CME Group, the world’s largest and most diverse derivatives exchange, today announced that its new In Delivery Month European Union Allowance (EUA) and Certified Emission Reduction (CER) futures contracts will be available for trading on CME Globex beginning on July 11 for trade date July 13. These contracts are listed for trading by NYMEX and are subject to NYMEX rules and regulations.
Last week CME Group announced that these contracts would be available on the New York trading floor and through CME ClearPort®, a set of flexible clearing services open to over the counter (OTC) market participants to substantially mitigate counterparty risk and provide capital efficiencies across asset classes.
The new contracts and their commodity codes will be in delivery month EUA futures (EAF) and in delivery month CER futures (CRE). The first listed month will be September 2009.
In the European Union, large emitters of carbon dioxide are required to monitor their CO2 emissions and report them to their government. They receive a predetermined number of allowances that corresponds to their level of emissions. If they have more allowances than they need for compliance, they can sell those in a secondary market like the one this EUA product offers or bank them for future compliance purposes. CERs are emission reduction credits issued by the Clean Development Mechanism Executive Board that was established with the Kyoto Protocol. Taking positions in these CER contracts can lead to the delivery of the underlying credits, which can be used by emitting companies to comply in part with their emission caps.
It is intended that these products will be listed for trading as part of the Green Exchange venture once that venture has sought and achieved appropriate regulatory status. The Green Exchange venture will be working with U.S. and European regulators and intends to seek recognition in the U.S. as a designated contract market and approval from the FSA in the U.K. CME Group is one of the founding members of Green Exchange Holdings LLC.