UPDATE: ICE Buys 4.8% Stake In Climate Exchange
June 23 2009 - 3:54PM
Dow Jones News
IntercontinentalExchange Inc. (ICE) revealed Tuesday that it had
taken a minority stake in Climate Exchange PLC (CLE.LN), which
operates emissions trading platforms in the U.S. and Europe.
The move pushes ICE deeper into an asset class that some experts
believe could become among the largest in the derivatives sector as
governments adopt trading schemes to reduce greenhouse gas
emissions.
ICE already has a partnership with the Chicago-based but
London-listed company, which disclosed in a filing that its partner
had acquired 2.3 million shares, equating to a 4.8% stake.
Atlanta-based ICE provides the platform for the Chicago Climate
Exchange and its European equivalent to trade contracts based on a
range of greenhouse gases.
ICE clears trades for the European Climate Exchange via its ICE
Clear Europe service, while transactions on the Chicago Climate
Exchange are cleared by the Clearing Corp., which ICE acquired in
March.
Climate Exchange pays ICE a license fee for the U.S.
arrangement; in Europe, ICE receives a 27% share in the European
Climate Exchange's revenue by way of payment.
Shares in Climate Exchange rose 16.6% to GBP7.51, while ICE
shares were 0.8% higher at $106.90.
ICE's equity stake in Climate Exchange puts it up against rival
CME Group Inc. (CME), which plans an expanded role for its Green
Exchange venture in the U.S. and Europe. NYSE Euronext (NYX),
Nasdaq OMX Group Inc. (NDAQ) and Deutsche Boerse AG (DB1.XE) also
have made inroads to carbon trading in Europe through a series of
ventures.
The Climate Exchange dominates exchange emissions trade on both
sides of the Atlantic, benefitting from early-mover status as
cap-and-trade legislation was adopted in Europe, and building
activity on its voluntary U.S. platform ahead of a similar scheme
expected from the Obama administration.
Climate Exchange has been in expansion mode this week,
announcing a new venture in scrap steel futures while brokerage MF
Global Ltd. (MF) joined the Chicago Climate Exchange to participate
in carbon offset aggregation.
An MF Global spokeswoman said the company's new role in
overseeing offset projects, which let polluting companies displace
greenhouse gas emissions by investing in projects that reduce
pollution, is part of an expansion into U.S. exchange-traded carbon
markets.
Previously, MF Global's focus had been on over-the-counter
emissions trading in the U.S., she said.
-By Jacob Bunge, Dow Jones Newswires; 312-750-4117;
jacob.bunge@dowjones.com