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Chicago Climate Exchange and Dow Jones Indexes to market carbon emissions products

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The Chicago Climate Exchange and Dow Jones Indexes have concluded a joint marketing agreement to co-brand, calculate, market and license the Dow Jones/CCX Emissions Indexes, based on Europ

The Chicago Climate Exchange and Dow Jones Indexes have concluded a joint marketing agreement to co-brand, calculate, market and license the Dow Jones/CCX Emissions Indexes, based on European carbon, US carbon and US sulphur dioxide and other indices to be developed by the exchange.

Dow Jones Indexes will be the exclusive distributor and licensor of the Dow Jones/CCX Emissions Indexes. The indices are available for licensing as the basis of US and international structured products and other derivatives, including possibly futures.

‘Combining our long-term experience in innovative, comprehensible indexing with CCX’s unique expertise in integrating emissions reductions and emissions trading leads to an exciting new business initiative,’ says Michael A. Petronella, president of Dow Jones Indexes. ‘We are starting off with emissions indexes that enable participants in the carbon allowances market to achieve a highly sought-after additional degree of transparency.

Richard Sandor, chairman and chief executive of the Chicago Climate Exchange, adds: ‘The joint marketing agreement on the family of CCX, ECX and CCFE products with Dow Jones Indexes signals our continued commitment to create new innovative markets in the environmental space.

‘This suite of new index products will broaden the pool of participants while furthering transparency. Our alliance with such a world-renowned brand as Dow Jones is a win-win for the growing worldwide emissions market.’

On March 14 Dow Jones Indexes and SAM Indexes granted CCX a license for the Dow Jones Sustainability World and Dow Jones Sustainability North America indices exclusively for the purpose of listing standardised exchange-traded futures contracts and options on futures contracts where the price or return of such contracts is based on the performance of the licensed indices.

The exchange, which began trading in 2003, bills itself as the world’s first legally binding rules-based greenhouse gas emissions allowance trading system and the only global system for emissions trading based on all six greenhouse gases. Its members are active in greenhouse gas management and mitigation, including offset providers and offset aggregators.

The Chicago Climate Futures Exchange, a wholly-owned subsidiary of the CCX, is an environmental derivatives exchange that currently offers standardised and cleared Sulphur Financial Instrument futures and options contracts and Nitrogen Financial Instrument futures contracts based on mandatory cap and trade programmes created under the Clean Air Act Amendments of 1990.

The market offers participants price-transparent standardised futures and options contracts on an anonymous electronic trading platform, and the derivatives exchange says the availability of effective hedging tools, including prompt and deferred years for futures and options, has increased liquidity while easing volatility in the sulphur dioxide market.

In 2005, the CCX launched the European Climate Exchange, which operates in the European Union Emissions Trading Scheme. Since 2006, both CCX and ECX have been owned by Climate Exchange plc, a publicly-traded company chaired by Sandor and listed on the London Stock Exchange’s Alternative Investment Market.

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