Isra-Mart srl:Updated: Nasdaq OMX resumes carbon spot trading, as Climex exits spot market

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The EU carbon market took another small step towards normality today, after Nasdaq OMX Commodities resumed spot trading for emission allowances and carbon credits.

The move comes despite an announcement from alternative exchanges Climex and APX-ENDEX confirming that they will discontinue secondary trading of carbon allowances on the spot market.

The debate is still raging over how best to enhance security in the EU carbon market in the wake of January's cyber attack with analysts warning that without a comprehensive list detailing which allowances were stolen in January's cyber attacks, trading volumes on the spot market will continue to remain low.

Laura Fidao, carbon market analyst at IDEAcarbon, said there was "not much confidence" in the market, adding that traders were extremely reluctant to buy allowances on the secondary market until they can check them against a comprehensive list of stolen credits.

Nasdaq OMX, which today reopened carbon spot trading at 7 o'clock GMT, said it will implement new trading and clearing rules in an attempt to restore trader confidence.

The company said in a statement that it will screen all EU allowances and UN-backed certified emission reduction credits in a move designed to mitigate the risk of purchasing stolen credits.

"Buyers are nevertheless advised to also make their own verifications, and will have a limited complaint period in the event that any unlawful EUAs or CERs are transferred to their account from the clearing house," the company added.

The exchange also moved the delivery point for its spot contracts from the Danish to the UK registry as the Danish registry currently remains closed.

Meanwhile, the European Energy Exchange (EEX), which remained open for spot trading despite the closure of national registries, yesterday announced new processes designed to enhance security, including a commitment to separately settle allowance transactions for primary market auctions and the secondary market.

However, Climex and APX-ENDEX announced in a statement that they are to stop spot carbon trading and clearing services.

"On 19 January 2011, the European Commission (EC) suspended national registries in the EU ETS due to a theft of EUAs in a number of those registries," the statement read. "As a result, spot trading was not possible and Climex closed its spot trading platform.

"Some national registries have been allowed to re-open since 4 February. A comprehensive solution has not yet been found: uncertainty in the spot carbon market remains and still poses a risk for market participants and clearing houses. Given these uncertainties, Climex and APX-ENDEX have decided to discontinue facilitating secondary trading in the spot carbon market."

They added that all auction-related activities scheduled until the end of April 2011 will be performed as planned, including the spot allocation auction of 200,000 first issuance EUAs for the Austrian government in April.

So far, only 10 of the 30 EU carbon registries have re-opened following January's cyber attack, which saw 3.3m carbon credits stolen and all registries suspended until they could adhere to tighter EU security standards.

Meanwhile, a number of exchanges, including the largest ICE Futures Europe exchange, are also yet to resume spot trading as they continue to wait for traders' ongoing security concerns to be addressed.