Structuring and execution
for event-linked risk transfer
Discrete provides liquidity. Bespoke contracts in size, with objective triggers, bilateral terms, and clear settlement.
Selected coverage
From exposure to contract
Extreme heat can create a loss that power futures don't hedge.
The exposure.
A Chicago-area utility hedges its expected summer power needs in advance. Extreme heat can push customer load above those hedged volumes, forcing it to buy additional power when the system is tight and prices are highest.
Power and gas futures can hedge the price of expected supply. They don't hedge the risk that extreme heat causes demand to exceed it.
A temperature trigger at Chicago O'Hare provides an objective proxy for the weather event driving that excess load.
- Reference event
- Chicago O'Hare ≥ 100°F
- Observation period
- June 1 – September 30
- Source
- NOAA NCEI Daily Summaries
- Notional
- $10,000,000
- Payout
- Notional if triggered
- Settlement
- T+5 after publication
- Fallback
- Chicago Midway
- Calculation agent
- Discrete
- Collateral
- ISDA CSA
Selected exposure areas
Illustrative contracts. Terms and availability vary.
The exposure is real, and the listed hedge is often just a proxy. Discrete gives market participants a way to define the actual trigger, fix the terms upfront, and settle cleanly.
Risk Notes
Evaluating a specific exposure?
Contact Discrete for institutional inquiries.