Trayport Limited, a leading provider of multi-asset-class electronic exchange trading systems, today said that its exchange client, BlueNext, has launched trading of its first spot Emissions Reduction Units (ERU) contracts using Trayport's GlobalVision Exchange Trading System.
The launch of spot ERU trading comes on the back of two successful ERU auctions BlueNext held in January and September of this year.
BlueNext is one of the world's leading exchanges for environmental-related products. It trades three types of environmental contracts: EUAs, CERs and now ERUs and has used Trayport's GlobalVision Exchange Trading System since 2008.
BlueNext held the first-ever auction of 400,000 tons worth of ERUs in January. Emissions Reduction Units are created when companies invest in greenhouse gas reduction targets under the Kyoto Protocol. ERU's are separate from Clean Development Mechanism credits (CDM) under the Kyoto Protocol, which are traded by developed countries with emissions targets under Kyoto.
"The exchange decided to implement secondary auctions and make spot contracts available to its members to improve trading activity and create price transparency for ERUs," said François-Xavier Saint-Macary, Chairman and CEO, BlueNext. "By using Trayport to establish a secondary auction, with a link to our own in-house developed algorithm, we have made a major advance in providing price information and discovery for both buyers and sellers to make investments in the underlying joint implementation projects that will increase ERU supply."
BlueNext's spot members will now benefit from a single platform to trade the three contracts. The ERU launch will give the market a clear price signal and therefore give greater transparency to the market as a whole.
"Historically, the majority of ERU trades have been over-the-counter and so the auctions and spot contract availability of ERUs was designed by BlueNext and Trayport to help create better price discovery and generate a clearer price signal for ERUs to encourage greater investment," said James Davies, Head of Sales and Client Services, Trayport.
"We have worked hard to increase our product and service offering for those who trade ERUs - both with increased focus and increased allocation of resources. Trayport offered us the technology for this and so are ideally placed to provide us the adaptability we need in the future," said François-Xavier Saint-Macary.