Responding to market interest for environmental products, the New York Mercantile Exchange Inc. (Nymex) said it will introduce the first slate of futures and options contracts as part of its Green Exchange initiative on March 16 for trade date March 17.
First unveiled in late 2007 (see NGI, Dec. 17, 2007), the new exchange will offer a comprehensive range of environmental futures, options and swap contracts for markets focused on solutions to climate change, renewable energy, and other environmental challenges. Nymex's partners in the project are Evolution Markets Inc., Morgan Stanley Capital Group Inc., Credit Suisse, JPMorgan, Merrill Lynch, Tudor Investment Corp., ICAP and Constellation Energy. Nymex said the Green Exchange venture is expected to launch as a U.S. Commodity Futures Trading Commission-regulated exchange in 1Q2009, pending regulatory approval.
The initial contracts for trade on March 16 will be European Union Allowance (EUA) futures and options; Certified Emission Reduction (CER) futures; seasonal nitrogen oxide (NOx) emission allowance contracts; annual NOx allowance futures; and sulfur dioxide (SO2) emission allowance options contracts. The futures contracts will be available for trading on the CME Globex electronic trading platform; the options contracts will be available for trading on the Nymex trading floor; and all contracts will be available for clearing on Nymex ClearPort.
The EUA futures contract (commodity code RC) and CER futures contract (commodity code VA) will be physically delivered at the UK Emissions Trading Registry (UK Registry). The contract size will be 1,000 metric tons of carbon dioxide (CO2), the equivalent of 1,000 EUA units, and the minimum price fluctuation will be 0.01 euro per unit.
The EUA options contract (commodity code AV) will be a European-style option that will exercise into the underlying EUA futures contract. It will expire three business days prior to the EUA futures contract and will have 10 strike prices in increments of 0.5 euro above and below the at-the-money strike price. The EUA options will be traded on the Nymex trading floor and cleared on Nymex ClearPort.
Nymex said it will list seasonal and annual Nox emission allowance futures contracts for years 2009 to 2012. The contracts and their commodity codes will be:
They will be physically delivered at the U.S. Environmental Protection Agency NOx Allowance Tracking System. The contract size will be 10 tons with a minimum price fluctuation of $25 per ton.
The SO2 emission allowance futures contract (commodity code RS) and the seasonal NOx emission allowance for the current year (commodity code RN), which are currently listed for trading on Nymex ClearPort will be migrated to CME Globex, but they will still be available for clearing on Nymex ClearPort.
The SO2 emission allowance options contract (commodity code AS) will be a European-style option that will exercise into the underlying Nymex SO2 emission allowance futures contract. It will expire on the 15th business day of the contract month and will have five strike prices in increments of $5.00 per ton above and below the at-the-money strike price. The SO2 emission allowance options contract will be traded on the Nymex trading floor and cleared on Nymex ClearPort.
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