Friday, February 8, 2008

Carbon Trade: Speculators behind jump in options trading

You ain't seen nothin' yet. The CDM futures are coming. Buy, Sell. Hold. Short, Flat, Long. Strip, Strap, Straddle and Spread.
(okay, I just dated myself)

First, from Carbon Finance:

Options trading jumped dramatically last month on the back of growing speculative trading, according to market participants. Options on 44.5 million tonnes (Mt) of carbon dioxide were traded last month on the European Climate Exchange (ECX) – 300% higher than its previous record month, last September, when 10.9 Mt of options changed hands.

Brokers and traders said that US hedge funds – notably environmental investment fund RNK Capital – were behind a big part of the jump in volumes, while proprietary bank and utility trading is also increasing....MORE

And from Mondo Visione:
EEX And Eurex Launch CER Futures

European Energy Exchange AG (EEX) and the derivatives exchange Eurex are expanding their cooperation in CO2 trading. As of 26 March 2008, it will be possible to trade in futures on CERs (Certified Emission Reductions), global emission credits in accordance with the Kyoto Protocol, on the EEX. To incentivise trading, trading fees (exchange trading and OTC-registry) will be waived for the entire year 2008.

Certified Emission Reductions (CERs) are issued under the Kyoto Protocol for climate protection projects that industrialized nations carry out in developing countries. One CER is equivalent to one tonne of CO2 reduction. Since 2008,

CERs can be used in part for emissions reduction compliance under the EU Emissions Trading System. As a result, CERs – unlike the EU Allowances – are already a globally available “currency” to be transferred via the regional emissions trading systems in the future....MORE