Macquarie, Vitol first to trade CME's N-GEO futures

Macquarie Group and Vitol are among the firms trading CME Group's new Nature-Based Global Emissions Offset (N-GEO) Futures, the US exchange group has said.

The firm said 10 firms had participated in trading 1,315 contracts since launch on Monday, with 1,315 total contracts traded to August 3. Macquarie, the Australian bank, was joined by energy and commodity trading companies Vitol, Andurand Capital Management and Hartree Partners in the early flurry of trading.

N-GEO futures reference voluntary offsets under the Agriculture, Forestry and Other Land Use carbon standard with additional Climate, Community and Biodiversity accreditation. Trading so far is equivalent to over 1.3 million environmental offsets, CME said in a release on Tuesday.

"This new futures product enhances our and our clients' ability to manage price risk around the nature-based solutions portion of the market. We expect this to drive broader participation in the voluntary carbon markets as transparency and liquidity increase," said Erik Petersson, head of global carbon in Macquarie Group's commodities and global markets division.

CME has a pre-existing GEO future based on the Carbon Offsetting and Reduction Scheme for International Aviation framework. Both futures are listed by NYMEX, the CME-owned commodity futures exchange.

"We are pleased to participate in CME Group's new N-GEO markets, which have joined the GEO contract in providing a transparent marketplace for environmental risk management strategies," said Ariel Perez, head of environmental products at Hartree Partners. "The path to net-zero carbon will require a variety of innovative solutions, including market-based mechanisms like N-GEO and GEO which help global clients discover price and manage emissions risk more effectively."

In July, Intercontinental Exchange's (ICE) open interest in UK Allowance (UKA) Futures reached record levels. Meanwhile, European Energy Exchange, part of Deutsche Boerse Group, also launched a Zero Carbon Freight Index to coincide with increased European regulation of emissions in the maritime industry.