London-based clearinghouse LCH.Clearnet is launching its own over-the-counter carbon credit clearing service to rival that of its European Climate Exchange partner Climate Exchange PLC.
Shares in Climate Exchange fell 4.4 percent following the news.
The move is being backed by the carbon market's biggest brokers, including CantorCO2e and Tullett Prebon.
LCH currently provides over-the-counter (OTC) clearing for the European Climate Exchange (ECX), which is owned by Climate Exchange.
There are fears that brokers could take their OTC business away from ECX and remain with LCH as it goes it alone.
ECX currently sees around two thirds of its European Union Allowance (EUA) volume traded through OTC transactions.
LCH will offer clearing services for EUA futures and could steal a march on Climate Exchange by offering clearing services for U.N.-approved CER (Certified Emission Reduction) credit futures from 2008.
ECX has been trying to launch its own CER futures contract since this summer. But in September it said there were delays because of contract wranglings with LCH, which already does EUA clearing for the ECX.
LCH's initiative is being backed by London Energy Brokers Association (LEBA) members CantorCO2e, Evolution Markets, GFI, ICAP, Spectron, TFS and Tullett Prebon Energy. Continued...