[malloryerik]

The contract is intended to track the Nasdaq Veles California Water Index. From the FAQ:

"4. What is the Nasdaq Veles California Water Index?

Nasdaq and Veles Water have partnered with WestWater Research, LLC, the leading economic and financial consulting firm in water trading, to develop the Nasdaq Veles California Water Index.

This index was launched by Nasdaq in October 2018 and tracks the price of water rights transactions (leases and sales) across the five largest and most actively traded regions in the state of California, including surface water and four adjudicated groundwater basins. NQH2O utilizes WestWater’s WaterlitixTM database as the source for the underlying data."

https://www.cmegroup.com/education/articles-and-reports/nasd...

It's based on an acre of California water one foot deep and cash-settled so that, you see, nobody must deliver or receive actual H2O.

Crude oil (like almost all other commodity futures) is also traded based on local physical benchmarks, WTI at the Cushing, Oklahoma storage facility for the price you see quoted for U.S. oil.

[H8crilA]

So it's really "Californian water", and even that may not be very accurate (it's a big state), one would have to study what exactly goes into the index with what weight.

I wonder if it will help the farmers in the region hedge their production and also would it improve price discovery. The open interest will tell us.

PS. Cushing (the terminal for west texas intermediate) is in Oklahoma.

[malloryerik]

>> PS. Cushing (the terminal for west texas intermediate) is in Oklahoma.

Oops of course you're right, thanks. Changing in the comment. Like you I also wonder if these contracts will take off.