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NYSE Euronext to Shut Carbon Market After Failed Auction Bid

NYSE Euronext to Shut Carbon Market After Failed Auction Bid
A trader passes the NYSE Euronext logo on the floor of the New York Stock Exchange (NYSE) in New York. Photographer: Jin Lee/Bloomberg

NYSE Euronext and France’s Caisse des Depots et Consignations will close Bluenext SA, their joint carbon exchange in Paris, on Dec. 5 after the bourse failed to win a bid to run European Union permit auctions from next year.

Bluenext was one of several exchanges competing to sell emission permits on behalf of 25 member states in the third phase of the 27-nation bloc’s carbon market starting in 2013. The EU in September contracted Leipzig, Germany-based European Energy Exchange AG to sell the offsets.

“The market environment for carbon has been difficult for us,” Philippe Chauvancy, a company spokesman for Bluenext, said today by phone from Paris. “The fact that we didn’t get the Phase 3 auction was a big blow.”

The loss of the market’s biggest spot platform means that there will be no benchmark price for immediate delivery until a replacement is identified, said Trevor Sikorski, an analyst at Barclays Plc in London. European Energy Exchange AG and Nasdaq OMX Group Inc. also offer spot EU permit contracts that trade in smaller volumes.

Bluenext handled more than 1.1 billion metric tons of European Union permits in 2009, according to data compiled by Bloomberg. The company has hosted spot trades totaling 29.4 million tons this year. There is no outstanding open interest in any derivatives contract, Chauvancy said.

Permit Theft

The Paris-based bourse settled a tax liability with French authorities for 31.8 million euros ($41.1 million) after an audit covering 2006 to 2009 relating to alleged tax frauds by participants in the market, NYSE said in a July 2011 filing. BlueNext halted trading for 15 days in 2011 after an estimated 2 million permits were stolen in hacking attacks on accounts in Austria, Greece, Italy and the Czech Republic.

“The market never really got over the episodes of permit theft and value-added-tax fraud, and these hit Bluenext particularly hard as they were mostly perpetrated on spot transactions,” Sikorski said.

Richard Adamonis, a spokesman for New York-based NYSE Euronext, declined to comment. Calls to Maria Scolan, a spokewoman for Caisse des Depots’ CDC Climat unit, were not answered.

“We will contact our members next week to make plans for an orderly closing,” Chauvancy said.

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