Part 2: Next Big Trade: Richard Sandor Says Water Will Be THE Commodity This Century

Richard Sandor changed the face of financial markets with the invention of interest rate futures in the 1970s and then changed the face of environmental markets with carbon markets in 2003. But he’s not done yet. Sandor, who authored his latest book called “How I Saw It: Analysis and Commentary on Environmental Finance”  told John Lothian news that water, medicine, even education are ripe for financial market innovations.

And in his view, they aren’t that different.

“I’m struck by how similar financial innovation is, independent of whether it’s a agricultural, financial, environmental good. They tend to be very similar if one steps back and looks clinically.”

He is also the founder of  the American Financial Exchange, an OTC platform aimed at creating a benchmark US interest rate contract called Ameribor, or American Interbank Offered Rate, for small and mid-tier banks that hold about $5 trillion in assets, and 25 percent of all US deposits.

Beyond that, however, Sandor believes there is a solution for many of the water problems we face in parts of the world, for the cost of medicine and health care and even education.

“The 21st century is all about water, there’s not enough of it,” he said. “We now have water trading, but we don’t call it water trading, we call it grain trading. There is a way to trade water in a way that it makes sense,” he said. “There are just more subjects that are dying for a solution. Medicine. Education. Take a look at all of the breakdowns in society – education – all of which lend themselves to private incentives for public good. I think the next century is going to be more exciting than the 20th century.”