If the application is approved, the Green Exchange, which is owned by the Chicago Mercantile Exchange group, will be able to operate as a stand-alone entity and list futures and options based on environmental products.
At the moment, CME Group’s environmental contracts are listed on the New York Mercantile Exchange.
Tom Lewis, the chief executive of the Green Exchange, said in a statement that: “Once a DCM, the futures and options contracts currently traded on Nymex will be seamlessly migrated to Green Exchange enabling customers to continue to benefit from the same screen-trading access through CME Globex as well as the safeguards of the CME Clearinghouse.”
The products that will be offered, should the exchange gain approval, will be based on both European and North American carbon markets. It will offer derivatives based on EU Allowances and Carbon Emission Reduction certificates, which are used for compliance under the EU’s Emissions Trading Scheme. It will also offer a suite of derivatives based on North American products such as NOx, SO2, Regional Greenhouse Gas Initiative certificates and Climate Action Reduction certificates.
Lewis announced the move this morning at the US Environmental Market Association’s Environmental Markets Summit in New Orleans.
The exchange will compete with the Chicago Climate Exchange, the parent company of the Chicago Climate Futures Exchange and the European Climate Exchange, which list similar products. In March, volume reached 55,400 at the CCFE and trading at the European Climate Exchange reached an average daily volume of 20,700 in March, down 16% year on year.
Gary Hart, a senior energy analyst at Icap in Birmingham, Alabama, said that he believed that the two exchanges “could coexist and be mutually beneficial”.
Andrew Ager, head of emissions trading at Bache Commodities in London, said that: “There is room for another exchange” in this market and that the European Climate Exchange “really needs a competitor”.
Sian Williams +44 207 779 8370 firstname.lastname@example.org