Nymex’s Green Exchange airs it out
New York Mercantile Exchange (Nymex) has named a slate of US
and international emissions contracts for its Green Exchange,
bringing even more competition to the emissions exchange
Green Exchange, a joint venture owned by Nymex and eight other
firms, plans to launch a group of emissions futures and options
on March 17 including contracts on European Union Allowances
(EUAs), Certified Emission Reduction (CER), seasonal and annual
nitrogen oxide (NOx) emission allowances and sulfur dioxide
(SO2) emissions allowances. Nymexs prior offering of SO2
and NOx contracts have not been successful.
Futures will be listed on the CME Globex platform while options
will be traded open outcry at Nymex with clearing running
through the Nymex ClearPort platform. It is Green
Exchanges opening salvo in a bid to grab volume in the
fast-growing emissions derivatives space.
Randy Warsager, vice president of marketing at Nymex, told
FO Week that the exchange is lining up market makers
and plans to leverage synergies between energy and emissions
with Nymex members.
The Globex platform is very strong and a good platform
for us, Warsager said. The exchanges
membership is very strong, plus the partners are very active in
the carbon markets. And for many of the market participants
trading energies, theyll find the cross margining
Wasager knows the space is getting increasingly competitive in
both the US and European Market. European Climate Exchange
(ECX), which holds more than 80% of the market in EUA
contracts, is set to launch CER futures on March14 through ICE
Futures platform after a prolonged tussle with LCH
Clearnet was eventually settled on February 21.
European Energy Exchange, which plans to sell a larger
stake to Eurex (See story on p. 3), will launch CER futures on
March 26. Additionally, Euronext life plans to delve into the
emissions market space with the launch of BlueNext a
joint venture with Caisse des Depots - due this quarter.
BlueNext will also look to trade EUAs and CERs.
Its getting more competitive by the
day, Warsager said. The European market is growing
fast enough that there will be room for more than one
significant exchange. So we dont have to go in push
anyone out. We can start with a small part of the market and
grow from that.
Green Exchange has not yet announced fees but Warsager said
they will be comparable to other exchanges.
Tiffany Potter, senior analyst with Point Carbon in Washington,
told FO Week the Green Exchanges slate of products and
the joint venture partners which include Evolution Markets;
Morgan Stanley; Credit Suisse; JPMorgan; Merrill Lynch; Tudor
Investment; ICAP and Constellation Energy, will provide a
serious competitive challenge to Climate Exchanges
Chicago Climate Exchange (CCX), Chicago Climate Futures
Exchange (CCFE) and ECX.
I think theyll give Climate Exchange a run for
their money, Potter said.
ECX will have a battle to gain the level of marketshare in CERs
that it commands in the EUA market. But Green Exchange will
also face some stiff competition in the US market over SO2 and
Nox futures, where CCFE has steadily grown its SO2 futures and
CCFE, launched SO2 futures in December 2004, traded 210
contracts (5,250 tons) in 2005, 28,924 contracts (723,100
tones) in 2006, and 181,030 (4,525,750 tons) last year. The
contract traded 53,372 contracts (1,334,300 tons) in almost the
first two months this year. SO2 futures open interest stood at
19,810 on February 27.
CCFE also offers SO2 options electronically on the ICE platform
which could hand it an edge over Nymexs pit traded
options contracts. CCFE SO2 options, launched in April 2007
traded 91,858 contracts (2,296,450 tones) over the eight month
period last year and 33,430 (835,750 tons) in just under two
months this year. SO2 options open interest stood at 36,640 on
CCFE has a credible SO2 and NOx market, said
one US-based emissions broker. In the US, CCX and CCFE
have a very nice head start and they have a lot of good
business. But the stakeholders in the Green Exchange are likely
to make it a horse race.
On Friday, CFI or carbon options will be launched on CCFE. CER
futures and options were launched on CCFE last August as US
dollar denominated EUA contracts.
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