NYMEX Holdings, Inc. (NYSE:NMX) , the parent company of the New York Mercantile Exchange, Inc. (NYMEX), the world's largest physical commodity futures and options exchange, today announced the formation of The Green Exchange venture, with Evolution Markets Inc., Morgan Stanley Capital Group Inc., Credit Suisse, JPMorgan, Merrill Lynch, Tudor Investment Corp., ICAP and Constellation Energy.
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.
The Green Exchange products are expected to begin trading during the first quarter of 2008 and will be cleared by NYMEX. The Green Exchange venture is expected to launch as a U.S. Commodity Futures Trading Commission (CFTC)-regulated exchange during the first quarter of 2009, pending regulatory approval.
NYMEX Chairman Richard Schaeffer said, "The broad slate of new environmental products will perfectly complement NYMEX's energy complex, enabling The Green Exchange customers to efficiently manage the cost of reducing their 'carbon footprint.' The Green Exchange expects to focus on both global and regional compliance trading while also building liquidity and demand for the highest quality voluntary standards in the market. Underlying all this will be the ability for all market participants to manage risk and take positions in environmental derivatives markets."
Initially, The Green Exchange intends to offer trading in global carbon-based contracts, such as carbon allowances (EUAs) under the European Union Emissions Trading Scheme, carbon credits (CERs) under the U.N. Clean Development Mechanism, and verified greenhouse gas emission reductions (VERs/VCUs) used in accordance with voluntary carbon standards. The Green Exchange will also offer contracts for U.S. SO2 and NOx emissions allowance trading programs, as well as contracts for national Green-e certified voluntary renewable energy certificates (RECs).
Evolution Markets President and Chief Executive Officer Andrew Ertel said, "Leveraging financial markets is an essential part of addressing environmental challenges such as global warming, and The Green Exchange is the right financial marketplace at the right time. We've identified a set of contracts that address climate change, encourage renewable energy development, and tackle air quality. The Green Exchange will be more than a financial marketplace. It will be an engine behind global efforts to improve the environment."
Nancy King, Managing Director and Head of U.S. Emissions at Morgan Stanley, said, "We believe the global emissions markets represent huge growth potential and are excited to be part of the development of this important exchange."
NYMEX, Evolution Markets, and their partners have worked extensively with utilities, investment banks, environmental brokers, environmental groups, and institutional asset managers to establish a set of contracts that enable market participants to effectively manage risk and gain direct exposure to the global carbon market and other U.S. environmental markets. The group has also consulted with environmental groups to select the highest quality voluntary carbon and renewable energy offset standards as the basis for products.
Paul Tudor Jones, founder of Tudor Investment Corp., said, "Tudor Investment is thrilled at the historic opportunity to join with NYMEX and our partners to launch The Green Exchange, in order to provide financial market participants with high quality and liquid green products in order to achieve the larger goal of harnessing market forces to improve the environment in the years and decades ahead."
Paul Ezekiel, Managing Director and Head of Environmental Markets at Credit Suisse, said, "Credit Suisse is excited to support the development of an exchange with first-class environmental market products and clearing capabilities. The Green Exchange is very well positioned to facilitate the continued growth of the global environmental markets, including the anticipated rapid growth of these markets in the United States."
Blythe Masters, Managing Director and Head of Global Commodities at JPMorgan, said, "The Green Exchange proves NYMEX to be the change agent that our environment and our energy markets badly need."
David Sobotka, Head of Fixed Income, Currencies and Commodities at Merrill Lynch, said, "We are excited to be a founding partner alongside NYMEX and others in The Green Exchange, a platform which will support global environmental trading and facilitate forecasted growth in this important asset class."
The Green Exchange venture is in discussions with additional strategic partners from a broad cross section of market participants including banks, brokers, hedge funds, and energy and industrial corporations. It anticipates announcing additional strategic partners in the near future.
Products will be listed for trading on the CME Globex electronic trading platform and for clearing on the NYMEX ClearPort platform. All contracts will be cleared through the NYMEX clearinghouse as regulated futures contracts. In order to ensure broad global market participation, The Green Exchange will have:
- Established links with NYMEX clearing and trading platforms to provide market participants the opportunity to cross-hedge risk and cross-margin positions between established energy and emerging environmental markets;
- Opportunities for all market users to earn equity in the Green Exchange venture by helping to create liquid and transparent markets in its products; and
- Highly competitive transaction fees.
In keeping with its mission to assist in protecting the environment through market-based approaches, The Green Exchange venture intends to offset all of its electricity use with Green-e certified renewable energy credits, and intends to offset its remaining non-power related carbon emissions through the purchase of voluntary carbon credits, making the exchange fully carbon neutral.
Separately, TSX Group Inc. (TSX Group) today announced that it has entered into a voting and support agreement with NYMEX Holdings, Inc. (NYMEX) by virtue of which NYMEX has agreed to support and vote in favour of the previously announced combination between TSX Group and Montreal Exchange Inc. (MX) to create TMX Group Inc., a leading integrated exchange group.
NYMEX is the largest shareholder of MX, holding approximately 10% of the outstanding MX common shares. NYMEX's agreement can be revoked if the Board of Directors of MX exercises the right to terminate the combination agreement in order to accept a superior proposal.
TSX Group has previously announced that directors and officers of MX holding approximately 7% of the MX common shares, in the aggregate, have irrevocably agreed to vote their shares in favour of the combination.