CFTC to examine Chicago Climate Exchange's carbon instrument

The US Commodity Futures Trading Commission will examine whether a carbon financial instrument which trades on the Chicago Climate Exchange performs a significant price discovery function, the CFTC said on Aug. 17.

This will be the second time the commission uses authority it received on April 22 to determine if a specific transaction, contract, or agreement traded on an exempt commercial market performs a significant price discovery function, CFTC Chairman Gary G. Gensler said. If its investigation finds that a financial instrument fits that description, the ECM must comply with position limits, reporting requirements and other rules under the Commodity Exchange Act with respect to the transaction, contract, or agreement.

It ruled on July 24 that the InterContinental Exchange’s Henry Hub natural gas contract performed a significant price discovery function based on its its high average daily trading volume, its reliance on the New York Mercantile Exchange’s physically-delivered gas futures contract, and trader usage of the ICE contract’s prices. ICE declared itself a registered CFTC entity three days later and announced that it would begin submitting enhanced market statistics for its cash-settled Henry Hub gas swap market to the commission immediately.

The Chicago Climate Exchange operates North America’s only cap-and-trade system for six greenhouse gases, according to information at its website, www.chicagoclimatex.com. Members voluntarily agree to meet annual GHG reduction targets. Those who come in below those targets can sell or bank surplus allowances, while those who come in above the targets can buy CCF carbon financial instrument contracts, it said.

The CFTC said that it is conducting the review after initially evaluating information which CCX provided indicating that the carbon financial instrument several statutory criteria for a significant price discovery determination. It will accept public comments for 15 days following its Aug. 14 publication in the Federal Register of a notice of intent about the examination.

Contact Nick Snow at nicks@pennwell.com

Related Articles

Move carefully on crude exports, refiner urges House subcommittee

04/04/2014 Tight oil formations have helped the US increase its crude production dramatically, an independent refiner conceded. But the nation should proceed ...

EIA: Ethanol spot prices rise on rail congestion, cold weather

04/03/2014 Spot prices for ethanol have increased steadily since early February, driven by logistical problems and harsh weather conditions, according to the ...

MARKET WATCH: Oil prices slip on possible resumption of Libya supply

04/03/2014 Crude oil futures prices slipped during Apr. 2 trading on both the New York and the London markets, which analysts attributed primarily to reports ...

EIA: Net energy imports in 2013 lowest in more than 2 decades

04/02/2014 Total US net imports of energy, measured in terms of energy content, declined 19% from 2012 to 2013, hitting the lowest level in more than 20 years...

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected