ASX Launch of Environmental Futures


On Jul. 17, ASX said environmental futures will be launched on Jul. 29.


  • ASX notified it has formally lodged the environmental futures rules and procedures with AST ASIC for the launch of ASX environmental futures on Jul. 29, 2024.
  • It published Amendments to ASX 24 operating rules (rules and procedures), re same.
  • ASX issued product factsheet ASX environmental futures, which has more information.
  • Follows ASX Sep. 2022 published ASX annual general meeting addresses, #149399.
  • Background
  • ASX environmental futures are designed to support Australia and NZ's decarbonization efforts as well as clean energy transition by providing a transparent forward curve.
  • This is for the market to hedge and price the energy transition re emissions reduction.
  • Environmental Futures
  • ASX specified 3 environmental futures contracts, covering large generation certificates (LGCs), New Zealand emissions units (NZUs), Australian carbon credit units (ACCUs).
  • Each product is listed out to 5 years; they are deliverable into the ASX clear (futures) account maintained at the relevant Environmental Registry; ASX clear (futures) will effect delivery with clearing participants acting on behalf of the end clients.
  • Preparations
  • Participants are encouraged to review the rules and procedures and product factsheet.
  • Participants wanting to trade futures should contact clearing participant to ensure they are aware of listing and intend to clear new products from go live; participants wanting to go to delivery should ensure registry account is set up before first delivery in 2025.
  • Effectiveness
  • Environmental futures will be launched on Jul. 29, 2024; revised rules and procedures will take effect on Jul. 29, 2024 as well, subject to final regulatory approval.
  • Jul. 18, 2024 Fee Waiver
  • On Jul. 18, 2024, ASX said it will temporarily waive fees on all environmental futures transactions for a period of 3 months, commencing the first day of trading.
  • The fee waiver will run from Jul. 29 2024 to Oct. 31, 2024 (inclusive) and will cover all transaction types on exchange, blocks, and exchange for physical.
  • Jul. 25, 2024 Go Live Confirmation
  • On Jul. 25, 2024, ASX issued notice to remind that ASX environmental futures will go live on Jul. 29, 2024, with the rules and procedures coming into effect on same day.
  • It also reminded about fee waiver above, as well as some steps that need to be taken.
  • Jul. 26, 2024 Revised Operating Rules
  • On Jul. 26, 2024, ASX published revised ASX clear (futures) operating rules - part 6 mandatory cash settlement and delivery procedures, forward dated Jul. 29, 2024.
  • Includes revisions regarding launch of environmental futures; revisions regarding Wallumbilla natural gas futures contract delivery procedures, #122662, #149636.
  • It also issued revised ASX clear (futures) operating rules - procedures determinations and practice notes, which contains numerous pages forward dated as Jul. 29, 2024.
  • Revisions include insertion of rule 67 with respect to environmental futures contracts.
  • In addition, inserted 66.1(d) in schedule 3 titled prescribed times, re open contracts.
  • Jul. 29, 2024 Contract Launch
  • On Jul. 29, 2024, ASX announced that it has listed three first environmental futures contracts, which will allow participants to price and hedge emissions reduction risks.
  • The contracts are available on ASX 24 Market, include LGC, ACCU, NZU futures, aim to provide a liquid, transparent, forward pricing curve on an annual basis out to 5 years.
  • Allow registered participants to make/take delivery of underlying certificates/units at settlement which can then be surrendered to the government to offset emissions.
  • Contracts are standardized, with each equaling 1,000 underlying LGCs/ACCUs/NZUs.
  • The futures will support OTC ACCU market where certain methods and co-benefits are valued differently, and help mobilize capital to meet longer-term emission targets.
  • Aug. 2024 Wallumbilla Natural Gas
  • On Aug. 20, 2024, ASX listed deliverable Wallumbilla Natural Gas Futures contract, extending portfolio of transitional energy as well as carbon market derivatives.
  • Jointly developed with the Australian Energy Market Operator (AEMO), contract helps participants more effectively manage risk amid the transition to clean energy.
  • ASX is currently exploring the potential to expand into other domestic regional gas markets through additional futures contracts, pending internal, regulatory approvals.
  • Oct. 2024 Reminder on End of Fee Waiver
  • On Oct. 8, 2024, ASX reminded that temporary fee waiver will end on Oct. 31, 2024.
  • Also provided details of the new fee schedule taking effect from Nov. 1, 2024.
  • Oct. 11, 2024 Editorial Update
  • On Oct. 11, 2024, Reg-Track made an editorial update to the sub-heading dated Oct. 8, 2024 above, to add further detail and an additional link to a document published by ASX.

Regulators ASX
Entity Types B/D; Corp; Exch; FCM
Reference Nt 1146.24.10, 10/8/2024; PR 8/20/2024; PR 7/29/2024; RF 6/26/2024; Nt 0831.24.07, 7/25/2024; Nt 0799.24.07, 7/18/2024; Nt 0793.24.07, Info, RF, 7/17/2024; ESG;
Functions Compliance; Environment; Legal; Operations; Product Design; Registration/Licensing; Risk; Settlement; Trade Reporting; Trading; Treasury
Countries Australia; New Zealand; Cross-Border
Category
State
Products Clearing; Commodities; Derivatives; Futures
Regions AP
Rule Type Final
Rule Date 7/17/2024
Effective Date 11/1/2024
Rule Id 219573
Linked to Rule :149399
Reg. Last Update 10/8/2024
Report Section International

Last substantive update on 10/11/2024