MERCHANDISER
CME Group launches CME Direct
CME Group has the launch of CME Direct, a new
technology offering side-by-side trading of exchange- listed and OTC markets. CME Direct initially supports trading of CME Group’s benchmark energy futures markets alongside OTC energy swaps through leading inter-dealer brokers. The exchange-listed products on CME Globex that can
be traded through the CME Direct technology include NYMEX WTI crude oil, NYMEX Brent, DME Oman crude oil, RBOB Gasoline, New York Heating Oil and the benchmark Henry Hub Natural Gas futures contract – products that form part of the CME Group energy complex, which has average daily trading volumes of over 1.9 million contracts. CME is licensing the CME Direct technology to leading
inter-dealer brokers Marex Spectron, Tradition and Tullett Prebon, to offer trading of global OTC oil markets. Traders can execute electronically or in a hybrid, broker- assisted model through the participating brokers, combining the benefits of electronic trading, while retaining the flexibility of voice brokering. CME Direct is integrated with CME Group’s OTC post- trade services, CME ClearPort for straight-through
clearing to CME Clearing and CME Clearing Europe and CME ConfirmHub for STP. This integration ensures OTC markets are cleared and processed quickly and without manual intervention, reducing operational overheads, errors and counterparty risk. “We have a proven track record of providing our
customers with advanced trading technologies that enable them to execute even the most complex and demanding of trades,” says Bryan Durkin, COO and MD, Products & Services, at CME Group. “With the introduction of CME Direct , we are offering our clients a new way to access simultaneously our listed markets as well as OTC energy markets in a fully automated trading environment, expanding access to our global liquidity and price discovery functionality.” “By combining brokered OTC markets with CME
Group’s clearing and STP platforms, CME Direct now offers the first global, fully automated front-to-back- office platform for trading CME listed and OTC energy products,” according to Michel Everaert, Managing Director, OTC Solutions at the CME. “CME Direct is a big step forward for markets to comply with current and anticipated market regulations that call for more transparency, automated trading, data reporting and clearing in OTC markets.”
Find out more on CME Direct at:
www.cmegroup.com/direct
Experts Call for EU ETS Intervention
FOUR OUT OF five carbon market experts in the €92bn global emission marketplace have called for the EU to intervene to support the price of carbon allowances. But respondents warned that periodic tinkering with the market risks turning it into a “casino”. The findings were published at the industry’s annual congress in Cologne, at the 7th
annual International
Emissions Trading Association (IETA) survey. The three leading options for intervention included a move to a 30% reduction in CO2
emissions by 2020, a permanent set
aside of allowances, or an auction reserve price in the EU ETS [a discussion of which can be found in Commodities Now, March 2012 edition]. The EU ETS, the world’s largest carbon trading
programme, has had to weather storms caused by recession and the eurozone crisis. Prices have fallen more than 60% in just 12 months on the industry’s flagship Scheme. Expectations of future prices for EU Allowances are now 36% lower than three years ago (down to €19 from €30 in 2009) and 45% lower for CERs. But despite the pessimism, respondents felt that market mechanisms remain at the forefront of policies to tackle emissions growth. Markets experts said new demand would be injected
into the global market by viable markets emerging by 2020 in Australia, China and South Korea. Most also
thought a federal US scheme would emerge before 2020. The international row on aviation’s inclusion in the
scheme meant some respondents felt it could not be taken for granted that the sector would be included in the ETS. There was also widespread scepticism over the International Civil Aviation Organisation’s ability to broker a deal by 2015, with face-saving bilateral treaties at a national level the most likely outcome. Respondents remain divided on whether new market
mechanisms, would emerge before 2020. Almost half thought sectoral crediting would also emerge before the end of the decade. Seven out of ten respondents said carbon markets
and taxation would not be able to raise the estimated US$30bn annually expected by the UN to fund the Green Climate Fund. Conservative estimates from respondents say the funds are more likely to be 50-80% lower in the range $5-15bn annually. Dirk Forrister, President and CEO, of IETA said: “The
long-term view remains robust, because we know that if we are going to take steps to seriously address climate change, there is simply no more cost-effective way than a market mechanism to create a business incentive to reduce carbon emissions.”
See more at
www.ieta.org June 2012 25
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