WHAT IS A WATER INDEX?
- Benchmark price for water, representing different specifications (raw & Processed, Desalinated, etc.)
- Abstraction licence value and derived water value can also be included in a water index
- Water indices are used for valuations of assets and trading
- Although headquartered in London, WWX water indices cover multiple geographic regions, states & provinces, cities and countries
- Listed instruments will be hosted on a single exchange or on four regional exchanges
- Otherwise the OTC traded market will function globally
- Create price transparency
- Facilitate investment in infrastructure
- Valuing the commodity (asset)
- Facilitate a deal type that allows exposure to the water price
- Allows correlation to other asset classes or commodities ie agriculture, energy
- waters relationship with other commodities is unmatched
- Energy markets have spark spreads (gas or coal value to electricity value) WWX indicesallow spreadtrading and risk management, water and agricultural and other commodities
- WWX has compiled and is compiling the appropriate water data and will make it available on request
- The methodology used to construct each WWX index is individual to the country but in concept the indices are based on 3 main approaches.
- Reported physical water trade
- Topped. Tailed and volume weighted trades, supply and demand balanced sector surveys
- Or A combination of the above.
- The methodology used to construct each WWX is robust, ahead of IOSCO principles, is trademarked and the sole property of WWX
- Water indices will not influence water prices, just reflect their value
- Standardised trade in water and water derivatives are just vehicles to express opinion of the future direction of the water price
- Instruments derived from indices will have no influence over water prices, unlike futures where physical delivery is used as a settlement
Clive Murray founded London Commodity Brokers and played a pivotal role in developing the OTC physically traded coal markets in Europe, South Africa, China and India.
Clive, as CEO of London Dry Bulk, led the charge to move the Iron Ore industry away from an annual bench-marking system and to indexation of physical contracts and a derivative market. LDB brokered the world’s first Iron Ore derivative on SGX as well as the first deals on ICE, CME and LCH.
SGX has traded Iron Ore forwards to a contract value of $400 billion since 2009.
Additionally Clive established London Commodity News, was Head of Weather and Emissions for ICAP, Chief Dealer for De Beers SA & Centenary Luxembourg and CEO of Astley & Pearce South Africa.