Exchanges flock to emissions trading

Luke Jeffs
07 Dec 2007

Two large exchanges have outlined their plans to move into carbon emissions trading just two days after a leading European derivatives market began trading its first energy-related product.


NYSE Euronext said today it is to buy Powernext Carbon, the carbon emissions trading business of Powernext, the energy market the world’s largest stock exchange established with French investment house Caisse de Dépôts et Consignations.

The deal, the terms of which were not disclosed, is subject to a shareholder vote at an extraordinary general meeting on December 21.

The transatlantic exchange, which owns London-based financial derivatives bourse Liffe, plans to develop a European market for CO2 emission permits and credits in conjunction with CDC that it will launch next year.

The exchange said the new market will “offer the full range of international market services for carbon emission permits, from trading to settlement and delivery”.

Separately, Richard Schaeffer, the chairman of the New York Mercantile Exchange, said the US energy market is in the final stages of building a global emission trading service, which a spokeswoman said will be launch “in the coming weeks”.

The pledge came one month after the US commodities market, which closed its European arm earlier this year, bought a 15% stake in a Norwegian exchange that claims to be the only regulated market trading freight derivatives.

Eurex, Europe’s largest derivatives exchange, started trading emissions derivatives through its systems on Wednesday. The Swiss-German derivatives exchange is offering members trading in emissions contracts listed on the Leipzig-based European Energy Exchange, which is part owned by Eurex.

A spokesman for Deutsche Börse, the German exchange that joint-owns Eurex, said the potential for European Union emissions allowance trading was “huge”.

The world's largest exchanges have been attracted to energy and energy-related derivatives as the market has expanded rapidly this year to reach an estimated €25bn ($37bn) by the end of the year, according to US research and consultancy Celent.