Support of CME Contracts

Background Information

MDA has been a provider of weather data and forecasts to the key companies involved in a majority of the over-the-counter weather derivatives trades. To be consistent with the weather derivatives industry's practice, and to assure that the Chicago Mercantile Exchange can settle contracts at 9:00 a.m. Chicago time on the first exchange business day which is at least two calendar days following the last day of the contract month, the CME has chosen MDA to maintain the HDD and CDD indices. Many participants in the over-the-counter weather derivative market use MDA's services to reconcile trades based on temperature or degree days. The temperature data for the cities selected by the CME is retrieved by automated data collection equipment known as the Automated Surface Observation System (ASOS). The daily maximum and minimum temperatures are measured by ASOS and are directly transmitted to the National Climate Data Center (NCDC), a subsidiary of the National Oceanic Atmospheric Administration (NOAA). MDA receives the daily temperature data from NCDC and computes the HDD and CDD indices.

MDA provides timely quality control and replacement value data in the event the ASOS equipment fails or if communication problems occur in reporting the data in the NOAA network.