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ETF Securities to list Europe’s first carbon exchange-traded commodity product


Exchange-traded commodities provider ETF Securities will list the world’s first carbon ETC on the London Stock Exchange on Thursday, October 30, offering European investors the opportunity

Exchange-traded commodities provider ETF Securities will list the world’s first carbon ETC on the London Stock Exchange on Thursday, October 30, offering European investors the opportunity for the first time to gain simple and direct exposure to the carbon emissions allowance futures market.

ETFS Carbon is designed to offers investors a total return by tracking the price of carbon emissions allowance futures through the ICE ECX EUA Futures Contract traded in London on the IntercontinentalExchange futures market, currently the most liquid exchange-traded contract within the European Union Emissions Trading Scheme.

ETFS Carbon is initially equivalent to one emissions allowance conferring the right to emit one tonne of carbon dioxide-equivalent gas. It will trade in both euros and sterling on the London Stock Exchange and will begin trading at around EUR18.37 (GBP14.74).

Carbon emissions allowance trading markets have developed in response to concerns over the environmental effect of increasing global greenhouse gas emissions, in particular carbon dioxide, whose emissions increased by around 32 per cent between 1990 and 2005, according to the Energy Information Administration. The 1997 Kyoto Protocol provides a framework to help reduce greenhouse gas emissions through emissions trading schemes.

The EU Emissions Trading Scheme is currently the largest and most liquid greenhouse gas trading market, with approximately 80 per cent of global turnover in carbon dioxide allowances and credits last year.

Total EU emissions trading activities were valued at some EUR30bn in the first half of 2008, equivalent to 750 million tonnes of carbon dioxide, an increase of 80 per cent from a year earlier.

ETFS Carbon is the latest of nine ETC to be issued by ETFS Oil Securities, which are backed by matching energy contracts purchased from an entity of Shell Trading, the principal trading and shipping business within the Shell Group. ETFS Brent Oil 1mth and ETFS WTI Oil 2mth were the world’s first oil ETCs when they first started trading in July 2005. Last year, ETF Securities added six more ETCs to its Oil Securities platform, providing exposure to a range of both Brent and WTI dated oil contracts.

ETF Securities provides a range of more than 120 ETCs offering physical, long, forward, leveraged and short exposure to a wide range of commodity sectors, traded in euros, US dollars ands sterling and listed on the London Stock Exchange, Euronext Paris, Euronext Amsterdam, Deutsche Börse and Borsa Italiana. The firm has USD6.5bn in assets under management and its products’ monthly trading volumes currently exceed USD4bn.

‘ETFS Carbon is an exciting new development for investors to gain exposure to the carbon emissions trading market through a listed product on the London Stock Exchange,’ says ETF Securities chief operating officer Nik Bienkowski. ‘This development recognises the rising importance of carbon emissions trading and more importantly global warming.

‘ETCs were designed to be simple and accessible tools for all types of investors. Currently most investors cannot invest in carbon emissions allowance futures due to limited market access, but our response to this problem in the form of ETFS Carbon creates a practical and accessible answer for investors.’

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