ICE Futures May Extend 16-Month Suspension of Prompt CO2 Market

ICE Futures Europe, the biggest exchange for carbon trading, said it might extend a 16-month suspension of its prompt market as it waits for a software upgrade at a new European Union registry.

The upgrade will allow traders to set up so-called trusted accounts in the registry, which tracks ownership of emission allowances. Without those accounts, which will allow for streamlined trading, transactions may take as long as seven days to settle, said David Peniket, the exchange’s president.

“For a daily market, this could be too long for participants,” he said yesterday by phone from London. “Once trusted accounts are set up, transactions may be able to settle in one or two days.”

ICE suspended prompt trading in January last year after thefts of carbon allowances roiled the market, the world’s biggest greenhouse-gas-reduction program by traded volume. BlueNext SA, the Paris spot exchange, reopened for trading Feb. 4 last year.

Settlement of trades from ordinary accounts in the registry will take so long because allowances must be transferred from the seller’s account to its clearing member, then to the clearing house, on to the buyer’s clearing member and then to its own account, Peniket said. Each transfer may take about 26 hours and may include a new text-message authentication process, he said.

“Customers would like to have a prompt market available and we are currently evaluating possible solutions,” Peniket said.

The European Commission in Brussels, regulator of the market, said May 3 that the new registry, which combines about 30 registries from countries participating in the market, will be activated on June 20. A more detailed timetable, including the upgrade for trusted accounts, will be communicated by July 15. The commission didn’t respond to an e-mail seeking comment yesterday on the availability of trusted accounts.

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