Now trade in carbon emissions

Chicago bourse licenses carbon & sulfur financial instruments to MCX

Multi Commodity Exchange of India (MCX) has signed a licensing agreement on Tuesday with Chicago Climate Exchange (CCX) under which CCX will list mini-sized versions of its European Climate Exchange (ECX) carbon financial instruments (CFI) and Chicago Climate Futures Exchange (CCFE) sulfur financial instrument (SFI) futures contracts on MCX. CCX is North America's first and only multi-sector market for reducing and trading greenhouse gas (GHG) emissions.

"We are very excited to enter into this partnership with MCX and announce the expansion of the CCX brand into Asia. This represents the first transparent linkage between Kyoto Annex I and Annex II countries," said Richard L Sandor, chairman and CEO of CCX.

"With the clean development mechanism as the common factor between them, we believe this will forge the way for the eventual harmonisation of the Asian, European and North American markets."

Neil Eckert, chairman of ECX said, "The introduction of CCX environmental financial products in Asia represents a new milestone both for CCX and the region. The Indian trading community represents a long and vibrant marketplace for trading. The ECX-CFI Mini and CCFE-SFI mini contracts open the door to new opportunities in growing environmental markets for India."

Jignesh Shah, managing director and CEO, MCX, said, "Environment-related products are the new generation commodities and MCX being market leader in globally referenced commodities has once again taken the lead to bring most innovative product in this segment to Indian markets for the first time. India has vast natural resources and new generation organized sector, which will provide an important reason for the Indian industry, and in turn whole country, to benefit from these products."

ECX, an entity 51 per cent owned by CCX and 49 per cent by Climate Change, a company listed on the AIM division of London Stock Exchange, offers futures contracts based on emission allowances issued under the European Union Emissions Trading Scheme.

WHAT IT MEANS

Carbon Financial Instrument
ECX carbon financial instruments (ECX CFIs) listed on the International Petroleum Exchange (IPE) are advanced, low-cost and financially guaranteed tools for trading in the EU Emission Trading Scheme.

ECX CFI contracts include both spot contracts (for prompt delivery) and a series of futures contracts that allow users to lock-in prices for instruments delivered at set dates in the future.

ECX CFIs help business succeed in the new carbon constrained environment. Each ECX Carbon Financial Instrument will be based on emission allowances issued under the EU ETS.

Sulfur Financial Instrument
The Chicago Climate Futures Exchange Sulfur Financial Instrument futures contracts provides participants in the SO2 emission trading program with low-cost, financially guaranteed tools for managing the exposure to price volatility in the SO2 emission allowance market.