MUMBAI, May 30 -- Speculating on rain was popular among citizens of Mumbai in the 1880s. While the practice, akin to betting, was discontinued by then British government in 1887 through an act, it has now been officially revived in another avatar - on Friday, the National Commodity & Derivatives Exchange (NCDEX) launched Mumbai Rainfall Futures Contracts, also called Rainmumbai, India's first exchange-traded rainfall derivatives contracts which opened for trading to retail and high-net-worth investors, power utilities, logistics firms and agri-processing businesses, among others. Amid predictions of below-average rain this year, due to the El Nino pattern, on the first day NCDEX received trading volume worth Rs.30 crore till 5pm, with NCDEX managing director and chief executive officer Arun Raste, expressing optimism that the trading volume would grow "with awareness and education through the monsoon months". The contract is built on a Cumulative Deviation Rainfall (CDR) model developed with IIT Bombay. It measures the deviation of actual rainfall from the city's Long Period Average (LPA) using past 30 years of India Meteorological Department (IMD) data to provide a credible and transparent market benchmark. Demystifying the process of trading, an official from NCDEX explained, 1 mm of rainfall is equated to Rs.50, with 2206 mm rain as the base LPA - which means, participants are expected to bet on how much deviation they predict from 2206 mm on positive or negative side. Based on actual rainfall during contract period in the monsoon, the participant will earn or lose money based on their prediction close to the actual rainfall. "Till the close of trading hours, we received Rs.30 crore worth volume with 2800 lots traded on the exchange," said the official, adding that since it was the first day, trading would continue till 11 pm. Arun Raste said weather as a commodity got SEBI's approval in 2024 and Rainmumbai future contracts allows businesses and traders to hedge against financial losses caused by excessive or deficient rainfall during the June-September season. He said, weather was officially included as a tradable underlying asset in India in 2024, following a landmark legislative update that added weather derivatives to the Securities Contracts (Regulation) Act, 1956 (SCRA). "While the agriculture sector is the intended beneficiary, this will also help a large number of other industries dependent on rains to hedge their risk. We have seen an encouraging response to the contract on the first day, including participation from Farmers Producer Organisations (FPOs) from different states," said Raste, adding, with awareness trading volume is grow in the monsoon months. Sanjeev Chandorkar, former associate professor at the Tata Institute of Social Sciences (TISS), who writes on socio-economic issues, said, "It would be interesting to see how many farmers use this instrument to hedge against paucity of rain. I have no ethical issue with Rainmaumbai. Two decades ago, carbon credits were seen as tool to control carbon emissions. But no data is available on how much carbon emission it reduced. So, the bigger focus is on financial capital movement in commodity."...