CME Group expands carbon offset contracts amid record volume and open interest

CME Group is adding two new carbon emissions offset contracts to its voluntary carbon products. The CBL N-GEO Trailing and CBL C-GIE Trailing futures contracts will be available for trading on August 8, 2022. Customers can trade offset credits that are no longer within the eligibility window of existing contracts.

The world's largest derivatives marketplace, CME Group, today declared that it will expand its line of voluntary carbon products, which have gained widespread market acceptance since their launch a year ago, by adding two new futures contracts.

Depending on regulatory approval, the CBL N-GEO Trailing and CBL C-GEO Trailing futures contracts will go live on August 8, 2022, enabling clients to trade offset credits that are no longer covered by the eligibility window of the current CBL N-GEO and C-GEO contracts. On July 18, 2022, CBL of the Xpansiv exchange plans to introduce the N-GEO Trailing spot contract. In January, trading for the C-GEO Trailing spot contract started.

According to Peter Keavey, global head of energy and environmental products at CME Group, "CME Group has been a leader in introducing effective price discovery and risk management solutions that help global businesses manage the risks associated with carbon reduction." Customers can hedge their risk across a variety of different vintages and offset types all on one exchange, with the advantages of transacting on the CME Group's platform, as liquidity in our carbon markets continues to grow.

The range of voluntary carbon emissions offset products offered by CME Group already fills a sizable market gap, and usage is rising each month:

Since the program's launch, more than 135 million carbon emissions offsets—or more than 135 million metric tons of CO2e—have been traded. On June 9, 2022, there will be a record 22,669 contracts with open interest that will last through 2025.

5,117 contracts were traded in record volume on June 14, 2022, and the average daily volume for the month of June is currently over 1,400 contracts.

With over 90 participants having traded one of the current carbon emissions offset products since launch, June saw a record number of new participants.

The oldest vintage years are no longer eligible for delivery under the current CBL N-GEO and CBL C-GEO futures contracts, and offset eligibility rolls annually. The Trailing contracts are intended to assist market participants in controlling the price risks related to these older vintage years.

Source: CME Group news