Green Exchange LLC (GreenX) today commenced trading of its California Carbon Allowance (CCA) futures contract. The contract, which will serve as a compliance and risk management tool for market participants operating within the California Emissions Trading Scheme (ETS), is currently the only California ETS product traded on an exchange regulated by the CFTC.
The first trade, agreed between Vitol and Enserco, was cleared via CME ClearPort® at 6:08PM EDT on Sunday, August 29, 2011 for today’s trade date. The deal was brokered by Evolution Markets and cleared by GreenX Clearing Firms Citigroup Global Markets Inc. and BNP Paribas Commodity Futures Inc.
Tom Lewis, CEO of GreenX, commented: “We are pleased to provide the California carbon market with a risk management tool ahead of the first compliance period and we look forward to the growth of a liquid futures market.”
The GreenX CCA contract has been developed in close consultation with market participants and contains the following key specifications:
- Contract size is 1,000 tons CO2 equivalent
- Contracts are listed on an annual expiration cycle for the Dec 2012, Dec 2013 and Dec 2014 contract months
- GreenX publishes an end-of-trading day settlement price for all listed contract months
- Physical settlement against the delivery of CCAs that have been approved by the California Air Resources Board for purposes of compliance with the ETS
- All transactions are cleared through CME Clearing
- Counterparty anonymity is intact from transaction through delivery – CME Clearing facilitates all physical deliveries through their Exchange Clearing Holding Account at the California registry
- In the event that the California ETS would not be in force by the time of the GreenX contract expiration in December 2012, open interest would roll one year (i.e., Dec 2012 positions are transferred to the corresponding Dec 2013 contract). In the event that the California ETS is not in force by December 2013, all contracts with open interest after the last day of trading will settle financially at the Auction Reserve Price for that year