Just over a year after purchasing the Chicago Climate Futures Exchange (CCFE), Intercontinental Exchange Inc. plans to close the derivatives trading platform, according to a Wall Street Journal report.
Intercontinental purchased the Futures Exchange, along with the Chicago Climate Exchange (CCX) and the European Climate Exchange (ECX) in July 2010 from Climate Exchange PLC for roughly $600 million.
The Chicago Climate Exchange (CCX) was North America’s only voluntary, legally binding greenhouse gas (GHG) reduction and trading system.
Intercontinental shut down the Chicago Climate Exchange at the end of 2010, when it became obvious that a mandatory cap-and-trade law would not pass in the US.
Now, Intercontinental plans to shut down the eight-year old Climate Futures Exchange at the end of Q1 2012, because it’s loosing money and the creation of a federal carbon-reduction plan in any shape or form is a long shot in the foreseeable future.
Intercontinental issued a notice to traders on Friday that after closing the Climate Futures Exchange it will begin listing similar emissions contracts over-the-counter (OTC).
In the meantime, it will begin listing OTC derivatives linked to emissions reductions plans in California, Massachusetts, New Jersey and Connecticut, as well as a sulfur-based contract.
Intercontinental still operates the Euopean Climate Exchange, which is the largest platform for trading mandated carbon reductions under the European Union’s Emissions Trading Scheme.
The US exchanges were meant to be a voluntary pre-cursor to mandatory exchanges that would begin trading when cap-and-trade policy was approved by Congress. Corporate leaders have been trading carbon in anticipation of that move, but there’s little incentive without government policy.
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