal and iron ore teams, driving significant growth and success.
Passionate about the potential growth of the weather derivatives market, Tim is excited to explore new opportunities and innovations in this emerging field. Known for positive and motivated attitude, Tim brings a dynamic and forward-thinking approach to every challenge.
A cancer survivor, he embodies resilience and determination, inspiring those around him with his journey. Outside of his professional life, he is a proud family man, cherishing the time spent with loved ones.
Felix Carabello
With over 30 years of experience in the derivatives financial and commodity markets, Felix has enjoyed a distinguished career trading energy, interbank forex, and commodities.
During a 17-year tenure at CME, Felix emerged as a recognised innovator, heading the CME Alternative Investments department. Notably, he collaborated with Professor Robert Shiller to launch and establish the Case-Shiller Housing Indexes.
Additionally, as the lead strategist for CMEG’s NYMEX acquisition, Felix played a pivotal role in this significant corporate milestone before going on to build CMEG’s global weather futures and options business from the ground up. In keeping with his passion for helping clients create business opportunities and solve business challenges, during a 5-year stint living and working in London, he launched a European Derivatives Exchange and Clearing House.
Beyond his professional achievements, his military career is equally impressive, having been commissioned as a 2nd Lieutenant in the US Army Corps of Engineers and retiring as a Captain with the US Army Reserves Civil Affairs branch.
Felix holds several martial arts black belts and degrees in Japanese fine arts. He is also a Zen priest and instructor at Daiyuzenji Zen Temple in Chicago.
