Monday 8 February 2021 7:31 pm

London loses carbon futures trading to Amsterdam, in Brexit hit to City

Intercontinental Exchange (ICE) today said it will move its trading of European carbon futures and options to its Netherlands-based exchange in Amsterdam from London during the second quarter, in the latest sign of financial activity leaving Britain for the bloc due to Brexit.

The City of London has been largely cut off from the EU since 1 January as the new post-Brexit trade deal now in force does not cover financial services market access.

EU carbon allowances (EUAs) are the currency used in the EUs emissions trading system (ETS), the 27-member bloc’s main tool to help reduce the greenhouse gas emissions that cause climate change.

“This decision … will help those who rely on these markets to meet obligations and manage climate price risk in the most cost-effective and seamless manner,” Stuart Williams, president of ICE Futures Europe, said in a statement.

ICE said it would announce an exact date for the move in due course.

More than €6bn a day of euro-denominated share trading has already left London for Amsterdam and Paris, along with some trading in derivatives such as interest rate swaps.

Cost-saving

ICE already had its ICE Endex exchange in the Netherlands for trading natural gas futures and options, which avoids the cost of having to set up a new Brexit hub in the EU from scratch as stock trading platforms had to.

The clearing of the carbon contracts will remain at ICE Clear Europe in London, the exchange said.

To avoid disruption to markets, the EU granted clearing houses for derivatives in London continued access until June 2022.

It is unclear whether clearers like ICE Clear Europe will have permanent access after that date given the EU wants financial activity undertaken by investors in the bloc to be based there.

ICE is one of the main exchanges trading EU carbon allowances and had combined average daily volumes of around 47,000 contracts of EUAs.

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