Today’s Financial Times carries an interesting article about the difficulties in launching new futures products (behind a subscription wall).

“However, there is no model template for launching contracts. ICE Futures, the former International Petroleum Exchange, needed three attempts before it launched a successful Brent crude futures contract.”

The most common challenge is convincing potential customers that futures products are useful for managing risks of price movements. In other words, potential customers have to recognize potential risks exist, and then be willing to consider methods to manage and hedge these risks. Although this seems obvious to the financial services industry, these attitudes may require major leaps for people in other industries.

Reference:
Kevin Morrison: New Markets: Emissions and Ethanol join the newcomers, Financial Times, London, 2005-11-23.

This entry was posted on November 23rd, 2005 at 20:10 (GMT) and is filed under Forecasting & Modelling . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.