Download - Chicago Climate Futures Exchange ™
CHICAGO CLIMATE EXCHANGE, INC. © 2006
Chicago Climate Futures Exchange™
www.theccx.com
U.S. Sulfur Financial Instrument Futures and Nitrogen Financial Instrument Futures on CCFE
CHICAGO CLIMATE EXCHANGE, INC. © 2006
Sulfur Dioxide (SO2) Market Foundation
The Acid Rain Program was created by Title IV of the 1990 Clean Air Act Amendments and is administered by the EPA
Calls for a 10 million ton reduction in SO2 emissions from 1980 levels, primarily through a cap and trade program
Effected Sources: Primarily Electric Generating Utilities
Annual cap set at 8.95 million allowances
Approximately 10 million allowances transfer annually (between unrelated entities), representing a cash market value over $5 billion
CHICAGO CLIMATE EXCHANGE, INC. © 2006
Nitrogen Oxide (NOx) Market Foundation
NOx Budget Trading Program was implemented in 2003 to address the formation of ground level ozone in the warm summer months (Ozone Season)
Federally mandated cap and trade program, caps emissions at State level
Currently 19 Eastern U.S. states + D.C. in participation
Effected Sources: Electric Generating Utilities, Pulp & Paper Industry, Cement Manufacturing Industry, Oil & Gas Industry...
500 thousand allowances allocated annually
Approximately 500 allowances transfer annually (between unrelated entities), representing a cash market value over $500 million
CHICAGO CLIMATE EXCHANGE, INC. © 2006
SO2 Emission Allowance Price History ($/ton)
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
CHICAGO CLIMATE EXCHANGE, INC. © 2006
NOx SIP Call Emission Allowance Price History ($/ton)
$0.00
$1,000.00
$2,000.00
$3,000.00
$4,000.00
$5,000.00
$6,000.00
$7,000.00
$8,000.00
$9,000.00
CHICAGO CLIMATE EXCHANGE, INC. © 2006
Chicago Climate Futures Exchange™
Chicago Climate Futures Exchange (CCFE™) is a CFTC designated contract market - futures exchange - which offers standardized and cleared futures contracts on emission allowances and other environmental products
Clearing services - The Clearing Corporation
Market surveillance - National Futures Association
CCFE currently lists Sulfur Financial Instrument (SFI™) futures contracts on Environmental Protection Agency (EPA) Sulfur Dioxide (SO²) emission allowances and Nitrogen Financial Instrument (NFI™) futures contracts on EPA Ozone Season (OS) SIP Call Nitrogen Oxide (NOx) emission allowances
CHICAGO CLIMATE EXCHANGE, INC. © 2006
CCFE SFI™ Key Features
Contract Size – 25 U.S. EPA SO2 Emission Allowances
Minimum Tick Size - $0.10 per allowance or $2.50 per contract
Underlying Contract Value $11,725 (03/12 Settlement
$469/contract * 25 tons)
Current Margin Requirements• Prompt Month (Mar07) $1,475 per contract
• Pre 2010 contract expiration $975 per contract
• 2010 & later - $400 per contract
• Spread Margin Credit – 80%
Trading Hours: 7:00 a.m. – 3:00 p.m. CST
Transaction Fees $2.00 per contract per side(Non-Member);$1.60member
CHICAGO CLIMATE EXCHANGE, INC. © 2006
CCFE NFI™ Key Features Contract Size – 5 U.S. EPA NOx SIP Call Emission Allowances
Minimum Tick Size - $1.00 per allowance or $5.00 per contract
Underlying Contract Value $5,250
Current Margin Requirements• Expiration Month (Mar07) $825 per contract
• Non-Expiration Month $550 per contract
Trading Hours: 7:00 a.m. – 3:00 p.m. CST
Transaction Fees $2.50 per contract per side(Non-Member);$2.00 member
CHICAGO CLIMATE EXCHANGE, INC. © 2006
CCFE SFI Volume
0
5,000
10,000
15,000
20,000
25,000
Quarter 1 2006 Quarter 2 2006 Quarter 3 2006 Quarter 4 2006 Quarter 1 2007
Volu
me
(Con
tract
s)
CHICAGO CLIMATE EXCHANGE, INC. © 2006
CCFE SFI Open Interest
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Ope
n In
tere
st (#
con
trac
ts)
CHICAGO CLIMATE EXCHANGE, INC. © 2006
CCFE Clearing Members