Climate Exchange Plc

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Climate Exchange, PLC
ClimateExchangelogo.gif
Founded 2004
Headquarters London/Chicago
Key People Richard Sandor, Chairman; Neil Eckert, Chief Executive Officer
Products *Chicago Climate Futures Exchange *Montreal Climate Exchange *European Climate Exchange *Chicago Climate Exchange
Website www.climateexchange.com

Climate Exchange Plc owned exchanges globally that listed environmental-based instruments like carbon credits and offsets for carbon emissions. The company began its existence in 2004 as the Chicago Climate Exchange (CCX). It stopped trading carbon credits at the end of 2010 because of inactivity in the U.S. carbon markets.

History

Climate Exchange Plc was formed in November 2004 [1] by changing the name of the CCX and placing 15,000,000 new shares worth £15m. At the same time the new company made investments in the European Climate Exchange (ECX), which had begun trading European-based carbon-emission permits earlier that year.

One month later, the newly formed Climate Exchange Plc launched trading on the Chicago Climate Futures Exchange (CCFE). The following year, in December 2005, the company formed the Montreal Climate Exchange (MCeX), bringing its total global exchanges to four.

In September of 2006, Climate Exchange Plc acquired the remainder of CCX it didn't own and placed £12.2 million of new shares with Goldman Sachs. Two months later the company appointed Neil Eckert [2] its new chief executive officer.

In 2010, the Intercontinental Exchange bought the Climate Exchange for $606.7 million dollars, adding to ICE's specialist OTC energy-trading business.[3] The acquisition was followed by an announcement that half of the company's Chicago workforce would be laid off because of inactivity in the U.S. carbon markets, and the Climate Exchange stopped trading carbon credits at the end of 2010.

Alliances and Ventures

In June of 2009, Intercontinental Exchange took a 4.8 percent stake in Climate Exchange. In a regulatory filing, Climate Exchange said that ICE had acquired 2.3 million shares in the company. ICE already provided the trading platform the Climate Exchange used to trade its greenhouse gas contracts. [4]

In mid-April 2008 Climate Exchange Plc formed an alliance with Dow Jones Indexes to co-brand and market its group of emissions indexes for carbon and sulfur traded on the CCX, ECX and CCFE.[5]

Key People

Latest news

The Intercontinental Exchange (ICE) in late April 2010 agreed to pay over US$600 million in cash to acquire Climate Exchange, for which it used to clear trades. The purchase represents a multiple of 58 on Climate Exchange's adjusted pre-tax profit for all of 2009, MarketWatch reported following the sale. Energy-market analysts said this represents a long-term bet by the ICE on the future of markets-based emissions trading in the U.S.[6]

Regarding the sale to ICE, Climate Exchange founder Richard Sandor told the New York Times's ClimateWire: "We thought it was the right combination with the right exchange and at the right time...As other exchanges have merged, they've talked about the benefits of one platform, a single clearinghouse for both energy and environmental products, all of which will be healthy for the environmental space." [7]

In early April 2010 shares of Climate Exchange fell after the European Commission (EC) announced that it would issue more new emissions permits in its cap-and-trade program though spot auctions rather than forward sales after 2012, Bloomberg reported. The spread between 2012 and 2013 EU carbon allowances on London's European Climate Exchange rose 7.1% on April 7, 2010 while shares in Climate Exchange dropped 2.7% the same day.[8] The EC said its decision to sell allowances in the spot market should limit any "negative impact" on brokers and exchanges.

References

  1. Company History. Climate Exchange Plc.
  2. Directors. Climate Exchange Plc.
  3. ICE buys Climate Exchange for 395 mln stg. Reuters.
  4. Intercontinental Exchange Buys 4.8% Stake In Climate Exchange. Morningstar.
  5. Climate Exchange unit signs Dow Jones indexes agreement. Thomson Financial.
  6. ICE buying Climate Exchange for over $600 million. MarketWatch.
  7. Sale of Chicago Climate Exchange to ICE Reinforces Weak Carbon Market. ClimateWire.
  8. Premium for 2013 Carbon Increases as EU Favors Spot Auctions. Bloomberg.