New York Mercantile Exchange will list three new futures contracts on a catastrophe risk index, starting on March 4. The contracts will trade on the Chicago Mercantile Exchange's Globex electronic platform and clear on Nymex ClearPort. On March 6, Nymex will also launch pit trading of options on those futures.
The contracts' settlement will be based on the Re-Ex index created by Gallagher Re, the reinsurance subsidiary of international insurance broker Arthur J. Gallagher. Nymex and Gallagher Re agreed last December to design the contracts because record losses caused by hurricanes, such as Katrina, highlighted the "shortage of insurance and reinsurance capacity for natural perils' exposure," which has increased in part due to "changing weather patterns."